While sales of recreational all-terrain vehicles took a steep drop during the recent tough economic times, steady sales of utility terrain vehicles helped to stabilize the overall ATV/UTV market.
The lag in equipment sales – and subsequent upswing as the economy began to rebound – was mirrored by ATV/UTV tire sales. The good news for tire dealers is this segment is projected to grow steadily, and with a little attention to detail and tire service know-how, there are profits to be made in this niche that caters to both work and play.
Market Recap
According to Hank Chang, marketing manager for Kenda Tire USA, equipment sales in this segment are “rebounding slowly but surely.” During the downturn, the sport ATV market dropped significantly while the non-recreational UTV segment – used largely for farm and turf work – stayed relatively strong.
Now that the economy is getting stronger, “both OE and replacement markets are benefiting,” Chang says. “However, the first half of 2011 was more affected by dealers trying to replenish their low inventory. The second half of the year’s sales proved that economic recovery still has a ways to go.”
For 2012 and beyond, Kenda predicts conservative growth; “Five percent to 10% is not unreasonable,” Chang notes.
According to representatives from Maxxis International, the increased sales of UTVs have led to higher sales of tires for both OE and replacement markets.
“We are optimistic that we will see steady growth in the ATV/UTV market in the coming years. The UTV/side-by-side market will probably continue to outpace the sport and utility ATV market.”
Customers and Service
Though customers in this market range from farmers to hunters to weekend enthusiasts, they all look for similar qualities in a tire dealer: reasonable prices, a fast turnaround and fitment knowledge.
These tires, the majority of which are bias-ply, typically offer aggressive, deep tread and high load ratings.
“Load ratings, sizing, wheel selection and intended application are as important when choosing ATV/UTV tires as when choosing passenger car tires,” Maxxis says. “We always recommend users follow the tire recommendations/specifications from the vehicle’s manufacturer.”
With heavy enthusiast use comes the danger of riders-turned-DIYers when it comes to tire mounting, according to the tiremaker, so it’s important that dealers sell their expertise and emphasize the safety benefits of allowing tire professionals to handle installation.
“The quality of tires offered, quick order fulfillment and inexpensive mounting” are paramount to customer satisfaction in this market, according to Maxxis.
Kenda’s Chang says, “Price is more of a top priority these days, but quality service and installation is very important, as well. Customers don’t want to have any issues with their tires once they are out on a trail somewhere.”
He adds it’s important for dealers to have the proper equipment, since they’ll be dealing with smaller wheel diameter sizes when mounting tires.
Another misconception that’s common among ATV/UTV riders is under- or over-inflation, for increased traction off-road or more load-carrying capacity, respectively. Either situation can lead to poor handling and premature wear, so it’s vital that tire dealers educate their customers.
Boosting Business
Compared to passenger tires, profit margins are higher and SKU requirements are lower with ATV/UTV tires, Chang says. When it comes to the amount of inventory tire dealers need to keep on hand, he explains it’s “relatively low, but there is a large market for older sizes and even new OE one-off sizes. Generally, the jump-in point to enter the segment is very minimal to cover the majority of vehicles.”
Maxxis adds there is consistent demand for a few standard sizes, but it’s most important that dealers work with a distributor that can meet an individual customer’s demand quickly.
“There are so many machines and so many terrains/applications for ATVs that a dealer couldn’t possibly stock a complete range,” the tiremaker adds.
Once quick access to product has been established, tire dealers should focus their marketing efforts on local enthusiast groups, farmers and turf specialists. With the right equipment and application knowledge, dealers have the opportunity to track down significant profits in the ATV/UTV tire segment.
