2016 Tire & Wheel Trends
Change Just Keeps Rolling
Judging from the number and quality of tire and wheel exhibitors at the 2015 SEMA Show, that segment of the industry is burgeoning once again.
From the influence of Internet sales to the integration of new materials and advanced manufacturing processes, the tire and wheel industries remain in flux. A tire tariff that threatened significant upheaval seems to have been overstated, but brick-and-mortar retailers are seeing the unmistakable effect of online sales. On the wheel side, flow forming, carbon fiber, concave designs and translucent colors are emerging trends.
The dumping of low-priced Chinese tires into the United States brought about new fees on imported tires, a move designed to equal the playing field for domestic suppliers. The move created fears that companies catering to low-end tire markets might suffer. But the drop-off appears not to have been as severe as originally thought.
“I buy a lot of Chinese tires, and the impact was negligible—less than 5%,” said Hank Feldman, president of Performance Plus Tire and Automotive Superstore. “The Chinese were bringing in what are called tier-three and tier-four tires, and none of the tier-one manufacturers—Michelin, Bridgestone, the major manufacturers—build those low-end products. The tariff really hasn’t accomplished much at this point, because raw-materials costs continue to drop, so we’ve seen very little in price change over the past 24 months.”
Dave Zielasko, editor and vice president/publisher of Tire Business, said that some tire makers and tire importers backed off or slowed plans to sell Chinese-made passenger and light-truck tires in the United States, but the continued strong presence of Chinese tire makers at the recent SEMA Show showed that others have not. And Bob Ulrich, editor of Modern Tire Dealer, said that Chinese tires have become an important part of the domestic market.
“Low-cost tires are still sought after in our country, but U.S. manufacturers do not produce enough low-cost tires to meet demand on our shores,” he said. “Tires made in China by Chinese manufacturers meet that demand.”
While the sale of low-cost import tires seems to have had little impact on the market, Internet sales are revolutionizing the tire industry. The Internet also provides great research opportunities for consumers, such as the use of visualization software that allows consumers to see what a specific tire and wheel package would look like on a specific vehicle.
While the sale of low-cost import tires seems to have had little impact on the market, Internet sales are revolutionizing the tire industry. Some estimates put Internet tire sales in the neighborhood of 40% in the next few years, and Feldman said that the only thing saving brick-and-mortar stores currently is the fact that consumers cannot install tires or fix cars online, otherwise brick-and-mortar tire retailers could go the way of book and music stores.
Kevin Rohlwing, senior vice president of training for the Tire Industry Association, said that Internet sales from tire manufacturers are undoubtedly the most significant trend in the industry.
“Bridgestone, Goodyear and Michelin have all introduced programs for consumers to purchase tires direct from the manufacturer and then have a local dealer install them,” he said. “Under this system, the dealer does not collect any money directly from the consumer and receives a credit from the manufacturer.”
Rohlwing said that dealers meeting in Europe recently stated that 20% of all tire sales are now manufacturer-direct, and that is having a negative effect on independent businesses.
“With two of the three major manufacturers having their own retail outlets (Bridgestone and Goodyear), independent retailers are now competing with their suppliers on two levels,” he said. “It’s still too early to tell how this will impact the market, but it’s safe to say that online manufacturer-direct sales are going to have a negative effect on cash flow as more sales involve credits with the manufacturers.”
Feldman reported that his company and others whose owners he’s spoken with have seen flat sales in their brick-and-mortar operations, but he’s seen double-digit increases in his own e-commerce efforts. The result has been a slight increase in overall business. He also pointed out that tire marketing on television has undergone an evolution, with the manufacturers increasingly resorting to live sports.
“People are recording shows and skipping the commercials in many other types of programming,” he said, “but you can’t turn on a sporting event that doesn’t have tire-company marketing. Also notice that there are marketing banners for tire companies behind home plate during baseball games, and a lot of tire companies are using social media to try to enhance their marketing, including YouTube. Our suppliers send us material that we can put on our own YouTube channel.”
In another emerging development, consumers don’t even need to take their new tires and wheels to an installer. The advent of mobile mounting and balancing vehicles brings the installation process to the consumer.
The Celsius tire from Toyo Tire U.S.A. Corp. is advertised as a “variable conditions” tire with improved winter-weather performance. While today’s all-season tires don’t take the place of true winter-weather tires, they certainly perform very well in most conditions.
Dave Johnson is president of Icon Media Inc., which is the founder of the iConfigurator visualization software that allows consumers to see what a specific tire and wheel package would look like on a specific vehicle. He said that the use of mobile tire and wheel installers is an outgrowth of Internet tire and wheel sales, and Feldman noted that tier-one supplier Michelin has introduced its own on-site installation service.
“I also noticed a couple of other businesses marketing mobile installation trucks at the SEMA Show this year,” he said. “I don’t know if anything is going to come of it, but I’m certainly watching it closely. It continues the trend of suppliers going direct.”
Rohlwing said that Bridgestone’s purchase of Pep Boys will also have a major impact on the market.
“They now have more than 3,000 company-owned retail outlets, so they are competing with their dealers at multiple levels,” he said. “That will also have an impact on the other manufacturers that supplied Pep Boys, since it’s highly unlikely that they will offer tires outside of their own brands. For some of these manufacturers, losing Pep Boys is a significant share of their distribution, so these companies will be looking to replace those sales.”
The specifics of tire manufacturing have also undergone some evolutionary changes. For instance, tire makers are introducing more products designed specifically for the quickly growing crossover vehicle market, Zielasko said. And the industry is developing more light-truck tires that have off-road capabilities but improved on-road behavior. In addition, many of the world’s tire manufacturers continue to work on sustainable new supplies of natural rubber, such as efforts by Cooper Tire & Rubber Co. to develop rubber from the Guayule desert shrub and similar developmental work by Bridgestone.
“Bridgestone opened a Biorubber Process Research Center about a year ago in Mesa, Arizona, and already has begun building tires with rubber derived from guayule,” Zielasko said. “The new tires—in which guayule rubber fully replaced Hevea rubber in the tread, sidewall, bead fillers and other parts of the tire traditionally made from natural rubber—were unveiled October 1.
“The biggest trend in the design area is probably the incorporation of low rolling resistance (LRR) properties in all tires,” Rohlwing said. “Tread designs and compounds on broad-line tires are providing more LRR features even though they aren’t marketed as LRR tires. The major manufacturers are pushing for regulations that will require all tires to meet
A change from original-equipment tire and wheel fitments can change ride comfort, stability, steering response and more. The SEMA Wheel & Tire Council collaborated with Clemson University to analyze changes in tire and wheel packages and has published the findings in a series of “WTC Ride Guides,” which are available for free download from the council’s webpage at www.sema.org/wtc.
Ulrich said that low rolling resistance is a major concern for the automakers because of ever-rising Corporate Average Fuel Economy (CAFE) standards, which dictate minimum fuel-efficiency requirements for all new cars.
“Tire manufacturers have been able to lower tire rolling resistance without significant tradeoffs in other performance areas,” Ulrich said. “That, in turn, has led to a smoother overall ride and better mileage, but the changes have been incremental.”
Both Ulrich and Zielasko pointed to notable improvements in all-season tires, and both specifically mentioned the Celsius tire from Toyo Tire U.S.A. Corp.
“The Celsius is advertised as a ‘variable conditions’ tire with improved winter-weather performance,” Ulrich said, “and I have no doubt that there are now all-season tires that perform as well in the summer as performance tires from the ’70s—that’s how far technology has advanced.”
Zielasko also mentioned the Nokian WR All-Weather line of tires. The Finnish company describes its Nokian WR All-Weather WRG3 and WRG3 SUV tires as providing excellent handling on wet and dry summer roads as well as superior grip in winter weather.
“According to the companies, these products are not designed to replace winter tires,” he pointed out. “But in our opinion, they are examples of tire manufacturers pushing the design envelope to provide higher-performing and safer tires under variable driving and weather conditions.”
Speed-rated tires have also taken greater market share. According to Tire Business and industry estimates, the high-performance share of original-equipment passenger tire shipments topped 50% for the first time in 2014, and Modern Tire Dealer’s Ulrich noted that more ultra-high-performance tires are coming as original equipment on non-sports cars.
Changes in the marketplace through Internet sales, supplier-direct sales and mobile installations dictate that tire dealers adjust their strategies.
Dealers must be focused on service to preserve the relationship with their customers,” Rohlwing counseled. “Some consumers will buy online regardless of what a dealer can offer, but the key to survival in the future is to preserve the existing customer base. Independent retailers also need to explore the possibility of selling online to compete with their suppliers and retain as much of that business as possible. The market is changing at a rapid pace, and the dealers who are looking forward—expanding services and building relationships with their customers—will have the best chance of survival.”
New materials such as carbon fiber are finding their way into wheels. Weld’s HiPer Technology off-road wheel brand uses super structural carbon fiber to absorb impacts such as those experienced in off-road racing.
The core wheel markets are stable, according to Wayne Williams of Exsell Marketing, who is also the chair-elect of SEMA’s Wheel & Tire Council (WTC). The automakers have not changed bolt patterns or offsets in the truck, SUV, luxury or sport-compact markets, which has allowed wheel manufacturers to focus on materials, designs and production processes.
“The trend in wheel designs is more of everything,” Williams said. “More larger-diameter wheels, more ‘stretch’ fitments, more smaller-diameter fitments and more finish options than ever before.”
Among the newer material choices are carbon-fiber designs, which are lightweight but more expensive than traditional materials.
“Material science is a very dynamic side of the industry,” said Chris Bovis, vice president of marketing for Weld. “There are a number of new materials with properties tailored specifically for vehicle performance needs. Our own HiPer Technology off-road wheel brand uses super-structural carbon fiber to absorb impacts, soaking up the bumps and impacts of off-road racing. Through material development, you will see highly tuned wheels for specific market segments.”
Flow forming has also gained traction, creating a middle ground in manufacturing between lower-cost cast wheels and more expensive forged wheels. Carl Robinson, wheel product manager for Mickey Thompson Performance Tires & Wheels, said that flow-forming wheel technology allows for reduced raw material input and improved metallurgical properties by providing better grain alignment in the base metal.
“The end result is a lighter and stronger wheel product that partially bridges the gap between cast and forged wheel technology,” he said. “While similar to ‘spinning,’ the CNC machinery and tooling advances have made this technology more applicable in recent years.”
Horlick and Bovis also pointed to the prevalence of concave designs at the 2015 SEMA Show, in which the spokes start at the outer edge of the wheel and recede into the lug area.
“We also see an increase in monoblock wheels, given the concave styling,” Bovis said. “Advanced alloys, composites and other alternative materials are being mated to very specific applications based on a narrowly defined performance envelope.”
Kelly Austin, national sales manager in the wheel segment for Tireco, believes that fuel prices have had an additional impact on the wheel segment.
“We’ve seen a lot of old SUVs and vehicles that were gas thirsty get back on the street,” he said. “Consumers are still thinking of what was popular back then for these older vehicles, which is a great thing for us manufacturers and dealers. The downward spike in fuel costs has opened up areas that were looking pretty bleak 18 months ago. Folks are investing in better tires and looking long term and putting some nice wheels on their vehicles. We have seen a lot of positive movement in the trend of the really large wheels coming back.”
Colored wheels offer consumers a vast array of alternatives to standard equipment. Colorization is one of the hottest trends in the segment.
Horlick said that many new truck designs also showcased very wide wheels with deep lips, allowing for a much wider tire. But he cautioned dealers to properly educate consumers about the effects of significant changes to tire and wheel packages.
“A large change from the original-equipment fitment may change ride comfort, stability, steering response and more,” he said. “Some consumers want the wheels to protrude slightly past the fenders and are willing to modify fenders, adjust alignment or even stretch tires to avoid fender contact. Others want the wheel and tire packages to sit directly in line with the fenders to give the car a clearer appearance. The SEMA Wheel & Tire Council collaborated with Clemson University to analyze changes in tire and wheel packages and has published the findings in a series of ‘WTC Ride Guides.’ They are available for free download from the council’s webpage at www.sema.org/wtc.”
Colored wheels also offer consumers a vast array of alternatives to standard equipment, and colorization is one of the hottest trends in the segment.
“Brushed wheels that are powdercoated with a clear candy finish allow the brushed appearance to come through the color,” Johnson said. “With some of the top automakers now offering black-finished wheels and car dealerships offering aftermarket wheels in black, these new high-impact colors are become the next trend that allows vehicle owners to truly personalize their rides.”
While a stable marketplace and an abundance of color, style and material choices bode well for the wheel segment, it still faces its share of challenges. Among them, said Williams, are compliance with governmental regulations and pricing issues.
“Ever-increasing government legislation will continue to impact vehicle design,” he said. “The pressure on manufacturers worldwide to meet newer and more challenging regulations is going to have an effect on wheels and tires as automakers seek to achieve CAFE goals. At the same time, manufacturers are rolling out minimum advertised pricing (MAP) to protect the integrity of their pricing structures and support their channels of distribution. MAP creates challenges for retailers as they battle e-tailers for sales. Not all retailers are embracing MAP pricing, and that is going to take some time to sort itself out.”
Bovis also cited counterfeiting, knock-offs and manufacturing costs as hurdles for wheel manufacturers.
“The Internet has made it easier for counterfeiters to get their products out into the marketplace,” he said. “Counterfeit and knock-off products erode profit margins for retailers and create consumer discord when the product doesn’t perform as expected. In addition, increased manufacturing costs in the United States might mean that more companies look for overseas solutions. Keeping high-quality, American-made wheels available to consumers will take a concentrated effort by both manufacturers and retailers to make sure the consumer is aware of the advantages.”
Robinson said that one hurdle moving forward is education through marketing. The challenge, he said, is how to educate consumers about why your product is worth its price compared to another brand that may be of lesser quality. But just as with tires, the marketing of wheels is in transition. The industry is aware that magazine advertising—long a staple in all areas of automotive marketing—is in decline as the Internet and social media surge.
“Magazines have been having a hard time for a good while now,” said Austin. “Advertising prices for them are way up, and readership is down. Wheel manufacturers liked magazines because every tire dealer had a stack of them, which gave a nice shelf life to their ads. Now, with magazines facing a big recession and starting to put much of their content online, that value of shelf life for wheel manufacturers is lacking.”
Obviously, the Internet allows consumers to explore commodity options more easily, and the increasing use of mobile devices both for research and for actual purchases has changed the playing field.
“A functional website that is mobile responsive is absolutely vital in today’s marketplace,” Bovis said. “Social media provides increased interaction between consumers, with opinions and advice shared freely among total strangers. But we still see the use of events—where you can get the wheels out for consumers to see in person—as having a place in marketing. No matter how good the wheel looks online, many people still like to see it in person before making a buying decision.”
Even within social media, the focus remains how to define a brand and diversify the marketing message, Robinson said. Any single venue will not get the job done.
“It takes a 360-degree plan to get the strongest return on marketing dollars spent,” he said. “One of the new tools being applied to marketing are visualization programs, such as the one offered by the folks from Icon Media. Having a tool—whether online or in a store—that can provide an instant, mirror-like image of your customer’s vehicle fitted with the tires and wheels he wants is a strong selling tool—especially in a market where the look is 90% of the attraction.”
Whether for looks or functionality, wheels can make a significant difference to a vehicle. Weight is key, but so are price, fitment and style.
“Retailers can seek niche markets or fitments that are new and offer less competition,” said Marc Pugh, marketing manager and wheel designer for Ultra Wheel Company. “Bigger, wider wheels are slowly on the way back, but the newest trend in wheel design is to produce an off-road race-style wheel that looks like a true bead lock but is a street-legal wheel with a simulated bead lock. Off-road racing is becoming immensely popular every year, and the sales and marketing opportunities are huge. The greatest hurdle for retailers today is in educating customers about correct wheel care, particularly about what to do for winter conditions.”
Johnson also advised retailers to diversify their offerings, stocking leveling kits so that their truck and SUV customers can install oversize tire and wheel packages without sacrificing their warranties or causing their new tires to rub inside the wheelwell or the edge of the fender.
On the topic of warranties, Robinson recommended that retailers also ensure that the wheels they purchase for their customers offer a finish warranty for a reasonable term, along with a lifetime structural guarantee.
“All wheels should be clearly marked with the level of certification and the load ratings,” he said. “Understanding a good-better-best scenario for wheels may be tougher than that for tires due to the emphasis on the cosmetic appearance of the product. With the proliferation of factories and offshore manufacturing, you must be aware of the features and benefits surrounding the product you are representing. Make sure you know the competitive set of products and educate the end user about why he should buy his wheel products from your team.”
Product knowledge and the ability to explain the positives and negatives of a given package provide an advantage for brick-and-mortar retailers. As Horlick pointed out, an installer who can definitively advise a consumer about the amount of work and investment a package requires will gain the confidence of that customer and help him make a more informed decision.
Austin also encouraged retailers to promote the added value of proper installation, inspections and the availability of accessories such as tire-pressure monitoring systems, lug nuts and wheel caps.
“Let the customer know what it takes to get these things done and how professionally prepared your shop is at handling them,” he said. “Also ask for their next purchase at the time you say goodbye. Let the customer appreciate that you now know his vehicle better than anyone and that if he liked your professional service the first time, he will like it even more the next time.”
By showing your customer everything that is available for his car or truck, you will become his personal auto stylist, Johnson said.
“Keep in mind that improved performance and personalization are the two reasons why people upgrade their stock vehicles,” he counseled. “By integrating fitment guides and visual tools in both your showroom and website, your ability to completely cater to their needs is what will separate you from your competition.”