Performance treads rev up tire market

DSN Retailing Today, July 25, 2005

The increasing popularity of performance tires among tuners and as replacements for original equipment on some new vehicles--in addition to continued strong sales of light trucks and sport utility vehicles--are gradually transforming the replacement tire market.

This $24.3 billion category grew 7.8% last year, according to Modern Tire Dealer magazine estimates. Passenger tires accounted for nearly 61% of sales and light-truck tires made up 16.5%. Other segments are farm, truck and off road tires. Separate from this breakout, high-performance tires grew to 20% of the consumer tire market. This segment had an 18.3% share in 2003.

"Absolutely, performance is the fastest-growing category. It's not just because people are buying hot rods, but a lot of the upper-end cars like Mercedes and BMW are now taking performance tires," said Steve Messmer, assistant gmm in automotive for Costco.

In response to greater demand for these higher-priced tires, some companies such as Bridgestone/Firestone are expanding production. The No. 3 domestic tire producer is investing $88 billion to address the shift toward high-performance tires and tires with larger rims, adding or converting production capacity in several countries. And those that specialize in performance tires are getting new business, such as Kumho and Hankook brands that Pep Boys added this past year to its formerly private label-dominant assortment.

"There's still steady growth in the truck tire area, but there's a shift away from traditional touring tires to performance tires," said Bill Furtkevic, assistant vp of marketing and advertising at Pep Boys.

Because of their higher prices, performance tires make up 44% of the average tire dealer's revenue. Most tire dealers offer an in-store performance selection, but the range available through special order has grown substantially for retailers such as Costco.

Truck tires and tires that are generally larger than in the past are another growing segment. According to Jim Davis, public relations manager for Goodyear's North American tire group, the SUV and light truck tire segment is "holding very steady and very strong."

Beyond general industry trends favoring higher-priced performance and light truck tires, interesting innovations are also taking place in improved features for all types of tires. Goodyear's SilentArmor technology used in new Wrangler and Fortera tires for light trucks and SUVs features a rubber-compound Kevlar layer that helps the tire resist punctures and provide a smoother ride, while the TripleTred feature in the Assurance tire line includes three separate tread zones for driving in icy, wet and dry conditions.