EVs to All-Weather tires: What’s impacting the U.S. tires marketplace?
This article was originally published by the Tire Industry Association, in the 2023 Fall/Winter edition of Today's Tire Industry magazine.
U.S. drivers continue to hit the road in 2023, reaping the benefits of emerging and potentially transformative new vehicle technologies. It’s critical for manufacturers and retailers to understand these trends to keep pace with a rapidly evolving market and understand what’s influencing tire purchasing decisions.
In the independent tire channel, over 2 million tires are sold per week, but what do these transactions really tell us about today’s tire sector? Tracking consumer demand through POS transactional data, tire makers and sellers can identify industry trends that may very well influence go-to-market strategies on production, assortment, pricing, and promotional efforts.
In this article, we’ll explore two key trends impacting how independent tire retailers manage assortment and sell through inventory: Electric Vehicle (EV) adoption and All-Weather tires.
Electric Vehicle (EV) adoption
Today there are just over 2.5 million EV’s on U.S. roads, with that number climbing fast. Projected sales rates anticipate that by 2028, 2.5 million new EVs – if not more – will enter American roads. That’s more than double today’s count in under 5 years. But how are EVs reshaping the tire marketplace?
The answer lies in the high-tech, and usually proprietary, construction of the vehicle. A standard tire replacement simply needs to meet sizing requirements, but with EVs, there are other factors to consider. These include load bearing for a heavy battery, noise control, the ability to sustain an EV’s intense torque, and the ability to maintain a rolling resistance for an acceptable range. With all this in mind, it’s clear why retailers need to think beyond size and consider a collection of specs.
Heading straight to the dealership is more costly, but as many EV owners look to replace tires for the 3rd or 4th time, U.S. consumers are turning to independent retailers to purchase new EV tires. According to GfK’s panel of independent tire retailers, EV tire sales in 2023 (January to July) have grown by 128% compared to the same period in 2021. As demand grows for premium tires from independent retailers, the average selling price has grown faster than the industry standard too. EV tires now sell for an average of $280 — up 51% compared to 2021. For comparison, the industry average for non-EV tires is only $185.
The EV market is picking up pace fast, but what does this mean for tire retailers? Based on GfK research, the EV segment still only comprises less than 0.5% of the total tire market, so there is no urgency to convert or supplement your inventory to meet EV needs just yet. However, it’s a hugely profitable and rapidly evolving segment. According to Neil Portnoy, EVP of Research at GfK, “having data to help pinpoint demand in this small yet emerging category is essential for retailers and manufacturers to stay ahead of trends.”
The All-Weather vs. Winter Tire
While many consumers in deep winter regions will continue to rely on winter tires, there’s an emerging category disrupting winter tire sales: the All-Weather tire.
The All-Weather tire is a passenger tire that meets or exceeds the standards for a 3PMS winter certification, which evaluates a tire’s ability to maintain solid traction in snowy conditions but remains suitable for summer. Replacing the need to switch out tires season after season, the All-Weather appeal is clear — and it shows in the numbers. Comparing Q4 2019 to Q4 2022, All-Weather tire sales have grown 63.4%, and the average retail price has grown 28.6% to $206. Manufacturers are also keeping up with this trend, with more than ten new product lines hitting the market since 2019, all in premium or upper-mid retail price positions.
While this segment is growing in popularity, winter tires will always outperform All-Weather tires in extreme winter conditions. Consumers in deep winter regions like upper New England, Minnesota, and Canada will – and should – continue to use specifically designed winter tires during snow season. In the U.S., many milder winter regions like the Midwest are more reliant on All-Weather tires given the lower extremes this region experiences. The clear advantage for All-Weather tires is that, at their core, they are Premium Touring tires, which offer attractive, comfortable, and reliable quality for consumers in regions without snow. GfK’s panel of independent tire retailers shows that in non-winter regions, like the Pacific and West South Central, the All-Weather category holds a respectable 6% share of the market, with a higher-than-average retail price too. The Pacific region’s average retail price is $223, and $229 for West South Central. This broader appeal makes the category sellable year-round, across every region.
Miguel Quiros is VP of Market Intelligence for GfK's point-of-sale tracking team focusing on the U.S. tire industry. GfK maintains the only nationwide tracking sell-out data in the independent tire dealer channel.