16 minute read
Truck tire market
from Modern Tire Dealer - June 2018
by EndeavorBusinessMedia-VehicleRepairGroup
Market Analysis Truck tire market analysis
IF YOU THOUGHT DEMAND WAS HIGH LAST YEAR…
By Bob Ulrich
n unexpected surge in domestic truck tire demand
Ain the second half led to a record number of replacement truck tire shipments in 2017. Unable to produce enough tires to meet the demand, Tier 1 and Tier 2 manufacturers lost market share versus 2016.
The U.S. Tire Manufacturers Association (USTMA) estimates domestic replacement and original equipment truck tire shipments totaled a record 25.1 million units, broken down as follows:
Replacement: 19.7 million. OE: 5.4 million.
USTMA members produced 14 million units in the U.S. last year, more than 11 million units less than total U.S. shipments. In addition, USTMA members exported 2.5 million truck tires.
The 12 companies that make up USTMA’s membership are Bridgestone Americas Inc., Continental Tire the Americas LLC, Cooper Tire & Rubber Co., Giti Tire (USA) Ltd., Goodyear Tire & Rubber Co., Hankook Tire America Corp., Kumho Tire U.S.A. Inc., Michelin North America Inc., Pirelli Tire North America Inc., Sumitomo Rubber Industries Ltd., Toyo Tire Holdings of Americas Inc. and Yokohama Tire Corp.
Modern Tire Dealer estimates a record 19.5 million radial and bias medium and heavy truck tires were shipped in the U.S. last year.
TRUCK TIRE IMPORTS China was the largest exporter of truck tires to the U.S. last year, accounting for 6.2 million units. And that number will reach at least 10 million tires this year, based on available government import numbers to date.
Through the first three months, Chinese truck tire imports, predominantly radial, are up close to 60%. Imports from Vietnam (more than 1,800%!), France (close to 100%) and Italy (90%) also are up dramatically.
Truck tire imports from Thailand, where a number of Chinese tire manufacturers have built plants the last few years to avoid heavy tariffs, are up 5.6%, while Japanese imports are up 3.5%.
WHAT TO EXPECT At least through the first quarter of 2018, USTMA member truck tire shipments are down, while non-USTMA member shipments are up significantly. That is despite Cooper Tire & Rubber Co.’s 1Q performance; the company says its truck tire sales are up 25%.
On April 6, 2018, USTMA’s forecast for this year was positive: U.S. replacement shipments will increase 1.7%, to 20 million units, while OE shipments will increase 3.7%, to 5.6 million
2017 U.S. replacement medium/ heavy truck tire brand shares (based on 19.5 million units)
Bridgestone Michelin Goodyear Yokohama Firestone Continental Double Coin Hankook Roadmaster Hercules Sailun Aeolus BFGoodrich Dayton
SOURCE: MODERN TIRE DEALER 14.0% 14.0% 10.0% 8.0% 6.5% 5.0% 5.0% 4.0% 3.5% 2.5% 2.5% 2.0% 2.0% 2.0% General Toyo Westlake Dynacargo Falken Sumitomo Ameristeel Duraturn Gladiator Kelly Kumho RoadOne Samson Others 2.0% 2.0% 2.0% 1.5% 1.5% 1.5% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 4.0%
units. Already through April, overall shipments are up, with OE shipments leading the way.
Cooper introduced its namesake TBR tire brand in March. The brand will target fleets and original equipment manufacturers, while Roadmaster will primarily target owner-operators and trailer manufacturers. Cooper is relying on its “commercial servicing dealerships” for distribution in the U.S.
The average price of a medium/heavy truck tire in 2017 was $348.71. Because raw material prices are expected to rise steadily throughout the rest of this year, price increases from the manufacturer to the dealer are possible.
Competition from low-cost radials produced in China is expected to remain a thorn in the side of both new tire manufacturers and retreaders in the U.S. One Chinese company in Qingdao recently offered 295/75R22.5 16-ply Aeneas HS205 steer tires to U.S. dealers for $123 apiece. Even with FOB costs, that’s pretty low.
In 13 years, Nexen Tire has gone from making tires mainly for mainstream passenger vehicles to tires for every purpose, including the U.S.-designed-anddeveloped Roadian MTX Mud Terrain Xtreme.
Nexen Tire is building its U.S. brand on quality and consistency
The North American tire marketplace is highly competitive, so when a company has established its brand as an industry leader in just 13 short years, it’s worth a closer look to see why.
Nexen Tire America Inc. has worked hard to provide the highest quality tires to independent tire dealers while at the same time providing original equipment fitments to 30 different car models in the U.S. A research and development facility in the U.S. has helped Nexen design tires specifically for this market.
By concentrating on the needs of the U.S. market, Nexen Tire has been able to strategically grow its portfolio of consumer tire offerings tailored to the demands of U.S. drivers.
The company has an impeccable quality record in more than 70 years of manufacturing, including 18 years since rebranding as Nexen Tire in 2000. That level of quality has allowed dealers to recommend the Nexen brand to consumers with great confidence. Consumers, in turn, are recommending Nexen branded tires to their families and friends. The passion Nexen has for quality has helped propel it to a Tier 2 brand in the marketplace today.
With its manufacturing and research and development teams delivering well-designed and reliable products, Nexen Tire is focusing on boosting brand recognition in the U.S. market.
Breaking into the OE market
The company was not new to the tire business when it began to expand globally. Between 1942 and 2000, Nexen Tire was known as Heung-A Tire Company and later as Woosung Tire.
In 2000, the words “next” and “century” were combined to form a new name and a global brand: Nexen. In 2005, the Korean company set up its U.S. arm, Nexen Tire America Inc.
Vehicle makers recognized Nexen Tire’s quality, and the
company’s OE presence in the U.S. has grown rapidly. Nexen went from zero OE business in the U.S in 2012 to selling 2.8 million OE tires in 2017. Projections call for 3.2 million Nexen tires to be fitted on new vehicles in the U.S. in 2018 and 3.5 million in 2019.
Nexen Tire is one of a select group of tire manufacturers fitting tires on new vehicles in the U.S. The Nexen Tire brand is original equipment on 30 models by four automakers. Outside of the U.S., 123 models by 12 automakers roll on Nexen tires.
Nexen Tire has been a strategic partner with Fiat Chrysler’s Ram brand since 2012. The company has OE fitments on nearly all Ram vehicles. One of the newest is the 2019 Ram 1500, which will be fitted with Roadian HTX RH5 tires in size 275/55R20.
“We were awarded the number one market share for OE on that particular size because we outperformed our main competitors that have shares of that particular fitment,” says Jessy Kim, chief branch officer at Nexen Tire’s office in Detroit, Mich. “For Nexen to get on that particular fitment is a testament to how well-perceived our product is from FCA’s perspective.”
Partners to the OEs
Proving engineering and technical capabilities is one aspect of gaining original equipment business. Responsiveness is another. The company typically performs additional tests, develops a particular attribute, generates more test data and may even complete a demonstration project to show its response speed as well as technical know-how.
The goal is to show that Nexen Tire can be a significant partner to an OEM. “We pride ourselves in how quickly we can turn around our customers’ requests for data, testing or tire builds. We highlight the customer service aspect of our business when we approach an automaker,” says Kim.
OE business and replacement tire sales go hand-in-hand. “Nexen Tire makes tires that are approved by OEMs. We’re not just one of the hundreds of different tire suppliers making tires for the replacement market,” says Kim. “We can meet the most
OE fitments in North America Four automakers source the Nexen Tire brand for their vehicles sold in North America. All models are current production, unless otherwise indicated.
• Chrysler Pacifica • Fiat 500 L • Fiat 500 X • Ram 1500 (2019) • Ram 3500 • Ram ProMaster and ProMaster City • Kia Optima • Kia Forte • Kia Rio • Hyundai Elantra • Hyundai Santa Fe • Hyundai Tucson • Porsche Macan
This artist’s rendering shows Nexen’s $7 million North American Technical Center near Akron, Ohio, which is scheduled to open in November 2018.
stringent criteria for tire performance on OE tires and apply that to the replacement market.”
Consistent quality
If there’s one thing Kim wishes tire dealers knew about Nexen Tire, it’s the brand’s high rankings in initial quality surveys of new vehicles. He notes that Nexen has performed very well in customer satisfaction surveys in the last several years in both the U.S. and China.
Kim attributes the company’s world-class quality to its manufacturing processes. “The plants are all state of the art and highly automated so we’re able to produce very repeatable, very robust high-quality tires on a very consistent basis.”
Focused on the U.S. market
Nexen Tire is one of 12 companies supplying OE tires to U.S. automakers. The company’s tire technology center near Akron, Ohio, develops and designs all of Nexen’s OE tires for U.S. vehicle manufacturers for the North American market. The tech center also is responsible for designing light truck and sport utility vehicle replacement tires for North America.
Nexen Tire has outgrown the tech center, which opened in 2008. Construction of a 44,000-square-foot facility is scheduled to be complete by November 2018. The $7 million project includes offices, lab, testing machines and a warehouse, according to Don Lee, director of technology.
The new facility will allow Nexen to expand the scope of the tech center. “Eventually we will be responsible for all OE and replacement product lines in the next few years in North, South and Latin America,” says Lee.
The tech center developed OE tires for the Chrysler Pacifica as well as Nexen Tire’s first mud-terrain and off-road replacement tire. The new Roadian MTX Mud Terrain Xtreme marks Nexen’s entry into the hardcore off-road market.
Nexen Tire says that many are already calling the MTX a masterpiece of both design and function with dual “Beast” and “Machine” sidewalls, superior handling on mud terrain, exceptional traction for rock crawling, consistent performance on loose gravel and exceptionally quiet performance on the highway.
The look of the sidewalls was inspired by the Transformers and
The Roadian MTX Mud Terrain Xtreme tire’s distinctive dual sidewalls, called Beast (left) and Machine, give customers the freedom to choose the look that best represents their lifestyle and vehicle.
Jurassic Park movie franchises, according to Aaron Neumann, product development manager.
“We did the full development and design here for that product, we benchmarked industry-leading products, and we tested the product product on and off road here in the United States,” says Neumann.
The mold profile, which largely determines the shape of the footprint the vehicle leaves on the road, also was designed by the tech center’s engineers. The tire is the company’s first with three-ply construction, which provides better stability and durability when hauling heavy loads and on harsh off-road terrain.
Neumann believes a tech center located in North America sets Nexen Tire apart from other tire companies.
Honors for design and performance
The Roadian MTX is the latest of new products ranging from UHP to light truck tires. Up to five years ago, the company was focused on passenger and UHP tires. In the last five years, Nexen Tire has added a full line of light truck, SUV and CUV tires, an extreme off-road tire, and even a commercial truck tire.
The new products have earned honors for their design and recognition for their performance and quality.
Nexen is the first tiremaker in the world to be recognized for the “grand slam” of global awards for industrial design excellence: iF Design Award (2011 N800, 2011 WG Sport, 2014 N’Fera SU1, 2018 Winguard Sport 2); the International Design Excellence Awards (2014 Green Hive Concept, 2017 N’Fera AU7, 2017 Breathre Concept); the Red Dot Design Award (2012 N9000, 2015 N’Fera SUR4, 2015 Roadian AT Pro RA8, 2016 GreenHive Concept, 2017 N’Fera RU1, 2018 N’Fera AU7); and the Good Design Award (2015 N’Fera AU5, 2015 N’Fera RU5, 2015 Roadian AT Pro RA8, 2016 N’Fera SUR4, 2016 N’Fera RU1, 2017 N’Fera AU7).
Last year, in third-party reviews by a leading consumer magazine, five Nexen Tire products earned top 10 spots in the rankings of their respective product categories. Two products, the Roadian HTX RH5 and Winguard Ice, were each ranked among the top 10 tires tested in the all-season truck and winter/snow categories, respectively. The N’Fera SU1 UHP tire landed in the sixth spot in a ranking of summer tires. The Aria AH7 standard touring tire took the number five spot in a ranking of all-season tires. In comparisons of all-terrain truck tires, the Roadian AT Pro RA8 earned a number three ranking.
“When we launch new products, we make sure we find the gaps in the marketplace our competitors are missing. We develop unique selling points that are going to make us stand out among the competition,” says Jay Lee, director of product planning. For example, the N’Fera AU7, released in 2017, is an ultra-high performance tire designed to provide exceptional handling year round, especially in wet conditions.
Proven performance on the track
Nexen Tire launched a motorsports identity and its first-ever motorsports tire, the N’Fera SUR4G, at the beginning of 2016. Motorsports allows Nexen to do two things in the marketplace. One is showcase high performing products. The other is communicate its brand excellence and dedication to performance and quality to automotive enthusiasts as well as tire enthusiasts.
“Motorsports is like having a proving ground of our product in front of an audience,” says Paul Jho, senior motorsports manager. “We are putting our tires in a very extreme condition, from both a marketing aspect and also from a research and development aspect. We collect a lot of data to help develop our future products.”
Nexen Tire renewed its partnership with World Champion Formula Drift driver Fredric Aasbo in March 2018 and will sponsor him for two more years. Aasbo captured both the Formula Drift Series and World championships in 2015, smashing the series record for most wins scored by a driver in a single season along the way.
Aasbo will compete this season in a vehicle redesigned by Papadakis Racing. The 2019 Toyota Corolla hatchback features the Nexen SUR4G street-legal tires, which are engineered for superior performance in Formula Drift, SCCA and Time Attack time trials.
Three-time Formula Drift champion Chris Forsberg and professional drifter Ryan Tuerck also joined the Nexen motorsports family in 2018. Forsberg’s Nissan 370Z and Tuerck’s Toyota GT86 will use Nexen Extreme UHP N’Fera SUR4G tires throughout the 2018 Formula Drift season.
Jho says the drivers are a key element of Nexen Tire’s product development. “When it comes to tire development, we don’t develop on our own. We use top drivers. They will test with their vehicles, we collect data, and the drivers give their feedback.”
Motorsports also creates content for Nexen Tire to use in
marketing, public relations and social media. “To market your product, you’ve got to have a story, and motorsports gives you that story with exciting visuals and experiences,” says Jho.
NexenACE for dealers
Nexen Tire is boosting its online presence to spread the word about its tires to both dealers and consumers. For dealers, there’s a new tool for sharpening their customer service and marketing skills called NexenACE. The web-based education portal, which launched in April 2018 at www.NexenACE.com, is designed to help Nexen dealers maximize their earning potential.
NexenACE gives tire professionals access to valuable and engaging tire information as well as all the latest action taking place that makes Nexen one of the fastest-growing tire manufacturers worldwide.
“Nexen Tire is still a relatively new brand in the U.S., and many tire professionals don’t know the entire story behind our success,” says Kyle Roberts, senior director of marketing. “Our training program will be an invaluable tool for those just starting out with our brand, as well as established Nexen dealers who are looking to take their efforts to the next level.”
Roberts says the portal is open to all of the company’s partners including shop owners, wholesaler reps, tire techs and “any other tire professionals interested in learning about the world-class products and activities associated with Nexen Tire.”
A quick registration process gives NexenACE users access to training videos and information on tire patterns and the latest news. Users can earn points to redeem for branded items and to enter sweepstakes for cash cards, electronics and a dream vacation. Regular users will earn more points for viewing the training modules, which are updated monthly.
“Those who partner with and sell Nexen Tire-branded products know the quality and consistency we deliver every day,” says Roberts. “However, many in the tire industry are unaware of the great strides we have made in design and in
Optimized for extreme performance both on track and road, the SUR4G (left) is available to the public at select retail locations nationwide. The N’Fera AU7 UHP tire (right) provides excellent wet traction, stability and a quiet and comfortable ride in all road conditions year round.
building our brand. The NexenACE education portal is a great way for us to communicate our growth to all tire professionals.”
A mobile shopping experience
For consumers, Nexen Tire has redesigned its website to keep pace with their changing digital shopping habits. Launched on June 1, www.NexenTireUSA.com provides access to information via computers, tablets and mobile devices.
Consumers expect a mobile shopping experience before they step into an actual store. Roberts says the website offers a more fluid approach to finding tires and dealers that carry the Nexen Tire brand. Third-party product reviews are featured to give consumers all the information needed to make a purchasing decision. A new resource section allows consumers and media to view and to download all brochures, images, logos and videos. Online shoppers will especially appreciate the interactive 360-degree photography for all Nexen products.
“Consumers are using the web to become more informed buyers for all products. Now, more than ever, consumers rely on reviews, comparative research and online product specs before making their purchasing decisions,” says Roberts.
For many tire shoppers, the first stop before the tire store is www.NexenTireUSA.com.
The new online tool for dealers is called NexenACE.
