AKRON—The manufacturers of specialty tires—for trailers, golf carts, all-terrain vehicles (ATVs), forklifts, lawn and garden equipment etc.—seem to agree on two things: A dealer can reap big profits from specialty tire sales; and sales of ATV and trailer tires are surging. John Kiehl, vice president of sales and marketing for Carlisle Tire and Wheel Co. in Aiken, S.C., said Carlisle has experienced double-digit percentage growth in ATV tire sales for the last few years. ``There's obviously a large aftermarket because people wear the tires out,'' he said.
``You have more and more people using the products, and the sports themselves are becoming more popular,'' said Mike Orzechowski, marketing coordinator for Cheng Shin Rubber USA Inc., which sells Maxxis-brand ATV tires.
ATV tires account for roughly 30 percent of California-based Greenball Corp.'s revenues. Sales of these tires have been growing 15 to 18 percent annually, said Marketing Director Glynne Miller. ``It's been growing at that rate for the last two to three years,'' he added.
``With disposable income, people have purchased all-terrain vehicles for a variety of applications, from recreation to racing to plain utility use out in the field, like farmers.''
Victor Li, national account executive for Nankang Rubber Corp., called the ATV business ``outstanding.'' He said Nankang designed the Fieldmax, which he described as a ``cross tire,'' especially for dual applications such as agricultural equipment and ATVs.
Titan Tire International is finding that upsizing, popular with younger drivers of performance autos and light trucks, is making inroads on the ATV market. ``They want tires to be as tall as they can, so they can go through the mud and the holes and the bogs,'' said Ray Evans, Titan vice president of tire engineering.
While 24- and 25-inch sizes used to be the norm, some ATV owners now are asking for 26- and 27-inch tires, Mr. Evans said. ``They want more aggressive tread patterns, ones that clean better in mud.''
``One area that has taken off with significant increases every year has been the radial ST tire that we produce for the towing industry,'' said Greenball's Mr. Miller. (``ST'' designates a special tire for use on trailers in highway service.)
He said Greenball has about one-third of the original equipment market for trailer tires, and radials are becoming especially popular with owners of high-end trailers—for boats and horses.
``The primary reason has been a feeling that the radial tire gives you a longer-wearing product; it's a match with the tires on the vehicle that's pulling the tow-behind,'' he added. Mr. Miller also believes more and more mid-range trailers—pop-up campers for example—will be shod with radials.
Titan's Mr. Evans agreed, noting the conversion to radial tires will be ``a big seller for us.'' He said Titan's Des Moines, Iowa, plant has begun producing a new line of trailer tires, the ST Radial II. This new line has eight sizes, in 13- through 16-inch diameters, for boat trailers, horse trailers and the like, and will be available in about a month.
But not everyone agrees about the trend toward radials. `The bias tire is still the best application for the trailer,'' said Carlisle's Mr. Kiehl. ``It trails better, and it's less costly.''
He maintained that radial tires tend to fish-tail and feel ``whippy'' on trailers.
But Nankang's Mr. Li said the momentum towards radial tires for trailers is strong. ``The economy has been so good, and there are a lot of people buying travel trailers and higher-end boat trailers and typically taking longer trips. Radials wear better in these applications.''
Jimmy Yang, president of Kenda U.S.A., said the firm is studying the radial trailer tire market and is "looking to get into that in about a year.''
Good for dealers
Selling ATV tires is a profitable business for dealers. ``In most cases, they'll make more profit, believe it or not, selling one ATV tire than four passenger tires. The reason is: Everyone has passenger tires,'' Mr. Kiehl said. He was referring to independent dealers trying to compete with national chains that offer a set of tires for $100, while a single ATV tire and wheel sells for about $125.
All of the manufacturers' representatives contacted by Tire Business agreed specialty tires have higher profit margins for dealers than passenger or light truck tires.
``The margins on specialty products are typically 15- to 40-percent higher vs. passenger-type products, and more in certain markets,'' Mr. Li said.
These margins are higher because the purchase of a replacement tire for a boat trailer, ATV or lawn and garden tractor usually isn't a discretionary purchase. ``The question in these types of tires is, `Do you have it?' and then secondarily, `What is the price?','' Mr. Kiehl said.
``When a person ends up with a flat (trailer) tire, the critical need is finding somebody that even has it in stock to take care of him so he can continue his vacation,'' said Mr. Miller.
Specialty tires also can build a dealer's business in the long run.
``You become more known in that market as being able to provide a variety of products. If you are known in that area for having those products, you generate a lot of repeat business and a lot of referral business,'' Mr. Li said.
In addition, manufacturers have developed programs to help independent dealers—who face inventory pressures in stocking passenger and LT tires—keep a manageable number of SKUs in specialty tires. ``We have a network of distributors that, for the dealer, can deliver the same day or overnight,'' Mr. Kiehl said.
``We've purchased (about 10) distribution locations instead of manufacturing locations,'' he added. Many tires, especially for trailers, are mounted on wheels in the warehouse ``because they want the product within hours,'' he said.
Mr. Miller suggested advertising the availability of these products in the yellow pages and putting a display in the showroom.
Mr. Evans said Titan has opened a new plant in Brownsville, Texas, and is expanding plants in Des Moines and Clinton, Iowa, to meet the demand for specialty tires and assure enough product will be available for independent dealers.
Several manufacturers observed that some ATV buyers are switching to replacement tires rather quickly.
``What you have is people buying a Honda and then, before they even take it out, they'll take the OE tires and wheels off and put on some specialty tires,'' Mr. Kiehl said.
``We would like to become the first choice in replacement tires,'' Mr. Li said, noting that Nankang also produces SenDel wheels, and dealers can order wheels, specialty tires and passenger tires all on same program.
Titan's Mr. Evans said the ATV replacement market is almost like the aftermarket for passenger and light truck tires. ``They (customers) want heavier sidewalls, 6-ply sidewalls—not for load capacity, but for resistance to punctures,'' he said.
These manufacturers increasingly are viewing the electronic highway as a way to promote products and improve service to dealers.
``In the next several months, we're going to live e-commerce with our Web site,'' Mr. Orzechowski said. ``If somebody's looking for a particular motorcycle or ATV tire, they'll go to our Web site and purchase it online.''
However, Cheng Shin's Web site prices will be a little higher, he said, so dealers and distributors don't lose too much in sales.
Mr. Li said Nankang has just gone online with an ordering system for dealers that is available 24 hours a day to speed up the ordering process. But the product still will be shipped on a Monday through Friday schedule.
Greenball's Mr. Miller said his company's Web site offers a list of SKUs, but no online buying capability is planned.
Carlisle's Mr. Kiehl and Titan's Mr. Evans both remain skeptical of doing business on the Internet. ``Quite honestly, that's still a very small portion of the business,'' said Mr. Evans. ``I don't think the dealers are ready for it, and it's going to take time to grow.''
Mr. Kiehl said Carlisle's Web site is informational only, and selling directly to consumers ``sort of flies in the face of our dealers and distributors.''