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Tires - US - November 2014

SCOPE AND THEMES
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
Overview
The market
Record post-recession growth in the tires market set to stabilize in the future
Figure 1: Total US retail sales and fan chart forecast of tires, at current prices, 2009-19
Market drivers
Market segmentation and retail channels
A market made mostly of passenger tires
Independent tire dealers continue to dominate, but value poised to rise
The consumer
Asian, Hispanic, and Black respondents considerably more likely than White respondents to have made a tire purchase within the last year
Figure 2: Time of last tire purchase, by race/Hispanic origin, September 2014
Consideration and purchase concentrated among the top five brands
Figure 3: Brands of tires considered, September 2014 and brands of tires bought in last 12 months, April 2013-June 2014
Independent tire discounters command the largest proportion of retail sales
Figure 4: Tires purchased at automotive retail stores, April 2013-June 2014
Tire durability and comfort more important than most performance features
Figure 5: Important tire features, September 2014
Millennials less concerned with tire maintenance, not convinced tires will perform as promised
Figure 6: Attitudes toward tires and shopping behaviors, by Age, September 2014
What we think
ISSUES AND INSIGHTS
Are tire manufacturers innovating in ways that matter?
The issues
The implications
Can younger consumers be taught to pay more attention to their tires?
The issues
The implications
What would it take to generate brand loyalty in the tires market?
The issues
The implications
TREND APPLICATIONS
Trend: Prove It
Trend: Return to the Experts
Trend: Prepare for the Worst
MARKET SIZE AND FORECAST
Key points
Post-recession pop in tire sales may flatten in the future
Figure 7: Total US retail sales of tires, at current prices, 2009-19
Figure 8: Total US retail sales of tires, at inflation-adjusted prices, 2009-19
Fan chart forecast
Figure 9: Total US sales and fan chart forecast of the tires market, at current prices, 2009-19
MARKET DRIVERS
Key points
Millennials and their parents are the key to the future of the tires market
Figure 10: Population by age, 2009-19
Hispanic, Black, and Asian consumers all more likely to purchase tires
Figure 11: Population by race and Hispanic origin, 2009-19
Macroeconomic trends favorable for more frequent, premium tire replacement
Figure 12: Consumer Sentiment Index and unemployment, 2000-14
Figure 13: DPI rate of change versus previous month and year ago February 2007-July 2014
Substantial income inequality means a majority of Americans spend less on and buy fewer tires
Figure 14: Household income distribution, US, 2013
The number of Americans with driver’s licenses continues to increase…
Figure 15: Number of licensed drivers in the US, 2001-2011
…but the number of miles driven remains nearly constant
Figure 16: Total annual miles driven, 2003-2013
Average age of US vehicles continues to increase
Figure 17: Average age of passenger cars and light trucks, 2004-13
The US is a net importer of tires, mostly from China, Japan, Korea, and Thailand
Figure 18: Balance of trade in tires, top five trading partners, 2009-114
MARKET SEGMENTATION
Key points
Passenger tires show a slight increase in share
Figure 19: Total US Retail sales of tires, by segment, at current prices, 2012 and 2014
Post-recession boom in passenger tires segment, poised for moderate future growth
Figure 20: Total US Retail sales of passenger tires, at current prices, 2009-2019
Figure 21: Total US Retail sales of passenger tires, at inflation-adjusted prices, 2009-2019
Light trucks also enjoyed post-recession boom, but will not sustain growth
Figure 22: Total US Retail sales of light truck tires, at current prices, 2009-2019
Figure 23: Total US Retail sales of light truck tires, at inflation adjusted prices, 2009-2019
RETAIL CHANNELS
Key points
Independents dominate, but auto dealerships are one of the fastest-growing channels
Figure 24: Total US retail sales of passenger and light truck tires, by channel, at current prices, 2012-14
Value players lose share to dealerships and tire-owned stores, but are poised for a comeback
Figure 25: Total US retail sales of passenger and light truck tires, by channel, at current prices, 2009-14
Figure 26: Market share of sales of passenger and light truck tires, by channel, 2009-14
LEADING COMPANIES
Many players in the market, but the top three control nearly half of all sales
Figure 27: Market share of sales of passenger and light truck tires, by channel, selected tire brands, 2009-14
Goodyear
Michelin
Bridgestone Corporation
Cooper Tires
Yokohama
Continental Tires
Pirelli
INNOVATIONS AND INNOVATORS
Innovation is still possible, but manufacturers must go to extremes
Goodyear Tow365 service and app
Michelin delivers what consumers want – longer-lasting tires
“My Firestone” gets consumers to consider tires on their mobile devices
Pirelli fashion – PZero Moda Project
MARKETING STRATEGIES
Overview of the brand landscape
Theme: Mostly performance promoted on TV
Michelin promotes premium tire performance on TV
Figure 28: Michelin, Michelin premier all-season tire tv spot, March 2014
Firestone breaks the performance mold; appeals to history
Figure 29: Firestone, Pick-up commercial tv spot, April 2014
Theme: Racing endorsement as a proxy for performance
Goodyear drives NASCAR
Michelin Motorsports and Porsche Club Racing
BF Goodrich goes off-road in Baja
Theme: Functional or fun efforts for tire companies in social media
Goodyear as an ambassador of good cheer
Social identify solidifies Michelin’s long, proud history of driving safety
#RollWithCooper Twitter promotional campaign
#PirelliMySUV Instagram photo contest
Theme: Dealerships and tire discounters see tire services as a way to drive repeat business
Roll with Toyota tire event
Figure 30: Roll with Toyota mailer, October 2014
Fall into Honda genuine service
Figure 31: Fall into Honda genuine service mailer, October 2014
Tire Kingdom offers buy three get one free
Figure 32: Tire Kingdom buy 3 get one free e-mail, October 2014
TIME OF LAST TIRE PURCHASE
Key points
Most consumers have purchased tires fairly recently
Figure 33: Time of last tire purchase, September 2014
Men more likely to have replaced tires within the last year
Figure 34: Time of last tire purchase, by gender, September 2014
Younger respondents (18-34) more likely to have replaced tires within the last year
Figure 35: Time of last tire purchase, by age, September 2014
Highest-income consumers more likely to have replaced tires within the last year
Figure 36: Time of last tire purchase, by household income, September 2014
Larger households likely means more vehicles, more frequent tire placement
Figure 37: Time of last tire purchase, by household size, September 2014
City drivers more likely to have replaced tires in the past year
Figure 38: Time of last tire purchase, by area, September 2014
Millennials more likely to have replaced tires within the last year
Figure 39: Time of last tire purchase, by Millennial parents, September 2014
Type of vehicle has little effect on the cadence of tire replacement
Figure 40: Time of last tire purchase, by type of vehicles owned, September 2014
INTENT TO PURCHASE TIRES
Key points
Almost half of all respondents plan to purchase tires within the next year
Figure 41: Intent to purchase tires in next two years, September 2014
Younger adults plan to replace their tires sooner
Figure 42: Intent to purchase tires in next two years, by age, September 2014
Larger households more inclined to purchase tires sooner
Figure 43: Intent to purchase tires in next two years, by household size, September 2014
Urban consumers plan for more frequent tire replacement
Figure 44: Intent to purchase tires in next two years, by area, September 2014
Drivers of larger vehicles and performance vehicles believe they will replace tires sooner
Figure 45: Intent to purchase tires in next two years, by type of vehicles owned, September 2014
ACTUAL TIRE PURCHASES
Key points
Most consumers replace all of their tires at once
Figure 46: Number of tires bought in last 12 months, by age, April 2013-June 2014
SUV drivers are frequent tire replacers
Figure 47: Pickup trucks, sport utility vehicles, or vans, by age, April 2013-June 2014
Higher-income respondents buy tires more frequently
Figure 48: Number of tires bought in last 12 months, by household income, April 2013-June 2014
Figure 49: Pickup trucks, sport utility vehicles, or vans, by household income, April 2013-June 2014
Most consumers purchase “regular” tires for their cars
Figure 50: Type of tires bought in last 12 months, by age, April 2013-June 2014
Consumers spend just under $400 a year on tires
Figure 51: Total amount spent on tires in last 12 months, by age, April 2013-June 2014
Higher-income consumers spend more per year on tires
Figure 52: Total amount spent on tires in last 12 months, by household income, April 2013-June 2014
Discount Tire gets the most tire business
Figure 53: Tires purchased at automotive retail stores, by age, April 2013-June 2014
Higher-income respondents prefer to purchase tires form car dealerships
Figure 54: Tires purchased at automotive retail stores, by household income, April 2013-June 2014
WHO WILL PURCHASE TIRES?
Key points
Most tire purchases are independent decisions
Figure 55: Who will purchase tires, September 2014
Men more likely to make tire purchase decisions on their own
Figure 56: Who will purchase tires, by gender, September 2014
Youngest respondents less likely to make tire purchase decisions on their own
Figure 57: Who will purchase tires, by age, September 2014
Millennials slightly more likely to make tire purchase decisions on their own
Figure 58: Who will purchase tires, by Millennial parents, September 2014
BRANDS OF TIRES CONSIDERED AND PURCHASED
Key points
Brands of tires considered
Brand consideration concentrated among the top five
Figure 59: Brands of tires considered, September 2014
More women than men favor Michelin tires
Figure 60: Brands of tires considered, by gender, September 2014
Goodyear more popular among older consumers
Figure 61: Brands of tires considered, by age, September 2014
Middle-income consumers show more interest in BF Goodrich and Bridgestone group brands
Figure 62: Brands of tires considered, by household income, September 2014
Urban respondents more willing to consider Japanese tire brands
Figure 63: Brands of tires considered, by area, September 2014
SUV drivers want Goodyear, crossover drivers seek Michelin
Figure 64: Brands of tires considered, by type of vehicles owned, September 2014
Brands of tires purchased
Goodyear remains relevant, Michelin lags
Figure 65: Brands of tires bought in last 12 months, by age, April 2013-June 2014
Higher-income consumers prefer Michelin to Goodyear
Figure 66: Brands of tires bought in last 12 months, by household income, April 2013-June 2014
IMPORTANT TIRE FEATURES
Key points
Tire performance is secondary to durability and comfort
Figure 67: Important tire features, September 2014
Women show a greater interest in safety and value-oriented features
Figure 68: Important tire features, by gender, September 2014
Older respondents have higher expectations for tire performance
Figure 69: Important tire features, by age, September 2014
Lower-income tire indenters do not believe in tire durability claims
Figure 70: Important tire features, by household income, September 2014
Millennials have lower expectations for their tires
Figure 71: Important tire features, by Millennial parents, September 2014
Those considering a top-five tire brand demand more from their tires
Figure 72: Important tire features, by brands of tires considered, part 1,September 2014
Figure 73: Important tire features, by brands of tires considered, part 2, September 2014
Figure 74: Important tire features, by brands of tires considered,  part 3, September 2014
ATTITUDES TOWARD TIRES AND SHOPPING BEHAVIORS
Key points
Make it last, but don’t make me work
Figure 75: Attitudes toward tires and shopping behaviors, September 2014
Men more brand loyal, but still not compliant
Figure 76: Attitudes toward tires and shopping behaviors, by gender, September 2014
Younger consumers uninterested in tire maintenance
Figure 77: Attitudes toward tires and shopping behaviors, by age, September 2014
Lower-income consumers less likely to maintain their tires
Figure 78: Attitudes toward tires and shopping behaviors, by household income, September 2014
To avoid getting stuck, rural respondents are more fastidious with tire maintenance and care
Figure 79: Attitudes toward tires and shopping behaviors, by area, September 2014
Millennials are not careful with their tires
Figure 80: Attitudes toward tires and shopping behaviors, by Millennial parents, September 2014
RACE AND HISPANIC ORIGIN
Key points
Black, Asian, and Hispanic consumers more likely to have purchased, plan to purchase tires within a year
Figure 81: Time of last tire purchase, by race/Hispanic origin, September 2014
Black, Asian, and Hispanic consumers more likely to purchase tires within the next six months
Figure 82: Intent to purchase tires in next two years, by race/Hispanic origin, September 2014
On average, Hispanic respondents purchase the highest number of tires
Figure 83: Number of tires bought in last 12 months, by race/Hispanic origin, April 2013-June 2014
Asian consumers want only regular tires
Figure 84: Type of tires bought in last 12 months, by race/Hispanic origin, April 2013-June 2014
Black, Asian, and Hispanic respondents spend less on tires than Whites
Figure 85: Total amount spent on tires in last 12 months, by race/Hispanic origin, April 2013-June 2014
Asian tire replacers are loyal to dealerships, Blacks go to Walmart
Figure 86: Tires purchased at automotive retail stores, by race/Hispanic origin, April 2013-June 2014
More Black consumers purchase tires without help
Figure 87: Who will purchase tires, by race/Hispanic origin, September 2014
Lower purchase intent for major tire brands among Hispanics
Figure 88: Brands of tires considered, by race/Hispanic origin, September 2014
Hispanics, Blacks, and Asians more likely to purchase major tire brands
Figure 89: Brands of tires bought in last 12 months, by race/Hispanic origin, April 2013-June 2014
Blacks more concerned about performance and comfort, Hispanics less concerned about most features
Figure 90: Important tire features, by race/Hispanic origin, September 2014
Non-White consumers more brand loyal, Hispanic consumers have lower expectations for their tires
Figure 91: Attitudes toward tires and shopping behaviors, by race/Hispanic origin, September 2014
APPENDIX – OTHER USEFUL CONSUMER TABLES
Household ownership of vehicles
Figure 92: Number of vehicles in household, September 2014
Figure 93: Number of vehicles in household, by age, September 2014
Figure 94: Number of vehicles in household, by household income, September 2014
Figure 95: Number of vehicles in household, by race/Hispanic origin, September 2014
Figure 96: Number of vehicles in household, by marital/relationship status, September 2014
Figure 97: Number of vehicles in household, by household size, September 2014
Figure 98: Number of vehicles in household, by employment, September 2014
Figure 99: Number of vehicles in household, by area, September 2014
Figure 100: Number of vehicles in household, by Millennial parents, September 2014
Figure 101: Number of vehicles in household, by Gen X parents, September 2014
Type of vehicle owned/leased
Figure 102: Type of vehicles owned, by gender, September 2014
Figure 103: Type of vehicles owned, by age, September 2014
Figure 104: Type of vehicles owned, by household income, September 2014
Figure 105: Type of vehicles owned, by race/Hispanic origin, September 2014
Figure 106: Type of vehicles owned, by marital/relationship status, September 2014
Figure 107: Type of vehicles owned, by household size, September 2014
Figure 108: Type of vehicles owned, by employment, September 2014
Figure 109: Type of vehicles owned, by area, September 2014
Figure 110: Type of vehicles owned, by Millennial parents, September 2014
Figure 111: Type of vehicles owned, by Gen X parents, September 2014
New, used, or CPO
Figure 112: New, used, or CPO, September 2014
Figure 113: New, used, or CPO, by gender, September 2014
Figure 114: New, used, or CPO, by age, September 2014
Figure 115: New, used, or CPO, by household income, September 2014
Figure 116: New, used, or CPO, by race/Hispanic origin, September 2014
Figure 117: New, used, or CPO, by marital/relationship status, September 2014
Figure 118: New, used, or CPO, by household size, September 2014
Figure 119: New, used, or CPO, by employment, September 2014
Figure 120: New, used, or CPO, by area, September 2014
Time of last tire purchase
Figure 121: Time of last tire purchase, by marital/relationship status, September 2014
Figure 122: Time of last tire purchase, by employment, September 2014
Figure 123: Time of last tire purchase, by Gen X parents, September 2014
Intent to purchase tires
Figure 124: Intent to purchase tires in next two years, by gender, September 2014
Figure 125: Intent to purchase tires in next two years, by marital/relationship status, September 2014
Figure 126: Intent to purchase tires in next two years, by new, used, or CPO, September 2014
Figure 127: Intent to purchase tires in next two years, by household income, September 2014
Actual tire purchases
Figure 128: Tires purchased at automotive retail stores, by gender, April 2013-June 2014
Figure 129: Pickup trucks, sport utility vehicles, or vans, by race/Hispanic origin, April 2013-June 2014
Figure 130: Type of tires bought in last 12 months, by household income, April 2013-June 2014
Figure 131: Pickup trucks, sport utility vehicles, or vans, by age, April 2013-June 2014
Figure 132: Pickup trucks, sport utility vehicles, or vans, by household income, April 2013-June 2014
Figure 133: Pickup trucks, sport utility vehicles, or vans, by race/Hispanic origin, April 2013-June 2014
Who will purchase tires?
Figure 134: Who will purchase tires, by household size, September 2014
Figure 135: Who will purchase tires, by marital/relationship status, September 2014
Figure 136: Who will purchase tires, by employment, September 2014
Figure 137: Who will purchase tires, by area, September 2014
Brands of tires considered
Figure 138: Brands of tires considered, by household size, September 2014
Figure 139: Brands of tires considered, by Millennial parents, September 2014
Important tire features
Figure 140: Important tire features, by household size, September 2014
Figure 141: Important tire features, by area, September 2014
Attitudes toward tires and shopping behaviors
Figure 142: Attitudes toward tires and shopping behaviors, by household size, September 2014
APPENDIX – TRADE ASSOCIATIONS

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