Was Winter of Discontent Good News for 4×4 Market?

With the economy limping out of recession and the cold snap over (for now), is the 4×4 tyre market entering a spring season of its own? Some industry observers think so. They suggest that the combination of the UK’s obsession with the weather and our love affair with the underdog has prepared the way for an unlikely saviour to the depressed motor industry – the so-called gas-guzzling 4×4. And this could inevitably mean more growth for a tyre market segment that has continued expansion seemingly against the odds.

The legislative arena provides another factor suggesting there could be renewed interest (and perhaps an artificial spike) in this sector’s sales in the coming months. First, there is the fact that business secretary Lord Peter Mandelson has literally called time on the scrappage scheme that has done such a good job supporting new vehicles sales. With the initial investment in buying 4×4 vehicles remaining high, it remains to be seen whether consumers will continue opting for 4x4s once the scrappage scheme is phased out on or around 31 March 2010. Then there is the new ‘showroom tax’ (to be introduced from April of this year), which is likely to act as a deterrent to some motorists.

Nevertheless, there was a consensus amongst the market representatives Tyres & Accessories spoke to that the kind of driver that wants a 4×4 (and will therefore have to buy tyres for that vehicle at some point) continues to be willing to pay for it. One sign of continuing interest in 4x4s can be seen in the recent rise in insurance enquiries relating to these vehicles. According to moneysupermarket.com, demand for 4×4 insurance increased by 42 per cent to more than 3 per cent of all searches in the five days immediately following 5 January. The comparison site said that while “gas guzzlers” were out of favour before the 2009 Budget, the cold weather highlighted the failings of normal two-wheel drive vehicles. A combination of the on-going climate change debate and the fear of future snow-filled winters are said to have driven renewed demand.

The increased demand can also be seen as good news for 4×4 tyre sales as the focus shifts to the all-important contact patch. “During the warmer months, it easy to malign the 4×4, but when it comes to driving in winter and holding the road in adverse conditions, the ‘fit-for-purpose’ vehicle with the right tyres provides the peace of mind to allow drivers to not only to get out of the house, but to carry on a normal life of getting to and from work safely,” Andy Dingley, senior analyst for Bridgestone UK commented.

There were also suggestions that the widely recognised de-segmentisation effect (where consumers choose replacement tyres one or two segments below the price/quality point of their current tyres) observed in the wider passenger car market is less prevalent in the 4×4 sector.

De-segmentation less prevalent than in car tyre sector

Alan Baldwin, Michelin Tyre Services/Southam Tyres wholesale director, stated: “All is not lost in the current financial climate for the 4×4 tyre, far from it…in many areas strong growth continues, and new 4×4 vehicle sales have also been buoyed by another bad winter. Replacement 4×4 tyre sales continue to benefit from the continual growth in the 4×4 vehicle parc for the last 10 years, and the recent wave of 4×4 vehicle sales fitted with 19-inch tyres and larger, have faster wear rates, providing excellent business.” Baldwin did not report any significant growth in the sale of budget 4×4 products, unlike with car tyres. However, he did report that premium 4×4 brands remain strong, particularly in the UHP/SUV sector with brands like Pirelli and Continental.

New Michelin UK and Ireland car, van and 4×4 marketing manager Jianni Geras agreed that 4×4 sales are generally still increasing, with this segment being one of the few still on an upward trend. From his perspective, 17-inch plus sizes and tyre aimed at crossover style vehicles are those growing fastest. The slope of growth may be slower than it was previously, but this sector is still on the up.