GfK: UK 4×4 market depressed, but V-Z speed sizes grow

Anyone aware of the continued economic fug across the continent might have expected the news that UK and Europe-wide 4×4/SUV tyre markets were depressed in 2012; what you may not have so readily expected was that the macro-trend of increasing sales of V, W, X and Y speed rated SUV tyres would have continued to grow. Yet the latest data from UK market researcher GfK, read in the context of Europool and ETRMA figures, shows that this is exactly what happened during the last year, with more powerful road oriented models continuing to prove popular.

During its latest analysis of the UK 4×4 tyre market, Continental explained that the segment continues to shift to sizes 17” and above. Stagnating registrations have not prevented the pool of 4×4 vehicles primarily for on-road use from growing, and these SUVs, fitted with large alloy wheels, have helped tyres designed for transmitting the greater torque to the road to continue growing in sales. Conti expects continued growth to be stimulated by the availability of SUV models designed to appeal to new customer segments, such as the Range Rover Evoque, billed as “the most efficient Land Rover ever”. Conti also unveiled what it describes as “the first high volume 22” OE approval”, as it signed an agreement to supply summer and winter tyres to the new Range Rover.

In terms of the total European market volume, ETRMA figures show sales of 4×4 tyres were slightly down in 2012, though still around a third more than in 2006. The summer 4×4 market was around 9 million, down from 9.5 million in 2011 while the winter market is at 5.5 million compared to 6.2 million. Runflats also account for 0.5 million tyres. The most popular sizes in Europe include the H-rated 215/65R16 and 235/60R16, the V-rated 235/65R17 and 235/60R18, and 255/50R19 and 255/55R18 in the WYZ segment.

Higher speed ratings increase UK market importance

GfK’s analysis, gathering sales information between February 2012 and January 2013 directly from retailer’s tills (or “electronic point of sale systems”, if you will), backs up the growth predictions for the “road tyres” with speed indexes of V and WYZ.  Referring to sales units only, “V rated tyres representing just over 27 per cent of the 4×4 market was five per cent up on the previous MAT [moving annual total]. WYZ tyres representing just over 13 per cent of the market grew in sales volumes by 11 per cent.” (It is worth noting that the researcher’s sample group is made up of specialist tyre resellers in the UK – i.e. not including dealerships/the VMA channel, service and MOT agents or internet pure players.)

The segments, which only around ten years ago covered over 90 per cent of the total European SUV/4×4 market, showed declines well into double figures in this MAT compared to the equivalent February 2010 – January 2011 period. GfK research shows that sales of H-rated tyres – still the most popular single segment of the UK market, with a 34 per cent share – declined by a whopping 21 per cent. The S and T segment also dropped 14 per cent, though they collectively represent nearly 21 per cent of the market. In total GfK says that 4×4 sales for the latest MAT were “more depressed than passenger car tyres and light commercial vehicle sales,” finishing at nine per cent down.

Budget sales grow but bigger brands still dominate

In terms of 4×4/SUV segments, GfK notes that “Premium” brands still account for a share just under 58 per cent, while “Value” brands account for around a quarter. “4×4 sales historically were and continue to be primarily composed of premium brand tyres,” GfK says. “Most 4×4 drivers will have experienced a premium brand recommendation when buying tyres.” 4×4 tyre retailers also continue to recommend primarily Premium brands in this segment, with the original equipment brand taking precedence, GfK reveals.

These shares mean that the Premium segment has lost nearly five per cent share compared to the previous MAT, with unit sales dropping 16 per cent over the last twelve months. The average sell-out price for a Premium segment tyre, excluding valve, balance and fitting, was £160. In GfK’s Value segment, unit sales dropped nine per cent.

It is necessary to give these results some context by pointing out that GfK uses a tripartite structure that only labels lead brands produced by the five largest tyre manufacturers as “Premium”, meaning some names that have been synonymous with this section of the tyre market are filed under the “Value” section.

The less controversial Budget segment did record growth of 29 per cent in the MAT, and while this shows a significant jump, these brands still have a comparatively low base at just under 17 per cent of the market. GfK data shows that average prices for a budget brand tyre in the last twelve months increased from just under £80 to around £85.

One questions whether these 4×4/SUV tyre unit sales gains can continue to develop for budget brands. On the one hand, the increasing need for greater safety characteristics engendered by the proliferation of higher-powered vehicles, and their drivers’ assumed ability to pay for high-technology products suggests that the segment ought to secure the still-dominant position of the upper pricing tiers. On the other hand, is it possible that the increased focus on cost-consciousness in certain SUVs could allow budget products to increase their share further?