3 things to note about the changing OTR tire market
With the OTR tire market seemingly flat — and experts within the field expecting it to stay that way for the immediate future — it is reasonable to believe that tire dealers will find the OTR market as rugged as the terrain the tires tend to navigate.
While dealers, distributors and manufacturers remain optimistic entering 2020, most say they believe that sales of agriculture, construction and mining tires will stagnate, as they did in many cases in 2019.
Floods, commodity prices and tariffs were among the issues to wreak havoc with the ag tire market. In some cases, last year’s volatile conditions left farmers skittish as they approach the new season. Manufacturers believe consumers will be extremely hesitant to spend money on equipment, including tires.
But there are reasons to be optimistic. The American Farm Bureau said a majority of the 20 million acres that went unplanted in 2019 likely will be planted in 2020, and crop yields also are expected to rebound.
Meanwhile, the recent passage of the United States-Mexico-Canada Agreement (USMCA) and the finalizing of a Phase 1 trade deal with China provide a bit more stability.
Indicators are just as mixed in the construction market. According to”Dodge Data & Analytics’ 2020 Construction Outlook, U.S. construction starts will slip 4% from the 2019 estimated level of activity, while single-family housing starts are expected to dip 3%.
Construction companies continue to squeeze more life out of their machinery, and tires last much longer than they did two decades ago, adding to more uncertainty.
On the positive front, the increased use of skidsteers, telehandlers and backhoes that provide increased maneuverability have created demand for lower-profile tires.
The mining industry, meanwhile, also will remain flat, according to experts. While the coal mining industry continues to decline — down 9% last year and expected to be down another 14% this year — mining companies are investing in technology to minimize downtime.
The takeaways for OTR tire dealers seem to boil down to these points:
• Consider becoming a consultant as much as a tire retailer.
Bruce Besancon, vice president, off-the-road sales for Yokohama Tire Corp., suggested that dealers should work with their customers to help them get the “best cost-per-hour and the best usage out of that product.”
Mr. Besancon said customers expect dealers to be “safe, professional, knowledgeable and trained in everything and become that true consultant. That’s how tire dealers make their name, and the good ones get better, and the bad ones get weeded out.
“That’s where you gain your reputation, and that’s how you grow your business,” he said.
• Keep abreast of technology.
Construction companies will demand dealers incorporate new technologies into providing solutions, according to Justin Brock, B2B construction segment operations manager for Michelin North America.
“Dealers that incorporate these new solutions into their offering and utilize these technologies and data to bring value to the customer will differentiate themselves in the market,” he said.
• Help customers save money.
No matter what shape the economy is in, OTR customers want to maximize profits. Offer them solutions to that end, even if another option benefits the dealer more. Dealers should provide consultation on the best tire at the lowest possible price.
Once that trust is earned, OTR customers will come to depend on the dealer to help boost profitability. And that will benefit everyone.