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Sport Utility Vehicles or SUVs as they are widely called have risen in popularity in past 10 years and have outgrown all other vehicle body types in past 5 years. They now account for 35% of new vehicles sold globally, a sharp increase from 21% in 2014.
The reason why they are such an important segment for tire manufacturers is they inherently use bigger, stronger tires due to heavy kerb weight and versatile applications (towing, off-roading, adventure sports) they are subjected to.
The dynamics of OE and replacement SUV tire market segment are completely different. Where the former requires close collaboration with the car manufacturers, the latter requires solid distribution and sales network. The replacement demand has grown at a slower rate than OE demand but is characterized by significantly higher volumes and average gross margin for tire manufacturers.
In US and China, none of the best-selling SUVs had 16-inch tires, whereas in Europe 3 out of top 10 had them.
The high profile (60/65 aspect ratio) tires are popular in US and emerging countries whereas low profile (45-55 aspect ratio) tires are more common in Europe and Japan.
China and US are world`s biggest markets for SUVs, accounting for ~17-18 Million units sold per annum. Together they make up for ~57-60% of global OE SUV tire market.
In China (world`s biggest SUV market), as of June 2019, there are 523 SUV models on sale from 50+ manufacturers. The low-cost, value for money SUVs priced between $14,000-$20,000 like Haval H6, Baojun 560, Trumpchi GS4 are extremely popular in China.
In Europe, SUVs accounted for 5.4 Million-unit sales in 2018 or 36% of total passenger car sales- at par with global average. Small SUVs are the fastest growing segment right now, accounting for almost 39% of SUV sales in Europe. These SUVs are fitted with 16- and 17-inch tires and will generate a sizeable demand of 215/65 and 225/65 section tires in coming years in replacement market.
The Japanese trio of Toyota, Nissan and Honda cumulatively account for 21% of total SUVs sold globally in 2018.
In the premium segment, BMW is the market leader with 0.8 million SUVs sold globally in 2018 or ~40% of total car sales. BMW SUVs` tires range from 17 inch to 19 inch for most vehicles with 225/55 and 235/55 being the most common combinations. Also, BMW has the highest share of run flat tire sales which are priced ~70-80% higher than a comparable size tubeless tire in the replacement market.
Globally, in the premium segment, sales of Crossover SUVs with V-speed-rated tires and above have increased by 160% since 2014 and they represent a significant new opportunity in SUV tire market.
Globally, there are 25+ SUV tire manufacturers and we have profiled the top 15. Bridgestone, Michelin, Good year, Hankook and Continental are among top preferred choices in the OE SUV tire market.
The tire manufacturers are working on introducing even lower rolling resistance and airless tires to improve fuel economy and safety worldwide. Nokian tires has reduced rolling resistance of its tires by 8% in past 6 years.
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