The originaL equipment tires on your new vehicle are part of an intricate financial relationship between the tire and car companies, dealerships and consumers. You may not have given much thought to those four round black things when you bought your car – but you will when it comes time to replace them, and therein lies the story.
The vast majority of car buyers, rather than shopping around, chose to replace the tires that came on their vehicle with the identical tires. Not only does the tire company benefit from the business, so to do the new car dealers as an increasing number of their customers come back for replacement or alternate season tires. That’s why you see so many tire ads from car dealers.
It all starts several years before a new vehicle is unveiled, during the development stage. Once the designers and engineers have completed the initial work and the vehicle, whether a pickup, utility vehicle, compact or luxury car, they send out an RFQ (Request For Proposal) for the tires to all major tire companies. The car company knows what it wants from in terms of ride quality, noise levels, rolling resistance, traction and to a lesser extent, wear. The tire company provides the warranty, not the car company.
Obviously the company about to reveal a new high-end sports car wants a tire that will show off all their hard work on suspension and handling, one with maximum grip. Their customers do not have wear and fuel mileage atop their wish list. On the other hand, those about to produce a new small hybrid, want a tire with extremely low rolling resistance and have very little concern about grip at extreme loads in the corners. A new luxury car, will require tires that offer a very smooth and quiet ride while the pickup team are looking for tires that can accept heavy loads without overheating, good grip in a variety of surfaces and low rolling resistance to help in the search for fuel economy.
The details of those RFPs are specific, with numerical goals in each area – ride, handling, wear, noise levels, rolling resistance, traction etc. The tire companies may have a suitable product in their portfolio, one that can be altered to suit or have to develop a new one. Often they can come up with a new compound or tread design for an existing tire to meet the requirements. Or, they may have been working on a breakthrough and see this as an opportunity to gain awareness.
In all cases, the numbers are huge. Ford built and sold almost one million F150s in North America last year, riding on four million tires! Toyota built and sold more than 400,000 Camrys in North America last year. That’s 1.6 million tires!
The bottom line is that winning that contract to supply tires to be installed on the assembly line has both immediate and long -term implications. For a brand, it solidifies a reputation or perhaps establishes one. For its dealers, it represents an opportunity to capture a slice of the replacement market.
This is a business decision in a very competitive situation. Obviously, to the car company, price is probably the decision maker, provided all bids meet the same specs. The tire company has to keep its price to a minimum to stay in the hunt, or perhaps provide the tires at a slight loss if trying to get the market or a certain segment of it, knowing that consumers will come back for replacement units down the road.
Next time you take a test ride, check out the tires! You may see a familiar name, or one you have never heard of – but will become familiar.