More Than a Niche?
As a relatively new market segment the ATV tyre sector is hard to define in terms of numbers. It is estimated that the UK ATV tyre replacement market lies between 40 to 60,000 tyres, but it’s difficult to qualify specific numbers when so few companies compile statistics. Despite this lack of information everyone involved in this area will tell you that ATV tyres, in particular the recreational types, are increasing and there is potential for much growth. Further opportunities within the segment are beginning to show themselves, giving wholesalers and retailers the chance to broaden their portfolios, but there are no realistic forecasts as to their expected success. Tyres & Accessories asks UK dealers whether the ATV tyre sector has the scope – volume and longevity – to become more than just another niche?
UK wholesaler, R H Claydon has, like every other ATV specialist, noticed an increase in sales of competition ATV tyres and believes that their volume will increase in the next two to three years. However, currently the utility side provides it with its volume sales, and the company expects this to remain the case, terming it a “drip feed” segment. According to the company’s corporate business manager, Dick Anderson, R H Claydon’s existing sales are split 90:10 (utility: recreational), but he expects this to shift in the future. Whether sales of recreational ATV tyres will ever equal that of utility the manager could not estimate, but he does believe that due to the sector’s following it will continue to grow for years to come.
Mr Anderson maintains that both the volume and longevity of the recreational ATV market are certain, but what about profit? R H Claydon broke into the ATV sports sector last year and has been joined by considerably more competitors since. The recreational ATV tyre side has, until now, been dominated by a small quantity of companies but the numbers are beginning to grow. “It’s a niche market,” claims the business manager, continuing: “however the profitability has been eroded to some degree over the last few years due to the increasing number of companies present in the market.”
David Williams, ATV department manager, Fieldens, agrees that there has been a significant increase in those involved in ATV tyres. “There was a time when only ATV centres dealt with the tyres however this has changed. Now there are many more companies offering the tyres, even retail chains, and if they don’t stock the tyre they will generally offer to find it for a customer anyway.” Both managers commented that the increasing number of ATV tyre brands on the market (especially those from China) has also had an affect on profitability. Dick Anderson added: “Margins on ATV tyres are acceptable, but have decreased as the tyre’s worth has gone down.”
If the individual profit of an ATV tyre has decreased then it is obviously important that overall volume does the opposite, and that new opportunities to make money present themselves to the wholesalers and retailers involved. According to Quad magazine’s Dave Bradford quadricycles have become a “sales sensation” in Europe and are becoming a more frequent sight on UK roads. This craze has therefore increased the need for street legal tyres; e-marked ATV rubber that offers a performance similar to a passenger car tyre. Maxxis UK estimates that currently 15 per cent of ATV tyres are used on road with the remainder used in off-road conditions. MD Derek McMartin also explained that street legal tyres have become a massive opportunity in America for the company and he expects the same to happen in Europe.
Because ATV tyres have changed in terms of usage over the last five years, the technology behind them has also had to change. ATVs initially raced on turf tyres until they became so popular that ATV racing rubber was developed. As well as that run-flats have been created for the utility sector, so both wholesalers and retailers are expecting big things when it comes to future street legal tyre development.
As far as the ATV specialists are concerned there are plenty of emerging opportunities within the segment for them to get their teeth into. But what they don’t want is every other retailer and wholesaler in the market to take a bite of the cake also! As far as the existing ATV tyre companies are concerned it is a specialist market and an area for the specialist dealer only.
“It’s very much a regionally specific market, and that makes it ideally a market for specialist farm dealers, or on the sporting side specialist ATV dealers,” maintains Mr Anderson. An ATV tyre sales person needs a “sound” understanding of the market to ensure they fulfil the needs of customer, agree both R H Claydon and Fieldens, inferring that it is not an area that simply any retailer can operate in.
According to Mr Anderson, forecasting an ATV tyre stock profile also complicates matters. “With ATV tyres you have to be able to offer a full range because demand can be very varied. It’s difficult to assess the stock profile because there may be eight or nine popular sizes in the utility segment and six in racing, but each range has its own popular fitments, and you want to be able to offer them all. We (R H Claydon) bring in our ATV tyres by container so we can offer a full range, even of the less common sizes, but not every company is in a position to do that. So it’s not an area that every wholesaler and retailer could get into.”
As both the ATV utility and recreation markets develop new branches the market certainly seems to have the capacity to sustain the expected future growth. But whether these new opportunities mature into long-term profits is difficult to estimate at such an early stage. The wholesalers and retailers certainly have faith in the niche’s permanence and future volumes, just as long as it remains that, a niche.