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THE INDUSTRY’S LEADING PUBLICATION

January 2015 | Vol. 96, No. 1 | $30 | A Bobit Publication | www.moderntiredealer.com


THE INDUSTRY’S LEADING PUBLICATION

4 9 th annual

FACTS ISSUE Also in this issue

Analyst says 2015 will be ‘another exciting ride in the global tire industry’

Take the first step: Build a better experience at your counter zone

January 2015 | Vol. 96, No. 1 | $30 | A Bobit Publication | www.moderntiredealer.com

AAPEX 2014: Show coverage includes new ideas, tools and services


Quik-Link: 800-687-1557 ext. 11101


Features 16 What you need to know for 2015 Customers have cash to spend, thanks to low fuel prices. Tire sales are expected to increase, but dealers have to fnd new ways to get customers in the door

58 Te center of the automotive universe Atendees fnd equipment innovations, professional development opportunities and demonstrations on the latest products, services and repair techniques at AAPEX

49th annual Facts Section 28 Facts Section index MTD presents more charts, exclusive information

30 Tire shipments Te hub of the wheel: Like it or not, the U.S. tire industry revolves around China

36 Brand share Tere are 4 tiers, not 3: ‘Good-BeterBest’ still works, but new complications require brand reorganization

44 Plant capacity Five more tire plants by 2017!

46 Commercial Double digit growth! New truck tires were in demand at the replacement and OE levels last year

52 Tire sizing and pricing Start with 205/55R16: Ten worry about the other 500-plus sizes

54 Retailing and wholesaling Gender bending: Surprise! When it comes to buying tires, women are not the dominant sex

56 Future shock Look for... more tarifs? You never know. Te same goes for the fascination private equity frms have with our industry

Te Industry’s Leading Publication January 2015, Volume 96, Number 1

Departments 4 Editorial Bitter battle? TIA and RMA face off on tire registration — again

6 Online

News and navigation tools for MTD ’s website

8 News/views Highway funding bill is focus of Federal Lobby Day on Feb. 5

26 Your marketplace Volume trends have remained positive for 10 consecutive months

66 Focus on dealers Worth more than 1,000 words: Direct Tire & Auto Service sees real results with video

67 Counter intelligence Let’s start at the beginning: It all starts and ends at the counter

68 European notebook Optimism and designer innovations for 2015

69 Focus on industry New tires and pro basketball promotions boost Kumho brand

70 Focus on dealers E.T. Paul Co. closes after 119 years: Dealer loses property to eminent domain

71 TPMS Jeep Grand Cherokee 2005-2013: Two TPMS systems, base and premium, are available

82 Your turn Using common sense trumps overreacting, reader says

76 Products 78 Quik-Link 79 Classifed

Modern Tire Dealer is a proud member of: TRIB

TIRE RETREAD & REPAIR INFORMATION BUREAU

Member An Industry Association

www.moderntiredealer.com

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Editorial

Bitter battle? TIA and RMA face of on tire registration — again

I

n a nutshell, the RMA wants tire dealers to but there have been no discussions related to be responsible for registering tires purchased mandatory tire registration. at their shops. TIA wants the consumer to “We had talked about working together to be ultimately responsible. educate and improve voluntary numbers, so it Tis is a real point of contention between the two was a total shock to hear that they are proposing organizations. Most of it is philosophical, as the legislation over education.” manufacturers and dealers square of on opposite If this political intrigue sounds familiar to sides of the issue. Some of it is also political and, some of you longtime tire dealers, it should. dare I say, personal; communication between the In the 1970s, tire registration was mandatory. organizations prior to last December’s Passenger By Bob Ulrich TIA’s predecessor, the National Tire Dealers and Vehicle Tire Safety Symposium in Washington, Retreaders Association (NTDR), fought to make D.C., evidently lef something to be desired. it voluntary and won, much to the chagrin of the RMA. In her testimony during the symposium’s panel discusIronically, both the NTDR and RMA were against a sion on tire registration and recalls, Tracey Norberg, RMA “trigger mechanism” in the bill, which called for a review of (Rubber Manufacturers Association) senior vice president the law afer two years. If the Secretary of Transportation of regulatory afairs and general counsel, said the present determined it wasn’t working, registration would become system, which, at the very least, calls for each tire retailer mandatory again, “with any cost to the dealer or distributor to put the tire identifcation number on a registration card borne by the manufacturer.” Te NTDR was against having and place it in the customer’s car, all its eforts undermined afer the isn’t working because the registration fact. Te RMA was against being rates are too low. She places it at responsible for the cost. about 40% industry-wide. Prior to the original bill’s passing, “It is not particularly burdensome Modern Tire Dealer reported that on the dealer. Te manufacturers “pass or fail, the bill may leave a sour never see the consumer. Tey do afertaste in its wake as charges and not have the opportunity to directly counter charges of below-the-belt register the tires themselves.” legislative and lobbying tactics have According to Kevin Rohlwing, fown between the NTDR, the TIA (Tire Industry Association) RMA and their members.” senior vice president of training, Te current war of words between the low registration rates are more the RMA and TIA hopefully will refective of consumer apathy than not damage their relationship, which the lack of compliance on the part has ofen been contentious over the of independent tire dealers. During years. Over the last two years, they his presentation, he called for a colhave worked well together. lective efort to educate consumers on the importance of “We are very encouraged by our increasingly positive registering tires, something he said the National Highway working relationship with RMA,” said Litlefeld in 2013. Trafc Safety Administration, RMA and tire manufacturers “Whether it is working together on legislative issues on the had made litle or no efort to do. federal or state levels, sharing information, or speaking out Rohlwing also drew comparisons to NHTSA’s system on industry issues in the media, our industry is speaking for registering child restraints, which doesn’t require the with a united voice, and we are making a diference.” retailer to play any role nor bear any responsibilities with Do we need to take the responsibility away from the regard to the process. He questioned why tire retailers are consumer? Do we need another layer of bureaucracy to treated diferently and vehicle manufacturers are allowed oversee and perhaps enforce mandatory registration? to shif the burden onto the backs of small businesses. Perhaps geting down to the heart of the mater, who is “We are incredibly disappointed that RMA supports a going to pay for any changes to the current system? legislative solution to the problem of low tire registration For now, the RMA and TIA, in the spirit of cooperarates rather than educational,” said Roy Litlefeld, TIA’s tion, should get together to answer these questions. No executive vice president, following the symposium. “TIA emailing allowed. has been working with RMA on a number of legislative As the late Joan Rivers used to say, “Can we talk?” She issues like tire repair and used tires over the past few years, didn’t say, “Can we text?” ■

‘We are incredibly disappointed that RMA supports a legislative solution to the problem of low tire registration rates.’

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MTD January 2015


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Online Website: www.moderntiredealer.com

MODERN TIRE DEALER

Publisher Greg Smith Greg.Smith@bobit.com (330) 899-2200 ext. 12, fax (330) 899-2209

At the AAPEX

Editorial (330) 899-2200, fax (330) 899-2209 Editor: Robert J. Ulrich, ext. 11 Bob.Ulrich@bobit.com Managing Editor: Lori L. Mavrigian, ext. 16 Lori.Mavrigian@bobit.com Senior Editor: Joy Kopcha, ext. 15 Joy.Kopcha@bobit.com Associate Editor: Ann Neal, ext. 18 Ann.Neal@bobit.com

Did you miss the Automotive Aftermarket Product Expo (AAPEX) held in Las Vegas last November? MTD editors were there and posted coverage throughout the event on www.moderntiredealer.com. For easy access, go to our News section, scroll down to Breaking News, type AAPEX in the search box and hit GO. There you will fnd our coverage of the news and products introduced at the show. Find more on AAPEX in this issue starting on page 58.

Production (330) 899-2200, fax (330) 899-2209 Art Director: Neal Weingart, ext. 14 Neal.Weingart@bobit.com Production Manager: Karen Runion, ext. 10 Karen.Runion@bobit.com

Sales

Top news Our news coverage of recent tariffs implemented by the United States Department of Commerce (DOC) on passenger and light truck tires imported from China was of great interest to our website readers during the last month of 2014. Readers of www.moderntiredealer.com followed the unfolding story closely, making the updates four out of the top 10 news items. Here is the list of our most popular news items on www.moderntiredealer.com for December. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Chinese tire tariffs are effective Dec. 1 DOC admits mistake, implements lower tariffs An inside look at Walmart’s tire pricing Get ready: New tire sizes are on the way 2 companies exempt from retroactive tariffs Goodyear sells 7 distribution centers E.T. Paul Co. closing tire shop after 119 years Bruce Halle receives Horatio Alger Award Nitto adds two tires to the Grappler line 15.6% to 17.6% tariffs are effective immediately — and retroactive

Web exclusive Looking for information on commercial tire business? Or just performance articles? Check out the Channels section of our website, www.moderntiredealer.com. Tere you will fnd past articles narrowed down to specifc areas of interest — Performance, Retailing, Wholesale/Distributing, Commercial, Suppliers, Technology and Auto Service.

Total access — totally free www.moderntiredealer.com

South and Texas: Greg Smith Greg.Smith@bobit.com (330) 899-2200 ext. 12, fax (330) 899-2209 Midwest: Michele Vargo Michele.Vargo@bobit.com (330) 899-2200 ext.17, fax (330) 899-2209 West Coast: John Dyal /Te Dyal Company John.Dyal@bobit.com (760) 451-5026, fax (760) 451-5039 West Coast: Marianne Dyal /Te Dyal Company Marianne.Dyal@bobit.com (760) 451-9216 Automotive Aftermarket: Dan Tornton djtinc@gmail.com (734) 676-9135, mobile (313) 410-0945 Classifed Sales: Donna Stewart Donna_Stewart@cox.net (405) 260-1678, fax (405) 260-1684 Reprint Sales: Karen Runion Karen.Runion@bobit.com (330) 899-2200 ext. 10, fax (330) 899-2209

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MODERN TIRE DEALER (ISSN 00268496) (CDN IPM #40013413) (USPS #369-170) is published monthly by Bobit Business Media, 3520 Challenger St., Torrance, California 90503-1640. Periodicals postage paid at Torrance, CA 90503-9998 and additional mailing offces. POSTMASTER: Send address changes to MODERN TIRE DEALER, P.O. Box 1068, Skokie, IL 60076-8068. Please allow 6 to 8 weeks for address changes to take effect. Subscriptions in the U.S. and its possessions, $65; Canadian, $99; Int’l surface mail, $99; Int’l airmail, $198. Single copies, $10, except the January Facts Issue, $30. Address all subscription correspondence to MODERN TIRE DEALER, P.O. Box 1068, Skokie, IL 60076-8068. Please allow 6 to 8 weeks to receive your frst issue. Please address Editorial and Advertising correspondence to MODERN TIRE DEALER, 3515 Massillon Road, Suite 350, Uniontown, OH 44685-6217. The contents of this publication may not be reproduced either in whole or in part without consent of Bobit Business Media. All statements made, although based on information believed to be reliable and accurate, cannot be guaranteed and no fault or liability can be accepted for error or omission. For your information: We sometimes make our subscriber information (i.e. fax, e-mail or mailing address) available to carefully screened organizations whose products and services may be of interest to you. If you prefer not to have your information made available, please write MODERN TIRE DEALER, P.O. Box 1068, Skokie, IL 60076-8068.

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MTD January 2015


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News/views

Highway funding bill is focus of Federal Lobby Day on Feb. 5 ‘When a small businessman looks a congressman in the eye, he’s believed.’ The United States Congress is deciding how to fund the Highway Trust Fund. The options being considered have the potential to greatly impact the operations of independent tire dealers and retreaders. The proposals for funding the nation’s highway infrastructure involve: • reinstating the federal excise tax of 5 cents to 15 cents per pound on tread rubber used in the retread process; • increasing the federal excise tax on truck tires by 10%; • increasing the federal excise tax on trucks and truck parts by 10%; • increasing the motor fuel tax by 15 cents to $2 per gallon; and • reinstating the federal excise tax on passenger tires. Since the 1930s, the nation’s transportation infrastructure has been funded by taxes on gasoline. Why are lawmakers resisting an increase in the gasoline tax now? The answer is the shift in the balance of power in Congress following the November 2014 elections. “Now we have a Republican Senate and a Republican House, and I’m not sure they would agree to a gas tax,” says Roy Littlefeld, executive vice president of the Tire Industry Association (TIA). Congress had a chance to pass a multi-year transportation funding package in 2014, but lawmakers could not agree on a way to pay for more than a couple of months’ worth of projects, resulting in a temporary extension that lasts until May 2015. The nearly $11 billion measure, which reauthorized the collection of the gas tax but did not increase it, was intended only to prevent a bankruptcy in the Department of Transportation’s Highway Trust Fund, according to TIA. To help lawmakers understand how the highway funding proposals could affect independent tire dealers, TIA has organized Federal Lobby Day on Feb. 5,

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For more information and to register, contact Roy Littlefeld IV, TIA government affairs manager, by calling (301) 430-7280, ext. 137, or email rlittlefeld2@tireindustry.org.

2015, in Washington, D.C. The more dealers who are there, the stronger the message, says Littlefeld. “You can make a difference. In my experience, when a small businessman looks a congressman in the eye, he’s believed. He’s believed more than a lobbyist, he’s believed more than a hired gun.” Face-to-face with legislators Federal Lobby Day includes a legislative overview by the Democratic Whip Steny Hoyer. Rep. John Delaney will explain his proposals to create large-scale fnancing of the nation’s infrastructure. Littlefeld and Kevin Rohlwing, TIA’s senior vice president of training, will update members on a proposal for mandatory tire registration made by the Rubber Manufacturers Association at the National Transportation Safety Board’s Passenger Vehicle Tire Safety Symposium in December. A luncheon with Congressional leaders in the Caucus Room of the Cannon House Offce Building will follow. Next on the agenda are three hours of concurrent sessions where dealers: • participate in 10-minute, face-to-face, round robin connection sessions with key staffers from the House Transportation and Infrastructure Committee and the House Ways and Means Committee to voice support for a sustainable federal highway program and to express concern with some of the proposed funding ideas; • meet freshmen members from the House Transportation and Infrastructure Committee to discuss their top transportation initiatives; and • meet individually with senators and representatives. The day will end with a reception where Rep. Bill Shuster, chairman of the House Transportation and Infrastructure Committee, will give a keynote address. Tire dealers will not be alone on Feb. 5. Members of the Tire Retread & Repair Information Bureau (TRIB) and automotive and highway-user industry groups including the American Highway Users Alliance, WMDA/CAR Service Station and Automotive Repair Association, and Service Station Dealers of America and Allied Trades (SSDA) will also be meeting with committee staff and members of Congress on Feb. 5. — Ann Neal

MTD January 2015


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News/views

bites

Belle Tire adds store Belle Tire Distributors Inc. has opened a retail store in Lansing, Mich., its third outlet in the city. The company has 94 retail and commercial outlets. Toyo marks 70 years Toyo Tire and Rubber Co. Ltd. is celebrating its 70th anniversary in 2015. Founded in August 1945, Toyo will move into its new headquarters building in Japan in August 2015. Alliance expands to China The Aftermarket Auto Parts Alliance has expanded into China. The five charter members of the China Aftermarket Auto Parts Alliance will go to market in China under the Auto Value brand. Foundation helps students The University of the Aftermarket Foundation will award an additional $100,000 in scholarships in 2015 to students preparing for automotive aftermarket careers. Michelin updates RV website Michelin North America Inc. unveiled a revamped website for recreational vehicle tires that includes information on tire selection and maintenance for RVs, campers and motor homes. Retread calendars available The Tire Industry Association has released the 2015 Retread Production Date Code Calendar, which provides the number for each production week and other information, such as load index, speed symbol and ply rating charts. Federated and Pronto merge National Pronto Association and Federated Auto Parts are merging and will be known as “Automotive Parts Services Group,” or “The Group.” The combined organization will operate more than 5,000 locations in North America. Andreoli has new website Andreoli & Associates Inc. has a new website where dealers anonymously shop point-of-sale software, engage with its technical team, and test drive software for 30 days with no obligation.

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Hankook has new president for Americas division Hankook Tire Co. Ltd. has named Hee-se Ahn president of Hankook Tire America Corp. Ahn’s appointment was effective Jan. 1, 2015. Ahn will also serve as chief operating offcer for the company’s business operations throughout the Americas including the United States, Canada, Hee-se Ahn will be based at Hankook’s Central America, South America and Mexico. America headquarAhn comes to Hankook’s Americas operations ters in Wayne, N.J. from the company’s European headquarters, where he was vice president of marketing and sales. He began his career in 1986 at Hankook’s headquarters in Seoul, Korea. He replaces Byeong Jin Lee, who had been president since January 2013. The company declined to comment on Lee’s future.

Cooper hires Jones to replace Hughes as CFO Cooper Tire & Rubber Co.’s board of directors elected Ginger Jones vice president and chief fnancial offcer. She succeeds Brad Hughes, who in July 2014 was appointed president of the company’s International Operations. Jones joins Cooper from Plexus Corp., a $2.3 Ginger Jones brings nearly three decades billion electronics manufacturing services frm with of fnancial experimore than two dozen facilities around the world. ence to Cooper Tire.

Raben Tire sells interest to partner Raben Holdings LLC, which does business as Raben Tire Co. Inc., has sold an equity interest to Palladium Equity Partners LLC of New York City. Palladium describes the transaction as a “signifcant investment in partnership with the Raben family.” Evansville, Ind.-based Raben Tire operates 25 stores, two wholesale distribution centers, and three retreading facilities across Indiana, Kentucky, Illinois, Missouri and Arkansas. Founded in 1952, the company is No. 47 on the 2014 Modern Tire Dealer 100 list. “We are excited to partner with Palladium, a frm with strong experience in working with and growing family-owned companies,” says Tom Raben, president of Raben Tire. “Palladium shares our vision of expanding the Raben Tire footprint within our existing markets and into adjacent markets across the U.S. We are ready to work together to continue growing the company that my father, brothers and I have built.” When asked if the investment represented a minority or majority interest in Raben Tire, both Raben and Palladium declined to comment. “My partners and I look forward to supporting the growth of Raben Tire through initiatives such as increasing the number of services offered, opening new locations and pursuing strategic acquisitions,” says Luis Zaldivar, a managing director of Palladium. “We seek to accelerate the consolidation of a fragmented industry by providing family-owned businesses with new liquidity and transition opportunities.”

MTD January 2015


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News/views

bites

Trailer tires recalled Dynamic Tire Corp. is recalling 17,369 trailer tires manufactured between June 15, 2014, and Oct. 14, 2014. The affected Towmax STR tires, size ST225/75 R15, may have the incorrect load capacity and inflation pressure stampings. Cooper’s lawsuit is dismissed The Delaware Chancery Court dismissed the lawsuit filed by Cooper Tire & Rubber Co. against Apollo Tyres Ltd. for damages related to their former merger agreement. Falken campaign honored Falken Tire Corp.’s “Conquer Your World” advertising campaign has been recognized by the International Academy of Visual Arts (IAVA) with three Davey Awards for Print Advertising. Retreads earn SmartWay label Goodyear Tire & Rubber Co.’s G392A SSD UniCircle and G394A SST UniCircle wide-base retread products recently earned SmartWay verification. Discount Tire adds stores Discount Tire has opened stores in St. Charles, Ill., Evansville, Ind., and Parma Heights, Ohio. Part of the Reinalt-Thomas Corp., Discount Tire has more than 875 stores. Maxxis sponsors the Braves Taiwan-based Maxxis International will sponsor the Atlanta Braves in 2015. The company’s U.S. headquarters is in Suwanee, Ga. Michelin upgrades app Michelin Americas Truck Tires, a division of Michelin North America Inc., upgraded its dealer locator app that offers drag-and-drop capability, type-ahead functionality, more search options and one-click access to all key dealer information. Bosch signs Cantore Robert Bosch LLC has signed Weather Channel meteorologist Jim Cantore as spokesperson for Bosch Icon wiper blades with ClearMax 365. An advertising campaign will run through the first quarter of 2015.

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Pearson Tire founder Raynal Pearson dies Raynal Pearson, the 87-year-old founder of Pearson Tire Co. in Richfeld, Utah, died Dec. 9, 2014. “He has always been a gentle giant and will certainly be missed by all who have known him,” says his son, Larry, who took over the eight-store dealership years ago. Pearson started the business 64 years ago with a simple mission statement: “to provide customers the highest quality products, furnish them with excepRaynal Pearson was Modern Tire tional service, and make a fair proft for Dealer’s Tire Dealer of the Year in ourselves and the company.” 1999. He died Dec. 9. Pearson grew up on a farm in Marysvale, Utah, and served a mission for the LDS Church in the Pacifc Northwest. He was a chaplain in the U.S. Air Force during the Korean War. He owned and operated Pearson Tire and multiple wholesale and retail tire operations throughout the state. His businesses also included Sevier Valley Oil, gas stations and hotels in several states.

Goodyear sells 7 distribution centers Goodyear Tire and Rubber Co. sold seven Midwest distribution centers to U.S. Autoforce, a division of Wisconsin-based U.S. Venture Inc. Financial details of the deal were not revealed. The seven centers are in Minnesota, Missouri and Colorado, plus two in Wisconsin and two in Illinois. The centers distribute consumer and commercial tires. Jim Davis, public relations manager for Goodyear North America, describes the move as being part of Goodyear’s “aligned distribution strategy.” He says the company uses a combination of company-owned and aligned warehouse distributor (WD) centers. U.S. Autoforce is an existing WD for Goodyear products. “There are no plans to divest of all the company-owned WD centers,” Davis says. “We still have 45 of them.”

RMA predicts fewer replacement tire shipments in 2015 The Rubber Manufacturers Association (RMA) predicts total tire shipments in the U.S. will increase to more than 310 million units in 2015 but expects demand for replacement passenger tires to drop by 1.2 million units in 2015 compared to 2014. Total U.S. tire shipments were estimated to reach 309.9 million units in 2014. The RMA predicts 310.6 million units will be shipped in 2015. Passenger original equipment shipments are expected to increase 2.5% in 2015 while replacement tire shipments are expected to decline 0.6%. The RMA expects light truck tire OE shipments to grow 2.1% and commercial truck tire OE shipments to grow 3.7%. Replacement LT tire shipments and commercial truck tire shipments are forecast to grow 0.3% and 0.2%, respectively.

MTD January 2015


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News/views

bites

Goodyear sponsors bowl game Goodyear Tire & Rubber Co. sponsored the 79th Cotton Bowl Classic featuring the Michigan State Spartans and the Baylor Bears on Jan. 1, 2015. Federal wins design award Federal Corp. received a Good Design 2014 award in the transportation category for its high performance Formoza AZ01 and AZ01 FRF (Federal Run Flat) tires.

Louisiana dealers add Paul Bernstein to hall of fame The Louisiana Independent Tire Dealers Association (LITDA) named Paul Bernstein, president of Delta World Tire Co., to its hall of fame. Delta World Tire operates 16 retail locations and a Mighty Auto Parts franchise and is tied for No. 67 on the 2014 MTD 100. Bernstein has served on the LITDA board of directors since 2000, acting as president from 2007-2008. He was a member of Michelin’s Dealer Advisory Council from 2004-2012, serving as president for six years.

Paul Bernstein has been named to the LITDA hall of fame. His father Marvin and great grandfather Abe are also LITDA hall of fame honorees.

Beasley Tire expands in San Antonio Apollo embraces biodiversity As part of its commitment to biodiversity, Apollo Tyres Ltd. planted two butterfly gardens within the premises of its two plants in the southern part of India. Bosch and DSP form 20 Group Dealer Strategic Planning Inc. (DSP) and Robert Bosch LLC are forming a new 20 Group for authorized Bosch Car Service shops. Bosch selected the DSP 20 Group format to help its network of car service centers improve profitability. TBC may soon buy Del-Nat A deal that would result in the purchase of Del-Nat Tire Corp. by TBC Corp. has been agreed to in principle. However, certain details need to be ironed out before the deal is finalized. Toyo is OE on Dodge Journey Toyo Tire & Rubber Co. Ltd.’s Toyo A23 tire will be original equipment for the FCA US LLC Dodge Journey crossover utility vehicle. Gabriel will reward loyalty Gabriel (Ride Control LLC) is introducing a loyalty program for technicians and shops in the U.S. in early 2015. The Gabriel Answerman Advantage will include point-of-sale materials, promotions, rewards and business tools.

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Beasley Tire Service Inc. is on track to move into a new location in San Antonio, Texas. Construction of a 21,500-square-foot commercialand-retail store will be completed in the frst quarter of 2015. The Houston-based company has provided commercial tire services to the San Antonio market from a smaller leased facility since June 2011. Half of the new building will be devoted to retail business, according to Bob Davidson, director of dealer development. The new store will have six retail service bays, three drive-through truck bays and nine service trucks. Beasley Tire is buying two service trucks, including a boom truck for servicing earthmover Beasley Tire Service broke ground for its new San Antonio store in September. Pictires, for the new location. tured from left are Bob Beasley, owner; Mike The company employs 17 Beasley, vice president; Jason Lasala, store manager; and Jermaine Taylor, Michelin people at its current location North America Inc. regional manager. and expects to hire fve more employees for the new store. Opening day is set for April 1, 2015. In three years, Beasley Tire’s commercial operations in San Antonio have generated $7 million in sales. Davidson says the company projects sales for the new store to be $10.5 million due to growth in its earthmover and commercial businesses and the new retail services. In addition to stores in Houston and San Antonio, Beasley Tire has a commercial store in Kenedy, Texas. “We’re noted for the way we service all customers, especially on the commercial side,” says Davidson. “Our Houston store has 16 service trucks and Kenedy has another four. We have differentiated ourselves from our competitors because customers know they are going to get the best service.”

MTD January 2015


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News/views

dates

February 18-21 Tire Industry Association Off-TheRoad Tire Conference, Westin La Paloma Resort & Spa, Tucson, Ariz. (301) 430-7280 or (800) 876-8372 www.tireindustry.org February 26 – March 1 Automechanika New Delhi Pragati Maidan, New Delhi, India www.automechanika.com February 27-29 Mid-America Tire Dealers Association Convention Prairie Band Casino, Mayetta, Kan. (785) 286-1110 www.matda.org March 11-14 Automechanika Madrid Feria De Madrid, Madrid, Spain www.automechanika.com March 18-21 Tyre & Rubber Indonesia 2015 JIExpo Kemayoran, Jakarta, Indonesia www.tyre-indonesia.net March 19-21 Automechanika Kuala Lumpur Kuala Lumpur Convention Centre, Kuala Lumpur, Malaysia www.automechanika.com March 20-21 New England Tire & Service Association Trade Show and Convention, Foxwoods Resort Casino, Mashantucket, Conn. (207) 846-0986 www.netsa.org March 20-22 North Carolina Tire Dealers Association Expo and Trade Show The Westin Charlotte and NASCAR Hall of Fame, Charlotte, N.C. (877) 784-0111 www.nctda.com March 24-26 Tyrexpo Asia Singapore Expo Centre, Singapore www.eci-international.com/asia

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DOC adjusts some tariff rates Persistence by Giti Tire (Fujian) Co. Ltd. paid off as the United States Department of Commerce (DOC) is amending its “preliminary determination” of the countervailing duty investigation of passenger vehicle and light truck tires from the People’s Republic of China (PRC.) The DOC says it is correcting “signifcant ministerial errors.” Giti had maintained the DOC’s calculation did not “refect its actual circumstance.” The DOC defnes a ministerial error as “an error in addition, subtraction, or other arithmetic function, clerical error resulting from inaccurate copying, duplication, or the like, and any other similar type of unintentional error South Carolina Governor Nikki Haley joined Giti Tire Co. Ltd. in asking the which the secretary considers U.S. Department of Commerce to ministerial.” The error was traced adjust its countervailing tariff. to the “calculation of certain sales denominators” and the beneft calculation under the government policy lending program. Such an error is “signifcant,” the DOC says, if the correction results in a change of at least fve percentage points, and not less than 25 percent of, the subsidy rate originally calculated. For Giti, the rate dropped from 17.69% to 11.74%. Because Giti’s rate was used to calculate the rate for other exporters, the “all others” rate also required an adjustment, from 15.69% to 12.03%. The rates for Cooper Kunshan Tire Co. Ltd. (Cooper Tire & Rubber Co.) and Shandong Yongsheng Rubber Group Co. Ltd. (Yongsheng,) 12.5% and 81.19% respectively, did not change. All fgures are on top of the existing 4% tariffs. Additionally, the DOC says it is “also amending the scope of the investigation in response to comments submitted following the publication of the preliminary determination.” The period of investigation is Jan. 1, 2013, through Dec. 31, 2013. The issue had raised the ire of more than just tire makers. South Carolina Governor Nikki R. Haley appealed to the DOC asking that the agency reconsider its calculation of the countervailing tariff levied against Giti. Giti Tire (USA) Ltd. is to break ground on its frst tire plant in North America this year – a $560 million plant in Chester County, S.C. The plant will produce fve million passenger and light truck tires a year. In a letter to the DOC the governor wrote, “Giti Tire is an important company to South Carolina, and they have made an extraordinary commitment to our state. Likewise, we are committed to seeing them succeed.” One advantage in Giti’s corner is the fact it cooperated with offcials throughout its tariff investigation. The DOC sought to base its decision on information from the biggest suppliers of Chinese tires. But the biggest exporter and producer, Yongsheng, withdrew, and it essentially was penalized for not participating in the process. Without data supplied directly by Yongsheng, the DOC says it may apply “facts otherwise available,” and “may use an adverse inference” when applying those facts. In this investigation the department had no other choice but to use such facts for Yongsheng, and for another uncooperative respondent — the PRC. ■

MTD January 2015


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feature

What you need to know for 2015: Customers have cash to spend, thanks to low fuel prices. Tire sales are expected to increase, but dealers will have to fnd new ways to get customers in the door By Joy Kopcha

Y

es, the United States Department of Commerce’s preliminary decision on Chinese tire tarifs drove the market in 2014, and the forthcoming fnal decision will afect the market again in 2015. But there’s more to tires than tarifs, and Modern Tire Dealer turned to industry analyst Nick Mitchell to review the last 12 months, and to talk about what’s ahead. Tire dealers are optimistic about 2015, and they’re expecting business in the new year to be beter than it was in 2014, Mitchell says. At the same time, he thinks dealers need to be thinking about how to drive trafc to their businesses. Relying on regular oil changes, especially those of feet vehicles, isn’t going to cut it. Since April 2009, Mitchell has studied the industry as part of his work for Northcoast Research Holdings LLC in Cleveland. Mitchell, senior vice president and research analyst, has been honored by the Wall Street Journal and Financial Times for the performance of his investment recommendations. He writes a monthly column, “Your marketplace,” for Modern Tire Dealer.

MTD: How would you summarize the tire industry in 2014? Where is the industry headed in 2015? Mitchell: All things considered, I think 2014 was a fairly good year for the tire industry, especially in the U.S. where fundamentals remained solid all year, even afer adjusting for the impact of the forward-buying of Chinese tires. Demand for passenger and light truck replacement tires started the year strong in most of the major global markets, but growth trends started moderating in the late second quarter and early third quarter. Te most pronounced slowdown was seen in emerging markets, including Eastern Europe and parts of Latin America, especially in the original equipment channel. Demand in China has moderated relative to recent years; however, the frst nine months of the year turned out to be prety solid. Tat said, demand visibly weakened in the country once it was clear the U.S. would likely implement antidumping and countervailing duties. In the truck and bus radial market, demand has defnitely been the most robust and resilient in North America, especially in the U.S. Shipments in the OE and replacement channel were stable to positive in the frst quarter in most of the major regions across the globe. Trends started deteriorating in the second quarter of 2014, with the most pronounced weakness seen in Latin America and Europe, especially in the OE channel. Fundamentals remained lackluster in the of-the-road (OTR) tire segment all year; the headwind should moderate in 2015.

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Leading tire industry analyst Nick Mitchell, senior vice president and research analyst for Northcoast Research Holdings, is expecting 2015 to be another exciting ride.

Overall, we expect 2015 will be another exciting ride in the global tire industry, with most markets expected to experience growth — albeit more heavily weighted to the back half of the year. MTD: What are tire dealers saying about the state of their business? What are they expecting in 2015? Mitchell: Most of the retail players I have spoken with since early November have noted they expect unit volumes to increase 2% to 3% in 2015, which would be a step up from the consensus opinion that volumes are running up 1.5% to 2% year-to-date. Te frst half of 2014 was stronger than the third quarter, and volumes were fat to up 2% in 2013. Interestingly enough, members from the dealer community who I spoke with at this time last year indicated retail volume growth would likely range from 0% to 2% in 2014, so it appears 2014 will fnish in-line with expectations. I believe most of the optimism regarding the outlook for

MTD January 2015


2015 can be traced back to two main factors: A favorable outlook for gasoline prices, which should provide a tailwind to driving trends and consumers’ discretionary incomes; and a renewed growth in the car parc, including an uptick in the number of cars entering the frst replacement cycle. MTD: What’s the biggest inventory-related story of the year? Who’s got it and who doesn’t? And what opportunity, or problem, does that present for 2015? Mitchell: Te most prominent discussion on the inventory front is clearly the debate of whether or not the strategic, forward buying of Chinese passenger and light truck tires ahead of the potential countervailing and antidumping duties is pressuring shipment trends among the branded manufacturers in the U.S. Te topic is defnitely complicated, with ample evidence supporting both sides of the argument. Tere is litle doubt that many of the large domestic dealers and wholesalers fexed their balance sheets and warehouse capacity to import extra tires from China in the wake of the United Steelworkers fling a petition with the U.S. International Trade Commission in June requesting antidumping and countervailing duty relief under Sections 701 and 731 of the Trade Act of 1930. Tat said, I believe most of these organizations ratcheted back orders with Chinese suppliers by late September with concerns the shipments would not clear U.S. Customs by Nov. 21, 2014, the date of the preliminary determination in the countervailing duty investigation. More importantly, most of these contacts noted their inventory strategies related to Chinese passenger and light truck tires were not impacting their buying behavior for non-Chinese tires. In other words, sell-in shipments were largely matching sell-out. As such, I, along with others in the industry, had expected the forward buying of tires from China to moderate signifcantly in the fourth quarter of 2014, and any related headwind on shipments of non-Chinese tires to subside. Interestingly, our analysis of federal trade data suggests this is occurring. Specifcally, our work suggests the number of passenger and light truck tires imported from China increased 23%, 18%, 19%, and 12% in July, August, September and October, respectively. Te average monthly gain in the frst half of 2014 was 18%. I expect trends will continue to decelerate into 2015. Still, Goodyear and Cooper both atributed weakening demand trends for their product in the U.S. during third and fourth quarters of 2014 to their customers stocking up on Chinese tires. Te companies indicated the headwind could continue through the frst half of 2015.

MTD: What’s happening with tire prices? What do you expect for 2015? Mitchell: Tire prices continue to decline in the U.S. as relief on the raw materials front continues to get passed on to consumers. We estimate retail prices were down 4% to 5% on a year-over-year basis in October, and prices contracted 2% to 4% at the manufacturing level. While the enactment of antidumping and countervailing duties could create some modest upward pressure on pricing in 2015, we expect this will be largely ofset by the beneft associated with falling raw material prices.

www.moderntiredealer.com

MTD: How much are tire dealers depending on tire sales for their botom line? Mitchell: Notwithstanding the weak demand environment that has lingered on in the years following the Great Recession, tires are still a key element of a tire dealer’s operations, with the category typically contributing 55% to 60% and 13% to 15% of the revenue and gross proft mix, respectively. Additionally, the trafc generated from tire sales provides the installers an opportunity to capture rub-of service sales and build loyalty with the consumer. MTD: Will companies move manufacturing out of China, or bump up production elsewhere in light of the additional tarifs levied against some Chinese tires? Mitchell: Te impact of Tarif 421 (which expired in September 2012) defnitely forced many manufacturers to alter their capital allocation and production strategies in terms of where new investments were going to be made and the utilization rates of their existing plants. I would expect the same to occur this time around. In fact, it could be more pronounced since these protective measures would not be temporary, but rather semi-permanent with mandatory reviews occurring every fve years. Either way, I continue to think that tarifs, including the mere threat of such protective measures, will accelerate the trend of manufacturers adopting near-source production strategies. Examples of this include Giti Tire’s, Hankook’s and Kumho’s decisions to build plants in South Carolina, Tennessee and Georgia, respectively.

“I think eco-friendly tires are gaining traction in the market, no pun intended.” MTD: Are “green” tires making any headway in the market? Do customers care when shopping for replacements? Do car manufacturers care when planning OE? Mitchell: I think eco-friendly tires are gaining traction in the market, no pun intended, but I believe the atraction to “green” tires is rooted in the promise of improved gas mileage from reduced rolling resistance, which can defnitely lower fuel expense, rather than an over-arching desire to purchase tires produced via environmentally friendly manufacturing processes. Te promise of beter fuel economy appeals to drivers and OE manufacturers. It is also important to remember there are performance trade-ofs when it comes to “green” tires, including the give and take between fuel efciency and traction. MTD: What’s happening with the raw materials in tires? Are there new components coming that might change the face, or the price, of tires? Mitchell: Te underlying trend in the basket of key raw materials remains favorable. But manufacturers are not resting on their laurels, as they are all looking for alternatives to some

19


Industry analysis of the more volatile raw materials, including new sources of rubber and silica. As an example, many manufacturers and research groups are working to develop standard manufacturing processes to allow for the use of rubber extracted from plants, such as dandelions and guayule, and silica from rice husk ash. I am not sure if the more traditional sources of supply will ever be fully replaced. However, aggressive research and development investments will likely yield some promising advancements on this front in the coming years.

“Every one-cent drop in the price of gasoline leaves approximately $1 billion of income in the pockets of consumers.” MTD: How will low oil prices afect the industry? Mitchell: Lower oil prices will defnitely provide a tailwind to raw material prices, especially synthetic rubber, carbon black, silica, and select plasticizers, but, I expect manufacturers will only be able to hold on to a portion of these savings. Te

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bigger beneft should come from increased driving trends and the boost to consumers’ discretionary budgets, both of which should spur demand for replacement tires. Keep in mind every one-cent drop in the price of gasoline leaves approximately $1 billion of income in the pockets of consumers.

MTD: What’s the forecast for tire wholesalers? Mitchell: The tire wholesaling segment of the market continues to consolidate. Tere is plenty of liquidity available for the large players to fnance the acquisitions, so as long as the buyers can locate willing sellers, the buying spree will continue for the foreseeable future. Needless to say, as the market becomes less fragmented, the smaller ones have a harder time competing efectively.

MTD: What are your predictions for the Big Tree: Goodyear Tire and Rubber Co., Bridgestone Americas Inc. and Michelin North America Inc.? Mitchell: I do not expect any significant surprises from the Big Three in 2015. These organizations will likely continue to focus on increasing the share of revenue that comes from high value added tires, and managing the price/ mix-to-raw materials spread. This disciplined commitment to managing the businesses for profitability rather than market share gains has paid off handsomely in recent years, and I doubt any of the players will abandon their winning strategies in 2015.

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Industry analysis MTD: What about the smaller manufacturers? Mitchell: I think the smaller manufacturers that focus on the Tier 3 segment of the market will try to leverage the opportunity created by the protective measures against Chinese passenger tires in the U.S. Meanwhile, the product rich producers should make inroads in the niches they serve. MTD: What’s the next merger you anticipate in the industry? Mitchell: I expect American Tire Distributors Inc. and Monro Mufer Brake Inc. to continue rolling up smaller wholesalers and installers, respectively. When it comes to the manufacturing side of the business, deal activity is much harder to predict. I am sure there will be some deals announced in Asia, especially in China, as producers look for opportunities to create synergies in the wake of what appears will be more restrictive trade with the U.S. I do not think the Big Tree will make any acquisitions in 2015, but I would not be surprised to see consolidation or strategic alliancesplatforms to share technology, gain purchasing capital and capital alliances-formed among some of the manufacturers in the Tier 2 or Tier 3 segments. I suppose a suitor could emerge at Cooper Tire & Rubber Co.’s doorstep in Findlay, Ohio, but I do not think it is a high probability scenario at this point in time. MTD: How much do tire recalls afect the botom line? Mitchell: Unfortunately, recall, product liability and warranty costs are here to stay as they are clearly a cost of doing business. I would say these expenses typically equate to 2.5% to 3.5% of a manufacturer’s revenue.

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Incredible cold led hot year for auto parts stores Low gas prices will fuel business in 2015 Record cold temperatures in early 2014 were a big boost to auto parts sales, and 2015 should be another strong year, says Nick Mitchell, senior vice president and research analyst for Northcoast Research Holdings LLC. “The big chains had very robust same-store sales trends in 2014, partially driven by a huge tailwind from favorable weather conditions in the frst half of the year,” Mitchell says. “Looking forward, I expect the group will perform very solidly well into 2015.” Mitchell looks for the do-it-for-me channel to lead the way, with sales to grow 2% to 5% in 2015. But low gas prices will provide another boost, Mitchell says. “The sharp drop in fuel prices should help the do-it-yourself (DIY) consumer, and stimulate demand in this segment of the market,” Mitchell says. He expects DIY sales to increase up to 3% in 2015.

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Industry analysis MTD: What’s the biggest story of the year in commercial tires? Mitchell: The biggest story of the year in the U.S. has undoubtedly been the consistent and robust growth the channel has witnessed all year. Shipments in the OE and replacement channels were up approximately 17% and 10% through November 2014, respectively. Tis growth has also been resilient as the market grew every month. On the fip side, the strong performance creates a string of difcult comparisons for 2015, which will likely restrict growth trends.

“ I would imagine tire dealers will perform fewer and fewer oil changes in the coming years...” MTD: Is there something tire dealers are doing today they won’t be doing by the end of 2020? Mitchell: I do not think there is any service or work being performed today that will completely go away by the end of the decade. I would imagine tire dealers will perform fewer and fewer oil changes in the coming years as a greater percentage of the nation’s light vehicle feet will be comprised of electric vehicles, and more and more of the non-electric cars and light trucks will use synthetic oil, which allows for longer intervals between oil changes. As a result, installers will need to come up with new ways to drive trafc to their establishments.

MTD: Michelin North America Inc.’s Tweel plant is now open in South Carolina. How big is the Tweel today, and how big will it be fve years from now? Mitchell: Te technology behind Michelin’s Tweel is really amazing. Despite speculation this non-pneumatic tire/wheel

assembly could serve as a viable replacement for pneumatic tires in many applications, it appears the product will only serve a more limited end market for the foreseeable future, including skid-steers and other small industrial vehicles. I suppose one could envision a world where the Tweel could be on passenger cars and light trucks, however it would require more research and testing by Michelin, and consumers would have to buy into the aesthetics.

MTD: Which segment of the tire industry will see the most growth in 2015? Mitchell: Domestically speaking, the commercial truck tire market was very strong in 2014, which inherently creates a string of difcult comparisons for 2015 that will probably restrict growth trends. I expect the fundamentals in the OTR market will improve slightly in 2015, but demand will likely remain fairly lackluster. Based on these projections and the relief consumers will get from falling prices at the pumps throughout 2015, I think the safest bet is to assume the strongest shipments will be in the passenger and light truck segments. Te one wild card here is any pressure from destocking the strategic build in inventory of Chinese replacement tires could create more of a headwind than I currently estimate.

MTD: How’s the auto service repair business? What economic factors do you expect to afect those profts? Mitchell: I think fundamentals are fairly healthy in the auto service repair business. Trafc and the average ticket expanded in 2014, and the growth should continue in 2015. Cost pressures are fairly benign, the average age of a passenger vehicle continues to increase, and the car parc is starting to expand at more normalized growth rates afer a few years of stagnation following the Great Recession. Te uptick in miles driven trends and the increased disposable income resulting from the ongoing slide in gasoline prices will also provide a modest tailwind to demand in 2015. MTD: Tanks again for your insights, Nick. ■

Manufacturers fail in marketing Despite the money spent, customers don’t know anything about tires Tire manufacturers all spend money marketing their brands. They advertise. They promote every major sport and sponsor events from college football bowl games to professional hockey. Plus, there’s racing, a world that spins on the companies’ products. But this doesn’t mean sports fans, or customers in general, are knowledgeable about tires, says Nick Mitchell, senior vice president and research analyst at Northcoast Research Holdings LLC. “Consumers are usually forced to

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fork over a pretty decent chunk of change when they purchase four new tires,” Mitchell says. “Unfortunately, most buyers have no idea what type of tires they want when they begin the buying process, which, in my opinion, is a sign the tire marketing campaigns are not very effective.” So what does work? Mitchell says safety campaigns are often the most productive. “I think the most successful marketing and advertising strategies focus on

highlighting the safety benefts that can be harvested from investing in a mid-tier to premium tire, and educating the consumer on the pros and cons of each type of passenger and light truck tire available in the market,” Mitchell says. “Unfortunately, I do not think the manufacturers have done a good job on this front.” Cue the tire dealers to step in to bridge the gap. Mitchell says they “play a pivotal role” in the selection process.

MTD January 2015


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Your marketplace

Volume trends have remained positive for 10 consecutive months

W

ith the year quickly coming to an Volume trends were positive in November end, we were pleased to hear that Consumer demand for replacement tires dealers reported selling more tires remained positive in November. Te abundance in November compared to the previous year’s of pent-up demand should lead to decent volumes period despite the fact that consumers were being throughout the 2014-2015 winter selling season pulled in diferent directions as the demand of despite tough comparisons from last year’s harsh the holiday shopping season intensifed. Specifwinter. cally, the dealers who participated in our survey Trends were fat in the truck category as the reported selling 0.9% more tires on a year-over-year dealers who responded to the MTD survey reported basis, which was fairly similar to the growth in By Nick Mitchell that volumes decreased 0.5% after increasing the previous two months (increases of 0.8% and 4.3% in October. Meanwhile, the MTD survey 1.2% in October and September, respectively). Needless respondents indicated that volumes fell 2.0% in the retread to say, we were happy to see that volume trends remained business afer decreasing slightly in October. positive for the 10th consecutive month. More importantly, we were encouraged that dealers speculated that consum- Costs and retail prices were roughly fat in November ers continue to allocate a greater portion of their income Te surveyed dealers noted that manufacturer pricing on to tire and automotive repairs during this winter selling branded and value tires continued to stabilize in November. season in an atempt to catch up on work that was deferred As you will recall, during September we hypothesized a in prior months. In our view, the data supports our belief portion of the decline in manufacturer pricing may have that the underlying fundamentals remain healthy and that been due to the fact that Chinese manufacturers ofered consumer demand should remain fairly strong in the coming signifcant volume rebates during the period in order to months, especially given the favorable outlook for gasoline right-size their inventories ahead of a potential tarif on prices in 2015. Chinese passenger tires imported into the U.S. Despite the event-driven (i.e. potential tarif) pricing pressure on value tires that occurred during September, we believe that pricing in the aggregate market stabilized somewhat in October and continued to do so in November, Dealers JUL AUG SEP OCT(R) NOV(P) NOV(13) as evidenced by the healthy trends in manufacturer pricing Passenger tire of both branded and value tires, which were roughly fat Will improve 63% 50% 50% 75% 56% 38% during the month. Will worsen 25% 12% 0% 0% 0% 12%

How dealers view near-term business

Will stay level

12%

38%

50%

25%

44%

50%

Truck tire Will improve Will worsen Will stay level

57% 29% 14%

50% 0% 50%

57% 0% 43%

88% 0% 12%

57% 0% 43%

57% 0% 43%

R-Revised

P-Preliminary

Monthly survey A number of independent tire dealers were surveyed concerning current business trends. Except for tire prices and costs, the results of the November 2014 survey are compared with those of November 2013.

Dealers remain upbeat about sales trends According to the MTD dealer survey, 56% of passenger tire dealers believe business will improve over the next six months, while 44% believe it will stay about level. Meanwhile, 57% of the truck tire dealers we spoke with see business improving, and 43% believe it will stay about level. Te table highlights the outlook that the respondents have conveyed to us in recent months.

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Dealers thought inventory was appropriate Of the dealers who responded to the MTD survey, 100% indicated that they had the appropriate amount of inventory in stock for demand (vs. about 38% in October). Te inventory levels among truck tire dealers looked encouraging as nearly 72% of the truck tire dealers we surveyed indicated that they had the appropriate amount of inventory (vs. about 50% in October), while approximately 4% indicated that inventory levels were too high and about 14% indicated levels were too low.

Repair sales remain healthy Te dealers who responded to the MTD survey indicated that service sales, which accounted for 27% of the survey participants’ total revenues, were up roughly 5% on a year-over-year basis in November (versus a 2% increase in October). ■

Nick Mitchell is senior vice president and research analyst for Northcoast Research Holdings LLC based in Cleveland. Mitchell covers a variety of subsectors of the automotive industry.

MTD January 2015


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feature

Facts section: Index

FACTS ISSUE 2015 Modern Tire Dealer breaks down the North American marketplace for the 49th consecutive year. Here’s a list of what you’ll fnd in our record 29 charts. Tire shipments: 30, 32, 34 U.S. replacement tire sales U.S. consumer and truck tire imports from China U.S. units shipped U.S. consumer tire imports by country U.S./Canadian and world leaders in new tire sales Brand share: 36, 38, 40 U.S./Canadian replacement consumer tire brand shares Original equipment brand shares U.S./Canadian OE consumer tire market shares Brands listed by the MTD 100 Tire plant capacities, North America: 44-45 Commercial: 46, 48 U.S. market share, retreaded truck tires U.S. replacement medium/heavy truck tire brand shares U.S. farm tire market shares Tire sizing and pricing: 52, 53 OE passenger and light truck tires, 2011-2012 Top passenger and light truck tire sizes, 2012 New sizes in 2014 Retailing and wholesaling: 54 U.S. consumer tire retail market share Consumer tire distribution channel market share 2015 tire-buying decisions based on gender Future shock: 56 New P-metric and LT tire sizes/SKUs in 2015 All fgures in the 14-page Facts Section are Modern Tire Dealer fgures unless otherwise noted. For all market share charts: Because numbers are rounded to the nearest one-half percent, the total may not equal 100%.

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Facts section: Tire shipments

Te hub of the wheel Like it or not, the U.S. tire industry revolves around China By Bob Ulrich

A

lthough it is 6,000 miles away, the People’s Republic of China is the center of the universe to the U.S. tire industry. In 2014, China exported a record 60.5 million passenger and light truck tires to the United States, representing one-quarter of all domestic replacement consumer tire shipments. Tat alone is enough to keep tire manufacturers, marketers, retailers and the U.S. government focused on China and its low-cost radials. However, recent tarifs placed on Chinese consumer tire imports will change tier pricing in the U.S. throughout 2015 and beyond. And that will afect the consumer, too. To put China’s infuence on the U.S. tire market into perspective, Chinese exports are three times larger than the second largest exporter, Canada, and twice as large as our NAFTA partners combined, even though we share borders with Canada and Mexico. Chart 1 2014 U.S. REPLACEMENT TIRE SALES (a $37.4 billion industry)

Plant capacity has something to do with the disparities. While Canada and Mexico host 12 consumer tire plants that can produce 46 million tires a year, there are some 80 companies in China that can produce more than 400 million passenger and light truck tires annually, according to the U.S. International Trade Commission (ITC). If you look at the list of consumer tire imports by country (see Chart 5 on page 32), the number of Chinese imports roughly equals imports from the next four largest countries: Canada, South Korea, Tailand and Indonesia. Based on the massive infux of Chinese tires over the last two years, the United Steelworkers (USW) union charged the Chinese government with subsidizing exports to the U.S., resulting in unfair trade. It fled a complaint with the ITC and U.S. Department of Commerce last June asking for countervailing and anti-dumping duties, also known as tarifs. Te charges were similar to those fled by the USW in 2009, which led to additional tarifs ranging from 35% to 25% over the next three years. (All Chinese passenger and light truck

Chart 2 U.S. CONSUMER TIRE IMPORTS FROM CHINA (in millions of units)

Passenger tires

$24.8 billon

Light truck tires

$4.9 billion

Year

Units

Yr./yr. change

Chart 3 U.S. UNITS SHIPPED 2010-2014 (in millions; imports included)

Truck tires

$6.6 billion

2014

60.5

+17.9%

PASSENGER TIRES

Farm tires

$ 538 million

2013

51.3

+57.8%

Year

OTR tires

$ 580 million

2012

32.5

+25.0%

2014

206.6

46.0

2011

26.0

- 16.1%

2013

201.6

44.0

2010

31.0

- 27.9%

2012

192.0

40.5

2011

196.5

36.0

2010

198.7

34.6

In 2013, U.S. replacement tire sales totaled $37.3 billion.

Chart 4 2014 REPLACEMENT PASSENGER TIRE MARKET (based on 206.6 million units)

Replacement OE

LIGHT TRUCK TIRES 2014

28.8

4.8

2013

28.3

4.4

2012

28.3

4.2

2011

28.6

4.1

28.0

3.5

2010

MEDIUM/HEAVY TRUCK TIRES 2014

17.3

5.8

2013

15.7

5.0

2012

16.0

5.3

2011

17.0

4.9

2010

15.3

3.0

Sources: MTD fgures, Rubber Manufacturers Association

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MTD January 2015


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Facts section: Tire shipments tires are already saddled with a 4% duty.) Over that span, average replacement tire prices increased 30%. Without the tarifs, pricing has dropped each of the last two years. Although low-cost radial production in the U.S. cannot keep up with demand, the Department of Commerce once again agreed with the union. On Dec. 1, 2014, it implemented countervailing duties on all consumer tires, broken out as follows: • 11.74% for Giti Tire (Fujian) Co. Ltd. • 12.5% for Cooper Tire & Rubber Co. • 81.9% for Shandong Yongsheng Rubber Group Co. Ltd. • 12.03% for all other Chinese exporters. (The DOC is expected to add anti-dumping duties to consumer tire imports from China before the end of January; ST tires are exempt from either tarif.) Except for Giti and Cooper imports, the additional tarifs are retroactive 90 days from Dec. 1, their efective date. Tat means even tires imported on or afer Sept. 2, 2014, are subject to the additional duties. Giti and Cooper were exempt because they kept their import volume growth in check. Te resulting consequences relating to the decisions were severe and swif. Two tire manufacturers raised prices. Giti Tire (USA) Ltd. announced a 9.5% increase on all passenger and light truck tires, efective Jan. 1, 2015. Cooper Tire quietly increased prices 6% to 8% on some, but not all, of its Cooper and Starfre lines, also efective Jan. 1. Shandong produces some of the private brand tires for Del-Nat Tire Corp., which is in talks to sell to TBC Corp. In a leter to Del-Nat shareholders, CEO Brian Grant referenced how Del-Nat was “signifcantly impacted” by the recent countervailing duties imposed on consumer imports from China. Shandong was one of three Chinese manufacturers that produced the Fuzion brand for Bridgestone Americas Inc. Now there are two sources. “We knew back in September that they would be assigned the maximum CV (countervailing) tarif, so we moved molds and shifed production to the other plants,” says a Bridgestone spokesperson. “The other two plants have the necessary capacity to handle our volume needs.”

Expo in Las Vegas, he said the average age among Class 4 to 8 trucks has risen from 12.5 years in 2007 to 14.7 years. Te Rubber Manufacturers Association (RMA) estimates total U.S. replacement and OE tire shipments will increase from nearly 310 million units in 2014 to slightly more than 310 million this year. “Passenger original equipment shipments are expected to increase in 2015 due to anticipated growth in auto sales, while replacement tire shipments are expected to decline less than 1%,” said the RMA. “Light truck and commercial truck original equipment and replacement tire shipments are expected to grow in 2015.” Chart 5 U.S. CONSUMER TIRE IMPORTS BY COUNTRY (units, in parentheses, are in millions) 2013 rank

% change vs. 2013

1. China (60.5)

1

+17.9%

2. Canada (19.6)

2

-4.8%

3. South Korea (18.0)

3

-9.0%

4. Thailand (12.2)

6

+10.9%

5. Indonesia (11.1)

5

-0.9%

6. Mexico (10.8)

4

-0.9%

7. Japan (10.1)

7

-2.9%

8. Taiwan (7.3)

8

+1.4%

9. Chile (6.8)

9

+13.3%

10. Germany (3.7)

10

+5.7%

2014 rank/country

Chart 6 2014 U.S. TRUCK TIRE IMPORTS FROM CHINA (based on 8.2 million units)

Tire shipments, 2014... and 2015 Replacement and original equipment tire shipments were up across the board in 2014 vs. 2013 (not counting farm and OTR tires). Passenger tire shipments were up 2.5% and 4.5%, respectively (see Chart 3 on page 30). Light truck tire shipments — LT sizing, not P-metric light truck — were up 1.7% and 9%, respectively. Te growth in the truck tire segment, which includes widebase and heavy truck tires as well as medium truck tires, was particularly robust. Replacement shipments were up 10.2% year-over-year, while OE shipments increased 16%. Demand for commercial vehicles in the U.S. and Canada continues to strengthen, though used commercial vehicle registrations still outnumber new registrations, according to Gary Meteer, director of commercial vehicle solutions for the IHS Automotive division of IHS Inc. Speaking to industry executives at the 2014 Automotive Afermarket Products

32

Sources for Charts 5-6: U.S. government, MTD fgures

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Facts section: Tire shipments West Coast port problems North American container port demand has increased signifcantly the last three years. Record tire imports have added to the congestion problems at ports, especially in Los Angeles and Long Beach, Calif. Te Long Beach Board of Harbor Commissioners recently approved measures to relieve congestion. It also petitioned the Federal Maritime Commission “for permission to work in concert with the neighboring Port of Los Angeles.” Te Port of Los Angeles also wants to work together. Chart 7 WORLD LEADERS IN NEW TIRE SALES (fscal year 2014; in billions of U.S. dollars1) Tire company

2014

2013

Bridgestone Corp.

$29.3

$31.0

Groupe Michelin

$24.4

$25.5

Goodyear Tire & Rubber Co.

$17.8

$18.9

Continental AG

$12.9

$12.7

Pirelli & Cie SpA

$8.0

$8.1

Sumitomo Rubber Industries Ltd.

$6.9

$7.0

Hankook Tire Co.

$6.4

$6.5

Yokohama Rubber Co.2

$4.8

$4.9

Cheng Shin Rubber Ind. Co. Ltd.

$4.3

$4.5

Cooper Tire & Rubber Co.

$3.5

$3.4

Kumho Tire Co. Inc.2

$3.3

$3.4

Toyo Tire & Rubber Co. Ltd.

$3.0

$3.0

3

U.S./CANADIAN LEADERS IN NEW TIRE SALES (fscal year 2014; in billions of U.S. dollars) Tire company

2014

2013

Bridgestone Americas Inc.

$8.8

$9.3

Goodyear Tire & Rubber

$7.3

$8.0

Michelin North America Inc.

$7.3

$7.7

Continental Tire the Americs LLC

$2.8

$2.8

Cooper Tire & Rubber

$2.6

$2.5

Toyo Tire Holdings of America Inc.

$1.5

$1.5

Hankook Tire America Corp.

$1.3

$1.3

Yokohama Tire Corp.

$1.3

$1.4

Sumitomo Rubber Industries4

$.90

$.91

Kumho Tire U.S.A. Inc.

$.70

$.74

Pirelli Tire North America

$.64

$.65

1 The average exchange rates between foreign currencies and the U.S. dollar differed from 2013 to 2014 as follows: Japanese yen, up 8.2%; Korean won, down 3.7%; Taiwan dollar, up 2.2%. The euro was relatively unchanged. 2 Yokohama Rubber Co. and Kumho Tire Co. Ltd. signed a Memorandum of Understanding on Nov. 29, 2013. As part of the strategic alliance, the companies will share resources to “jointly pursue research and development of tire related technologies to compete with the Big 3,” according to Kumho. 3 The Cheng Shin Rubber USA Inc. subsidiary does business as Maxxis International. 4 Sumitomo Corp. of America is run independently of Sumitomo Rubber Industries.

34

Te Commission gave preliminary approval “to a cap of four days for parking or dockage fees charged by the port to ships at berth,” according to the Port of Long Beach. “Due to delays in cargo movement, ships have needed to stay at berth longer and have had to pay higher fees. With the dockage relief, the Port would forgo an estimated $150,000 in fees by allowing longer stays without charge during stays from Dec. 1, 2014, through March, 31, 2015.” Te development of a new generation of “mega ships” and a shortage of “truck trailer frames used to haul cargo containers” have been partially blamed for causing botlenecks at ports around the country. Increased trade, although desired, has simply exacerbated the problems.

Te growth of e-retailing, or e-tailing Tere is no question retail tire sales over the Internet are increasing. But at what rate? And what is the percentage of consumers who buy them online? When American Tire Distributors Inc. (ATD) launched TireBuyer.com in 2008, it estimated 3% of the tires sold in the U.S. — more than 7 million tires — were being sold to consumers over the Internet. According to its own research, consumers between the ages of 18 and 34 years of age, especially women, were more likely to purchase tires online “and to shop exclusively online.” When asked how likely they would be to purchase tires online in the future, 30% of the consumers surveyed by ATD indicated they were “very or somewhat likely” to do so. In 2013, Mathew Walker, managing director of Tireweb Marketing Inc., was quoted as saying 90% of shoppers preferred to purchase tires in the store. “We also know most of them start their research online, and about 50% will leave a website if it doesn’t have pricing information on it.” Te 2013 “Google Auto Tires Purchase” online study determined 10% of consumers purchased tires online in 2012. Tat jumped to 29% in 2013. Online tire buyers also were spending more money per tire, and considering more brands during online research. In terms of online purchasing dollars spent on automotive replacement parts, three categories represented half of the e-tail dollar volume in 2013 and none of them were tirerelated. According to the Auto Care Association’s “E-Tailing in the Automotive Afermarket” report, the top three product categories were braking systems, primarily pads and shoes; ignition and engine (fuel pumps, alternators, ignition coils, etc.); and glass, mirrors and lamps.” When even Wal-Mart Stores Inc. is investing a considerable sum of money on e-commerce at the expense of store growth, retail sales online cannot be ignored. It should be noted, however, that for now, online-only retailers don’t have to pay sales tax. Tat may change soon. “Te Marketplace Fairness Act” grants states the authority to compel online and catalog retailers, no mater where they are located, to collect sales tax at the time of a transaction. Tat would put them on a level playing feld with local retailers. However, the act requires states to simplify their sales tax laws before they can receive “collection authority.” Simplifcation is required because two Supreme Court rulings cite “concern that collecting sales tax for multiple states would be too difcult.” ■ MTD January 2015


Quik-Link: 800-687-1557 ext. 11118


Facts section: Brand share

Tere are 4 tiers, not 3 ‘Good-Better-Best’ still works, but new complications require brand reorganization

H

ow many consumer tire brands are available to the independent tire dealer? 50? 100? If you look hard enough, there are more than 100. Te options appear endless. Not surprisingly, the average tire dealer ofers at least 13 brands. Imports are the main reason for brand proliferation. In 2014, U.S. companies imported a record 150.7 million passenger tires and 26.9 million light truck tires. More than 60 million consumer tires were imported from China alone. When the tarifs on Chinese tires are fully implemented, perhaps the number of available brands will diminish. But even when the last tarif was at its highest — 35% for most of 2010 — China still exported 31 million consumer tires to the U.S. Ten why are there only three tiers of tires? Te replacement tire market is made up of price points. With so many brands from which to choose, and the increasing number of tire segments and sub segments, determining the right brand at the right price suddenly becomes more complicated for retailers. Take into account increasing competition (Amazon.com?!) and the “Good-Beter-Best” method of selling tires can seem antiquated. That is why Modern Tire Dealer believes four tiers are ultimately more accurate and helpful than three. In order to develop four tiers of brands for the U.S. market, we asked the following questions:

1. How is the brand marketed? Tat includes both the promotional aspect of marketing and the tires against which a brand is marketed. For example, associate and private brand tires generally compete against each other in the same tier. 2. What is the selling price of the tire? 3. What is the perceived quality? People ofen associate greater expense with greater quality. We also took the following into consideration: OE contracts; place on the manufacturer’s own product screen; size of the company; brand recognition; availability; market share (see Chart 8); ultra-high performance tire market share; global presence; domination of a niche market; and whether or not a manufacturer had at least a sales and marketing arm in the U.S. Tier 1 was easy. Michelin, Bridgestone and Goodyear are generally considered to be Tier 1 products by everyone. Tat is why they are the anchor brands of the U.S. market. Tere is a reason they have the most U.S. market share among the major brands. We couldn’t list every brand in every tier, but as a general rule, inexpensively priced tires either from China or competing against them would be placed in Tier 4.

36

Chart 8 2014 U.S. REPLACEMENT CONSUMER TIRE BRAND SHARES PASSENGER TIRES (based on 206.6 million units) Brand

% of total

LIGHT TRUCK TIRES (based on 28.8 million units) Brand

% of total

Goodyear

13.0%

Goodyear

12.0%

Michelin

9.0%

BFGoodrich

8.5%

Bridgestone

8.0%

Bridgestone

7.5%

Firestone

7.5%

Firestone

7.0%

Cooper

5.5%

Michelin

7.0%

BFGoodrich

4.5%

Cooper

6.0%

Hankook

4.0%

General

4.5%

Yokohama

4.0%

Multi-Mile

4.0%

Continental

3.5%

Hankook

3.5%

Falken

3.0%

Toyo

3.5%

General

3.0%

Yokohama

3.5%

Pirelli

2.5%

Pirelli

2.5%

Toyo

2.5%

Kumho

2.0%

Kumho

2.0%

Mastercraft

2.0%

Multi-Mile

2.0%

Uniroyal

2.0%

Nexen

2.0%

Continental

1.5%

Primewell

2.0%

Cordovan

1.5%

Dunlop

1.5%

Dunlop

1.5%

GT Radial

1.5%

Eldorado

1.5%

Hercules

1.5%

Falken

1.5%

Mastercraft

1.5%

Hercules

1.5%

Sumitomo

1.5%

Kelly

1.5%

Uniroyal

1.5%

Maxxis

1.5%

Big O

1.0%

Big O

1.0%

Cordovan

1.0%

Delta

1.0%

Delta

1.0%

GT Radial

1.0%

Fuzion

1.0%

Nexen

1.0%

Kelly

1.0%

Primewell

1.0%

Nitto

1.0%

Others

7.5%

Sailun

1.0%

Sigma

1.0%

Others

5.0%

Brands must have at least 1% of the market to be listed at 1%.

MTD January 2015


Quik-Link: 800-687-1557 ext. 11119


Facts section: Brand share Consumer tire tiers by brands (in random order) Tier 1 (major tire companies’ premium brands): Michelin, Bridgestone, Goodyear. Tier 2 (upper- and middle-market brands): Continental, Pirelli, Hankook, Yokohama, Toyo, Falken, Kumho, Dunlop, Cooper, Firestone, BFGoodrich, General. Tier 3 (value brands; all private brands): Nexen, Hercules, Multi-Mile, GT Radial, Mastercraf, Sumitomo, Big O, Cordovan, Delta, Fierce, Fuzion, Kelly, Nito, Sigma, Landsail, Delinte, Kenda, Vredestein, Nokian, Sailun, Eldorado, Uniroyal. Tier 4 (low-cost brands): Aturo, Linglong, Goodride, Dynatrac, Warrior, Duraturn, Aeolus, Zenna, Starfre, Primewell, Federal.

Te International Trade Commission, in determining the need for tarifs in 2009, categorized tires into three tiers. Its Tier

1 defnition was the same as ours. Tier 2 included Firestone, Dunlop, BFGoodrich, Continental, Yokohama and Toyo. Tier 3 included GT Radial, Runway, Primewell, Douglas and Riken. It doesn’t seem to mater where the tire is produced. Consumers rely on the tire dealer under our industry’s well-established “70-30 Rule,” which states 70% of consumers have no tire brand preference. Tey rely on the dealers’ recommendations for the brands they buy. Of the 30% who have a brand preference, 50% of them buy alternate brands based on the recommendations of their tire dealers. In other words, the dealer greatly infuences the tire purchase 85% of the time.

OE market and market share Light vehicle production in the U.S. was up nearly 5% in 2014. It totaled 11.9 million units, with crossover vehicles

Chart 9 2014 ORIGINAL EQUIPMENT BRAND SHARES (U.S./Canadian light vehicles, excluding imports) BMW

CHRYSLER/FIAT Goodyear

50%

Pirelli

30%

Continental

38%

Michelin

15%

Bridgestone

24%

Michelin

30%

Firestone

7%

Continental

22%

Goodyear

12%

BFGoodrich

5%

Dunlop

20%

BFGoodrich

8%

Continental

5%

Michelin

4%

Toyo

6%

Bridgestone

4%

Bridgestone

3%

Kumho

4%

Michelin

42%

Dunlop

2%

Pirelli

3%

Goodyear

32%

General

1%

Yokohama

3%

Bridgestone

15%

General

2%

Continental

4%

Bridgestone

68%

Nexen

2%

Firestone

3%

Continental

30%

Hankook

3%

Goodyear

Yokohama

1%

FORD Michelin

23%

HONDA

HYUNDAI / KIA

Continental

19%

Goodyear

18%

Kumho

38%

BFGoodrich

10%

Hankook

36%

Pirelli

10%

Nexen

18%

Continental

8%

SUBARU

2% TESLA

Michelin

50%

Goodyear

50%

TOYOTA Bridgestone

33%

Michelin

24%

Goodyear

12%

General

8%

Hankook

8%

Bridgestone

2%

Continental

29%

BFGoodrich

8%

Cooper

1%

Pirelli

26%

Dunlop

8%

Toyo

1%

Dunlop

19%

Firestone

5%

Bridgestone

11%

General

3%

10%

Toyo

3%

Continental

2%

Yokohama

2%

GENERAL MOTORS

38

NISSAN

MERCEDES-BENZ

Goodyear

37%

Michelin

Michelin

20%

Goodyear

Bridgestone

18%

Firestone

13%

5%

MITSUBISHI Nexen

50%

Toyo

50%

VOLKSWAGEN

Continental

6%

Continental

52%

Hankook

4%

Hankook

32%

General

2%

Bridgestone

16%

MTD January 2015


Quik-Link: 800-687-1557 ext. 11120


Facts section: Brand share leading the way. Canadian production was up, too. Te increase was needed: Light vehicle sales were up 5.8% in the U.S., to 16.4 million vehicles, according to the National Automobile Dealers Association (NADA), and 6.1% in Canada, to more than 1.8 million vehicles, according to WardsAuto.com. General Motors Corp. remained the market share leader at 19.2%, followed by Chrysler/Fiat (Fiat Chrysler Automobiles US LLC) at 18%. Ford Motor Co. was a close third at 17.9%. Toyota Motor Sales U.S.A. Inc. , with a 13.5% market share, and American Honda Motor Co., with a 12% share, rounded out the top fve vehicle manufacturers. Nissan North America Inc. was sixth with a 6.7% share. Te youngest and smallest of the OEMs, Tesla Motors Inc., accounts for less than half of one percent of the light vehicles produced in the U.S. However, the electric car company’s output was up 44% versus 2013. More than 60,000 electric vehicles were sold in the U.S. last year, up from the previous year, according to WardsAuto.com. In contrast, hybrid sales were down. Chart 10 U.S./CANADIAN OE CONSUMER TIRE MARKET SHARE (excluding imported vehicles) Brand

40

2014

2013

In line with increased vehicle demand, OE passenger and light truck tire shipments were up 5% (see Chart 3 on page 30). Five brands were up in market share: Goodyear, Pirelli, General, Toyo and Nexen (see Chart 10). American car owners drove an estimated 3 trillion miles last year, up approximately 1%. (Tere are roughly 260 million registered domestic vehicles on the road today.) Nick Mitchell, senior vice president of research for Northcoast Research Holdings LLC, said in light of his company’s positive Miles Driven Index reading for last November, “and the favorable outlook for gasoline prices, we believe the improvement in the underlying trafc volume trends should continue in December and throughout 2015. If historical relationships hold true, this backdrop should provide a tailwind to the intermediate demand trends across the automotive afermarket and tire industries.”

Modern Tire Dealer 100 favors Michelin, but... Te three most popular brands among the Modern Tire Dealer 100 Chart 11 2014 BRANDS LISTED BY THE MTD 100 (Total outlets: 5,630)

list of the top independent tire dealers in the U.S. are Michelin, Goodyear and BFGoodrich, the same three as last year. Michelin is ofered by 78.5% of the top 107 (there was a 10-way tie for the 98th spot), while Goodyear and BFGoodrich are sold through 66% of them (71 dealers each). However, Bridgestone, although sold through a fewer number of dealers, was ofered in more outlets than any other brand, 4,604 out of 5,630 (see Chart 11). Of the 17 top brands, 11 had greater store counts than the year before: Michelin, Bridgestone, Continental, Firestone, General, Hankook, Uniroyal, Kelly, Falken, Kumho and Nexen. For the ninth consecutive year, Michelin topped the list of brands sold by the MTD 100. ■ Chart 12 2014 CANADIAN REPLACEMENT CONSUMER TIRE BRAND SHARES

PASSENGER TIRE (based on 16.5 million units) Brand

%

LIGHT TRUCK TIRE (based on 2.8 million units) Brand

%

Goodyear

12.5%

Goodyear

16.0%

Michelin

12.0%

Michelin

11.0%

Motomaster 11.0%

BFGoodrich

9.0%

Bridgestone

8.0%

Motomaster

9.0%

Rank by No. of dealers

Dealers/ outlets

BFGoodrich

6.0%

Bridgestone

8.5%

Hankook

6.0%

Firestone

5.5%

Goodyear

27.8% 26.4%

1. Michelin

84/4,536

Continental

4.5%

Yokohama

5.0%

Michelin

20.6% 22.0%

2. Goodyear

71/4,277

General

4.0%

General

4.5%

Bridgestone 12.6% 12.7%

2. BFGoodrich

71/4,176

Toyo

4.0%

Hankook

4.0%

Continental

11.1%

4. Bridgestone

67/4,604

Firestone

3.5%

Toyo

4.0%

62/3,616

10.9%

Hankook

4.8%

5.0%

5. Continental

Yokohama

3.5%

Continental

3.0%

Firestone

4.7%

4.8%

6. Firestone

59/3,069

Cooper

3.0%

Uniroyal

3.0%

BFGoodrich

4.2%

4.4%

7. Yokohama

54/3,722

GT Radial

3.0%

Hercules

2.0%

51/3,308

Pirelli

3.4%

3.1%

8. Cooper

Nexen

3.0%

Kumho

2.0%

General

2.6%

2.5%

8. General

51/3,176

Uniroyal

2.5%

Pirelli

2.0%

Kumho

2.6%

2.6%

10. Hankook

45/3,395

Dunlop

2.0%

Cooper

1.5%

Dunlop

2.0%

2.0%

11. Dunlop

41/3,495

Hercules

1.5%

Dunlop

1.5%

Nexen

1.4%

1.0%

11. Uniroyal

41/2,923

Kumho

1.5%

GT Radial

1.0%

41/1,889

Toyo

1.3%

1.2%

11. Kelly

Nokian

1.5%

Kelly

1.0%

Yokohama

0.9%

1.0%

14. Pirelli

34/3,724

Pirelli

1.0%

Multi-Mile

1.0%

Cooper

0.2%

0.2%

15. Toyo

32/2,433

Westlake

1.0%

Others

5.5%

16. Falken

30/3,228

Others

5.0%

16. Kumho

30/2,651

18. Nexen

23/1,658

Brands must have at least 1% of the market in shipment numbers to be listed at 1% in the passenger and/ or light truck tire segments.

MTD January 2015


Quik-Link: 800-687-1557 ext. 11121


Quik-Link: 800-687-1557 ext. 11122


Facts section: North American plant capacities Chart 13 2015 NORTH AMERICAN PLANT CAPACITIES (in thousands of units)

Five more tire plants by 2017!

Y

early tire capacity, not production, in North America totaled 308.3 million tires at 56 plants as of Jan. 1, 2015. Tat’s up just over one-half percent compared to 2014, when capacity was 306.5 million tires. (The total does not include race or aviation tires.) In the United States, annual capacity increased more than 1%, to 248.5 million units. Tat was a year-over-year increase of 2.6 million tires. Canadian tire plant capacity decreased 4%, to 26.1 million tires a year. Mexican plant capacity increased 1.1%, to 33.7 million tires annually. In the next two years, another fve plants, all under construction, are expected to come online in North America. Tree are consumer tire plants, one is a truck tire plant, and the last is a farm tire facility. Goodyear Tire & Rubber Co. also announced plans to build a consumer tire plant. Te $500 million facility will support demand in North America and Latin America. A site for the plant has yet to be determined, however. The company says the plant will produce high-value-added tires for the replacement and original equipment markets beginning in the frst half of 2017. It will have an initial capacity of close to 6 million tires per year.

1. Kumho Tire U.S.A. Inc. will begin producing tires at its new consumer tire plant in 2016, almost eight years afer the groundbreaking ceremony in Macon, Ga. Te plant will be dedicated to OE business in North America, says John Hagan, national sales vice president. Replacement tire capacity will be added in 2018.

44

Light Passen- truck Truck Others Plant location/ Nonger per per per Year constructed union ISO1 QS2 per day: day: day: day: Total Bridgestone Americas Inc. Aiken County, S.C., 2013 x 0.0 0.0 0.0 0.02 0.02 La Vergne, Tenn., 1972 x x 0.0 0.0 6.2 0.0 6.2 Warren County, Tenn., 1990 x x 0.0 0.0 9.0 0.0 9.0 Bloomington, Ill., 1965 x x 0.0 0.0 0.0 0.29 0.29 Des Moines, Iowa, 1945 x x 0.0 0.0 0.0 4.57 4.57 Wilson City, N.C., 1974 3 x x x 30.5 3.5 0.0 0.0 34.0 Aiken County, S.C., 1999 x x x 20.5 9.2 0.0 0.0 29.7 Joliette, Quebec, 1966 x x 9.3 7.2 0.0 0.0 16.5 Monterrey, Mexico, 2007 x 8.0 0.0 0.0 0.0 8.0 Cuernavaca, Mexico, 1980 x x 11.0 4.4 0.0 0.0 15.4 Total: 79.3 24.3 15.2 4.88 123.69 American Industrial Partners (formerly Carlisle Tire & Wheel Co.) Jackson, Tenn., 2009 x 0.0 0.0 0.0 26.0 26.0 Clinton, Tenn. (Dico), 1974 x x 0.0 0.0 0.0 15.0 15.0 Total: 0.0 0.0 0.0 41.0 41.0 Continental Tire the Americas LLC Sumter, S.C., 2013 x 2.9 0.6 0.0 0.0 3.5 Mount Vernon, Ill., 1973 x x x 29.0 4.0 6.0 0.0 39.0 Total: 31.9 4.6 6.0 0.0 42.5 Cooper Tire & Rubber Co. Findlay, Ohio, 1917 x 7.0 16.0 0.0 0.0 23.0 Texarkana, Ark., 1964 x 24.0 8.0 0.0 0.0 32.0 Tupelo, Miss., 1984/1960 x x 42.0 0.0 0.0 0.0 42.0 Total: 73.0 24.0 0.0 0.0 97.0 Goodyear Tire & Rubber Co. Buffalo, N.Y., 1923 x 4.0 2.5 2.3 5.2 14.0 Danville, Va., 1966 x x 0.0 0.0 11.0 2.0 13.0 Fayetteville, N.C., 1969 x x 30.5 10.5 0.0 0.0 41.0 Gadsden, Ala., 1928 x x 14.5 11.5 0.0 0.0 26.0 Lawton, Okla., 1978 x x x 63.0 0.0 0.0 0.0 63.0 Topeka, Kan., 1945 x x 0.0 1.5 5.5 0.1 7.1 Medicine Hat, Alberta, 1960 x x 0.0 0.0 0.0 12.0 12.0 Napanee, Ontario, 1990 x x x 19.0 0.0 0.0 0.0 19.0 Total: 131.0 26.0 18.8 19.3 195.1 GTY (General/Yokohama) Mount Vernon, Ill., 1988 x x x 0.0 0.0 3.9 0.0 3.9 Michelin North America Inc. Ardmore, Okla., 1969 x x x 40.5 3.5 0.0 0.0 44.0 Dothan, Ala., 1979 x x 1.0 4.0 0.0 0.0 5.0 Fort Wayne, Ind., 1961 21.0 9.5 0.0 0.0 30.5 Greenville, S.C., 1975 x x 28.0 0.0 0.0 0.0 28.0 Greenville, S.C. (C3M), 1997 x x x 7.0 0.0 0.0 0.0 7.0 Greenville, S.C. (Tweel), 2014 x 0.0 0.0 0.0 0.07 0.07 Lexington, S.C., 1981 x x 19.0 5.0 0.0 0.0 24.0 Lexington, S.C., 1998 x x 0.0 0.0 0.0 0.1 0.1 Spartanburg, S.C., 1978 x x 0.0 0.0 7.0 0.0 7.0

MTD January 2015


Plant location/ Year constructed Starr, S.C., 2013 Tuscaloosa, Ala., 1945 Bridgewater, Nova Scotia, Canada, 1973 New Glasgow, Nova Scotia, 1971 Waterville, Nova Scotia, 1982 Queretaro, Mexico Total:

Nonunion ISO1 QS2 x x x

x

x x x

x x

Passenger per day: 0.0 23.0

Light truck per day: 0.0 7.0

11.0

3.0

Truck Others per per day: day: 0.0 0.01 0.0 0.0 0.0

0.0

14.0

0.0 0.0 0.0 7.0

0.0 5.0 0.0 5.18

5.0 5.0 6.0 205.68

0.0

0.5

0.5

0.0 0.0 0.0

0.0 0.0 0.0

1.7 5.0 6.7

0.0 0.0 0.0

4.6 1.6 6.2

5.0 1.6 6.6

0.0 0.0 0.0 0.0

0.33 11.25 8.1 19.68

0.33 11.25 8.1 19.68

0.0

0.0

16.6

0.0

0.0

26.8

0.0

0.0

20.0

1.5 0.5 0.0 2.0

0.64 0.4 0.0 1.04

3.64 9.4 5.0 18.04

2.8

0.0

20.0

50.9 0.0 4.8 55.7 0.0%

79.74 17.0 1.04 97.78 0.0%

680.84 71.5 92.44 844.78 +0.6%

4.0 1.0 0.0 0.0 6.0 0.0 160.5 33.0 Mitas Tires North America Inc. Charles City, Iowa, 2012 0.0 0.0 Pirelli Tire North America Inc. Rome, Ga., (MIRS), 2002 x x 1.2 0.5 Guanajuato, Mexico, 2011 x 3.8 1.2 Total: 5.0 1.7 Specialty Tires of America Inc. Indiana, Pa., 1915 x 0.0 0.4 Unicoi, Tenn., 1997 x 0.0 0.0 Total: 0.0 0.4 Titan Tire Corp. Bryan, Ohio, 1967 x x 0.0 0.0 Des Moines, Iowa, 1943 x 0.0 0.0 Freeport, Ill., 1964 x x 0.0 0.0 Total: 0.0 0.0 Toyo Tire North America Manufacturing Inc. White, Ga., 2005 x x 8.3 8.3 Yokohama Tire Corp. Salem, Va., 1968 4 25.7 1.1 Grupo Carso/Euzkadi (Continental AG) San Luis Potosi, Mexico 15.0 5.0 JK Tyre & Industries (formerly CIA Hulera Tornel) Mexico City, Mexico 0.5 1.0 Tultitlan, Mexico 7.0 1.5 Tacuba, Mexico 2.5 2.5 Total: 10.0 5.0 Corporacion de Occidente SA de CV (Cooper Tire) Guadalajara, Mexico, 2005 x x x 10.0 7.2 U.S. Totals Canadian Totals Mexican Totals TOTAL: 2015 vs. 2014

443.6 43.3 63.8 550.7 +0.4%

106.6 11.2 22.8 140.6 +1.1%

Total 0.01 30.0

Footnotes: 1 Plants that are ISO (International Organization for Standardization) 9001:2000 certifed (www. iso.org). 2 QS (Quality System) 9000 certifcation, required by suppliers to Ford Motor Co., General Motors Corp. and Fiat Chrysler Automobiles US LLC (www.qscertifcation.com). 3 ISO 50001 (Industrial Energy Management Systems). 4 ISO 14001 (Environment Management Systems).

www.moderntiredealer.com

2. Hankook Tire America Corp. expects to begin operation of its consumer tire plant in Clarksville, Tenn., in 2016. Te $800 million facility will have annual production capacity of 12 million tires, which Hankook says will be earmarked “mostly for regional supplies in the North American market.” 3. Giti Tire (USA) Ltd. is building a tire manufacturing plant in Chester County, S.C. Te $560 million tire plant will produce passenger and light truck tires for the replacement and original equipment markets. “Te frst phase of production capacity is expected to be 5 million tires annually,” says Tom McNamara, executive vice president of sales and marketing. “Giti Tire plans to further increase production capacity in response to future market demand and conditions.” 4. Trelleborg Wheel Systems Americas Inc. will build a $50 million radial agricultural tire plant in Spartanburg, S.C. Production is expected to commence by the end of this year. Te manufacturing facility will be located at Trelleborg’s existing premises in Spartanburg. “Although we already sell our products in the U.S. and Canada, local production ofers considerably more favorable conditions, thus enhancing our competitiveness,” says Maurizio Vischi, Trelleborg’s business area president. Being located in Spartanburg will help the company capitalize on “existing partnership agreements with major original equipment manufacturers and distributors,” he adds. The 430,000-square-foot plant is expected to be at full capacity by 2018, Trelleborg Wheel Systems closed its industrial tire plant in Hartville, Ohio, in September 2009. 5. Yokohama Tire Corp. will be building truck tires at its West Point, Miss., plant by the fourth quarter of this year. Eventually, the plant will have annual capacity of 1 million tires. The $300 million facility is being built on 500 acres. Te company says plant expansions could quadruple the initial investment. Yokohama Tire Manufacturing Virginia LLC, which oversees the company’s Salem, Va., consumer tire plant, signed a new four-year contract with the United Steelworkers last June. ■

45


Facts section: Commercial

Double digit growth! New truck tires were in demand at the replacement and OE levels last year

T

o domestic truck tire dealers, 2014 will go down as a banner year. Replacement truck tire demand increased signifcantly compared to 2013. Shipments were up 10.2%, from 15.7 million units to 17.3 million. Retreaded truck tires grew nearly 5%, from 14.9 million units to 15.6 million (see Chart 16). Te segments combined for 32.9 million tires worth $10.3 billion in replacement sales. Tire manufacturers not only enjoyed the increase in replacement sales, but also benefted from a 16% increase in OE sales. According to the Auto Care Association, medium and heavy-duty replacement sales, which include tires, parts, acChart 14 2014 U.S. MARKET SHARE, RETREADED TRUCK TIRES (based on 15.6 million units) Bridgestone (Bandag) 42.0% Goodyear 25.0% Michelin 23.5% Marangoni 5.0% Others 4.5%

Chart 16 2014 TRUCK TIRE REPLACEMENT MARKET BREAKDOWN (Before 2009, the number of retreaded truck tires produced last topped new truck tire shipments in 2004.)

20

Retreaded New

15

10

2009

2010

2011 2012

2013

2014

In 2014, the average price of a retreaded truck tire was $237.48. The average price of a new tire was $381.50.

46

cessories, non-warranty service repair and maintenance for Class 4 through Class 8 trucks, have grown 19.5% since 2009. Of the estimated $81.3 billion market, medium and wide-base truck tires accounted for $4.7 billion. Average new and retreaded truck tire prices were down substantially in 2014 compared to 2013 mainly due to lower raw material costs: Tire segment 2014 New truck $381.50 Retreaded truck $237.48

2013 $401.27 $250.24

2012 $425.00 $228.24

Total medium and heavy truck sales neared 400,000 units for the year, up 12%. Te Auto Care Association projects truck part and maintenance sales will continue to rise steadily, reaching $90.4 billion in 2017. Adding to the good news is a positive forecast from the American Trucking Associations, which predicts 11.6 billion tons of goods will be carried by trucks in 2019. Chart 15 2014 U.S. REPLACEMENT MEDIUM/HEAVY TRUCK TIRE BRAND SHARES (based on 17.3 million units) Michelin

18.0%

Bridgestone

17.5%

Goodyear

12.5%

Yokohama

10.0%

Firestone

8.0%

Continental

5.0%

Double Coin

4.0%

General

3.0%

Hankook

3.0%

Hercules

3.0%

Toyo

2.5%

BFGoodrich

2.0%

Dunlop

2.0%

Dynatrac

2.0%

Sailun

2.0%

Gladiator

1.0%

Kelly

1.0%

Kumho

1.0%

Roadmaster

1.0%

Sumitomo

1.0%

Others

3.0%

MTD January 2015


Quik-Link: 800-687-1557 ext. 11123


Facts section: Commercial

48

Top six replacement OTR tire size categories in 2013 1. 24-inch bias (11.6%) 4. 25-inch radial (29.3%) 2. 24-inch radial (10.0%) 5. 49-inch radial (4.0%) 3. 25-inch bias (16.3%) 6. > 51-inch radial (9.3%) In 2013, OTR tire unit sales were down 21% compared to 2012, partially due to challenges in the coal mining segment, said Easter. Michelle Lane, director of OTR marketing for Bridgestone Commercial Solutions, says the North American mining tire market has been impacted by the ongoing slowdown in global mining operations. “Coal, especially eastern coal, has been negatively impacted over the last couple of years, a trend likely to continue in the near term.” ■

% 26 .8

T

st on

e

BK

35

32 .0

%

Chart 19 REAR FARM TIRE MARKET SHARE, 2014 Total bias and radial shipments: 782,000

Fir e

30 25

6. 0% bo rg Ot 2.7 he % r7 .7 % le

Tr el

in

Al lia

M

ich

el

n Ti ta

10

nc e

6.

0% 8.

Go

od ye a

15

6%

r1

0. 2

%

20

5 0

22

.0

%

Chart 20 SMALL FARM TIRE MARKET SHARE, 2014 Total shipments: 1.25 million

8. 0% .0 % T

16

17 n

Ti ta

.5 %

r1 ye a od Go

20

BK

25

st on e

Ha

5

Ak u

re t

10

4 rv .0% es tK Am in er g i ca 4. Tr 0% n el F le bo arm Ot rg er he 3 2 r 3 .5% .0% .0 %

lis

le

10

.0

%

15

Ca r

Compared to 2013, the replacement farm tire market was down a litle and the replacement OTR tire market was up a litle. But both sufered greatly at the OE level. Radial rear OE farm tire shipments were down more than 17%, from 380,000 units to 315,000. Bias rear OE tire shipChart 17 ments decreased 1.4%, while 2014 U.S. OE FARM TIRE small farm OE tire shipments MARKET SHARE remained fat. REAR RADIAL At the replacement level, (315,000 units) radial rear shipments were up Firestone 43.5% slightly, while bias rear and small farm remained unchanged. Goodyear 34.0% With its Goodyear and Titan Michelin 12.5% brands, Titan International Inc. Titan 5.0% is the rear OE farm tire leader with a 46.8% share of the market BKT 2.0% (see Chart 18). It also owns a Trelleborg 2.0% 52% share of the small farm OE Others 1.0% market (see Chart 17). Te rear replacement farm REAR BIAS (345,000 units) tire market share leader is BKT Firestone 40.0% Tires USA Inc.. Te BKT brand Titan 34.0% has a 40% share of the bias segGoodyear 20.0% ment and a 20% share of the radial segment. Te Firestone Alliance 4.0% brand is second overall (see Trelleborg 1.0% Chart 19). Others 1.0% Scot Sloan, Titan’s product engineering manager, expects SMALL FARM the farm tire market to start (469,000 units) slowly in 2015. “A late harGoodyear 32.0% vest along with the inclement Titan 20.0% weather (last) fall has pushed producers’ projects back a few Firestone 18.0% months.” Carlisle 10.0% However, the extremely Alliance 6.5% wet conditions resulted in a “tremendous” increase in the BKT 6.5% demand for wide fotation tires, American he adds. Farmer 3.0% As for OTR tires, Tim Easter, Trelleborg 1.5% director of OTR tire sales for Others 2.5% Yokohama Tire Corp., believes OE shipments were down more than expected following 2013, when the overall market “botChart 18 2014 U.S. OE REAR FARM tomed out.” He says growth TIRE MARKET SHARE in both overall shipments (660,000 radial and and OTR tire radialization is bias units) expected to be marginal over the next three years. Firestone 41.7% At least the replacement Goodyear 26.7% OTR tire market didn’t Titan 20.1% decrease. Easter says six size Other 11.5% categories represented approximately 80% of all replacement Titan Tire Corp. produces both the Titan and Goodyear brands at its units sold in 2013; 65.3% of three plants. the units were radial.

Fir e

Farm and OTR tire markets

0

MTD January 2015


Quik-Link: 800-687-1557 ext. 11124


Quik-Link: 800-687-1557 ext. 11125


Facts section: Tire sizing and pricing

Start with 205/55R16

Ten worry about the the other 500-plus sizes

T

here are more than 550 consumer tire sizes available in the afermarket, according to the Tire & Rim Association, too many to seriously consider stocking. If you were building an inventory from scratch, however, stocking the two most popular sizes would be a good place to start. Te top two replacement passenger tire sizes in 2014 were hardly surprises: 205/55R16 and 215/60R16. Other top sizes (P-metric and metric combined) included the following: 195/65R15 225/60R16 205/65R15 195/60R15

225/50R17 215/70R15 265/70R17 235/70R16

235/70R16 215/55R17 215/65R16 225/65R17

One of the sizes to look for in the near future is the 235/50R18, which has been OE on the hot-selling Ford Escape. Te top-selling P-metric light truck tire sizes were 265/70R17, 235/75R15, 235/70R16 and 245/65R17. LT245/75R16 has been the number one replacement LT size for the last six years; it also was the top OE LT size from 1993-2010. (See Chart 21 for the most popular OE LT sizes from 2011-2013). Chart 21 MOST POPULAR DOMESTIC OE PASSENGER AND LT TIRE SIZES 2013 OE P-metric/metric

2013 OE light truck (LT)

Size

% of total

Size

P215/55R17

6.1%

LT245/75R17 21.9%

P265/70R17

4.0%

LT245/75R16 14.0%

P275/55R20

3.2%

LT225/75R16 11.3%

P275/65R18

3.1%

LT265/70R17 8.9%

P215/60R16

3.1%

LT265/75R18 8.1%

Te average advertised price for the 215/55R17 tire is $138.27, broken down as follows: $144.53 for a major brand, and $98.24 for a low-cost radial (see Chart 24 on page 53 for benchmark pricing). Overall, the price diferential between the two is nearly 50%. Advertised prices for higher cost major brands and low-cost radial LT tires are closer. Te percentage diference ranges from 15.1% for the LT245/75R17 to 24.9% for the LT245/75R16. Te split is similar when speed rating is taken into account, at least for the H- and V-rated tires. Tire Intelligence LLC, which tracks tire pricing on a daily basis in seven countries and has a database of 540,000 prices, broke down the domestic 215/55R17 price structure from T- through V-rated tires.

Advertised pricing breakdown, 215/55R17 Speed Major LCR Diference Overall V-rated $148.26 $97.33 52.3% $140.97 H-rated $147.10 $102.16 44.0% $143.95 T-rated $138.21 $123.96 11.5% $137.08

According to a recent Modern Tire Dealer survey of independent retail and wholesale tire dealers, the average proft margin on a passenger tire is 26.4%. For a light truck tire it falls to 24%. Te average wholesale passenger tire sales margin is 12.4%.

% of total

Car dealerships vs. quick lubes Quick lubes accounted for 34% of the installed lubricant business, based on volume, in 2002. According to Kline & Co. Inc. research, full synthetic motor oil accounted for an average of 12% of all oil used at quick lubes, while synthetic Chart 22 TOP U.S. PASSENGER TIRE SIZES, 2013 Replacement (Top 10 = 22.5%)

2012 OE P-metric/metric

2012 OE light truck (LT)

Size

% of total

Size

P215/55R17

6.1%

LT245/75R17 22.1%

1. 205/55R16

6. 195/65R15 7. P215/60R16 8. 195/60R15

% of total

P265/70R17

4.4%

LT245/75R16 14.7%

2. 215/60R16

P215/60R16

3.8%

LT225/75R16 11.1%

3. 225/60R16

P275/65R18

3.4%

LT265/70R18 8.1%

4. P235/75R15

9. 215/65R16

LT265/70R17 7.7%

5. P265/70R17

10. P225/60R16

P205/65R16

3.1%

2011 OE P-metric/metric

2011 OE light truck (LT)

Size

% of total

Size

P215/60R16

9.1%

LT245/75R17 22.3%

P265/70R17

5.1%

LT245/75R16 15.6%

1. LT245/75R16

6. LT285/75R16

P215/55R17

4.2%

LT225/75R16 11.9%

2. LT265/75R16

7. LT245/75R17

P235/70R16

3.2%

LT265/70R17 7.8%

3. LT265/70R17

8. 31x10.50R15

P275/65R18

3.0%

LT265/70R18 7.0%

4. LT225/75R16

9. LT215/85R16

5. LT235/85R16

10. LT285/70R17

% of total

Source for Charts 21-23: Rubber Manufacturers Association

52

Major brand versus low-cost radial pricing

Chart 23 TOP U.S. LIGHT TRUCK TIRE SIZES, 2013 Replacement (Top 10 = 68.9%)

MTD January 2015


blends averaged nearly 7% of total volume. Conventional oil accounted for the rest. In 2013, quick lubes accounted for an estimated 36% of the total U.S. installed market. However, Kline & Co. expects that percentage to decline to 35% by 2018, while car dealerships increase their share of the market from 29% to 30%. Full synthetic motor oil usage in quick lubes increased to 20% in 2013 and will continue to trend upward, reaching 22% in 2018.

Chart 25 2014 AVERAGE ADVERTISED OIL CHANGE PRICING (in the U.S.)

Chart 24 2014 AVERAGE ADVERTISED TIRE PRICES (in the U.S.) Size

Major brand Low-cost

Overall

205/55R16

$126.70

$90.71

$122.24

215/55R17

$144.53

$98.24

$138.27

215/60R16

$119.13

$86.79

$114.09

235/75R15

$117.15

$91.60

$112.99

275/65R18

$210.29

$172.90

$206.68

LT225/75R16

$173.66

$142.66

$169.33

LT245/75R16

$188.04

$150.57

$184.22

LT245/75R17

$203.43

$176.76

$200.72

31x10.50R15

$167.72

$138.25

$163.48

Source: Tire Intelligence LLC, www.tire-intelligence.com

www.moderntiredealer.com

Kline & Co. predicts semi-synthetic oil usage, which dropped to 5% in 2013, will plateau there. Te makeup of oil usage in car dealerships relies more heavily on semi-synthetic oil. In four years, it will represent 15% of the volume used at new car dealerships, while full synthetic oil will account for 25% of the volume. Te average advertised price of a conventional oil change dropped 5% to $20.47 in 2014 (see Chart 25). â–

$25 $20 $15 $10 $5 0

2014

2013

Quik-Link: 800-687-1557 ext. 11126

2012

2011

2010

2009

53


Facts section: Retailing and wholesaling

Gender bending Surprise! When it comes to buying tires, women are not the dominant sex

T

here are between 29,000 and 30,000 independent tire dealers in the U.S. in any given year. Whether store owners or store managers, they deal with men and women tire buyers on a daily basis. And most of the time, the primary decision maker, the person who decides which tires to buy and where to buy them, is, contrary to popular belief, male. Recent research by BrightLine Marketing LLC sheds a new light on the tire-buying process. According to a survey of tens of thousands of men and women, when it comes to buying tires, men are the primary decision makers 61% of the time. “One of my primary goals as a market researcher is to make sure my survey is ‘representative,’” says BrightLine Marketing owner Randy Ladd. “One of the ways I do this is to invite an equal number of male and female respondents to take my survey.” Determining the tire decision makers is the key to his survey. “Tis may not necessarily be the person who calls on the phone, the person who drops of the car or the person who hands you their credit card. But it is the person who decided where to buy.” Te percentages vary depending on the city, but not enough to change the results. In Chart 28, the cities chosen were based on extremes: the percentages in San Diego and Sacramento were the closest spread, while Houston and New York were Chart 26 U.S. CONSUMER TIRE RETAIL MARKET SHARE (based on retail sales) Distribution channel

2014

2013

Independent tire dealers

60.5%

60.5%

Mass merchandisers

13.0%

14.0%

Warehouse clubs

9.0%

8.5%

Auto dealerships

8.0%

7.5%

Tire company-owned stores

7.5%

7.5%

Miscellaneous outlets

2.0%

2.0%

the two with the greatest discrepancies. “Te range is a litle over 10% from the lowest market to the highest,” says Ladd. None of the results indicate a trend at this point. “Don’t get me wrong, I am not arguing that tire retailers should focus on men as decision makers,” he says. “Women represent 40% of decision makers in my survey, and most retailers who ignore 40% of the market will have a tough time staying afoat. I am simply suggesting that tire decision makers may not be 50%-50%.”

Distribution channel trends Warehouse clubs and auto dealerships gained market share at the expense of mass merchandisers in 2014 (see Chart 26). Steady growth in the number of outlets in both distribution channels is the partial key to their success. Warehouse clubs have increased their number of outlets 7.7% since 2011. Franchised new car dealerships are slowly building up their numbers again following the recession, and that is in addition to the more than 700 (and counting) Ford Motor Co. Quick Lane locations. Te problems of Sears Holdings Corp. and its Sears Auto Centers factors into its reversal of fortune. At one time, Sears sold close to 20 million tires a year; that total dropped to 3.2 million last year. Independent tire dealers remain the dominant force in the tire industry (see Charts 26-27), led by the top tire dealer in the country, Discount Tire. With close to 900 outlets and Discount Tire Direct, the company sold 28 million tires last year. Te average Discount Tire store sells more than 80 tires a day. ■ Chart 28 2014 TIRE-BUYING DECISIONS BASED ON GENDER

100 80

Chart 27 CONSUMER TIRE DISTRIBUTION CHANNEL MARKET SHARE 2014

2012

Independent tire dealers

77.0%

77.0% 76.0% 75.0%

Tire company stores

8.0%

2008

20

15.0% 15.0% 16.0% 16.5%

0

8.0%

* Miscellaneous includes mass merchandisers, warehouse clubs, car dealers, auto parts chains, muffer shops and oil companies/service stations.

54

52%

48%

48%

63%

64%

37%

36%

Houston

New York

40

8.5%

8.0%

52%

60

Initial channel

Miscellaneous*

2010

% Female

% Male

San Diego Sacramento

Source: BrightLine Marketing, (330) 239-1006

MTD January 2015


Quik-Link: 800-687-1557 ext. 11127


Facts section: Future shock

Look for... more tarifs? You never know. Te same goes for the fascination private equity frms have with our industry

W

hen the Chinese consumer tire tarifs are fully implemented, everyone in the industry will adapt accordingly. Tey will have to: Te tarifs will be in place for a minimum of fve years, and historical precedent makes 10 years a real possibility. They may even become permanent. Tarifs are a given in 2015. What else can we expect to see that will afect the industry in general and independent tire dealers in particular? Here are three more concerns that may become commonplace in the near future. At the very least, they will be topics of discussion.

against passenger and light truck tires imported from China. “As such, I would not be surprised if the next area of focus is on the TBR tire market. China has the ability to produce nearly 120 million radial truck tires, so it is clearly a force that needs to be monitored.” When asked if the United Steelworkers (USW) union is looking at petitioning for the implementation of any other tarifs on imported tires, such as on medium truck tires from China, Wayne Ranick, director of communications for USW International, said the union “will not rule anything out. We are always exploring opportunities to pursue trade cases where U.S. jobs are threatened and the security of families is put at 1. Truck tire tarifs? Consumer tire shipments from China risk by unfair trade.” were up 86% from 2012 to 2014. Over that same period, 2. Private equity influence. What do American Tire truck tire shipments from the same country increased 30%; in Distributors Inc., Dealer Tire LLC, BJ’s Wholesale Club Inc. addition, they represent a greater percentage of their market and Titan International Inc. have in common? Private equity (35.5%) than Chinese consumer tire imports do (25.7%). frms have a signifcant stake in all of them. Tat trend will continue, based on the steady performance of the tire industry through economic ups and downs. Chart 29 Te infux of cash from private equity frms can NEW P-METRIC AND LT TIRE SIZES/SKUS IN 2015 change the landscape quickly. Tanks to backing P275/35R15 SL P305/55R20 XL P315/30R20 SL from TPG Capital LP (Tarrant Capital IP LLC), ATD purchased Hercules Tire Holdings LLC and P235/45R17 XL P245/40R18 XL LT205/70R15 LRC Terry’s Tire Town Holdings Inc. for $655 million. LT215/65R16 LRD LT255/55R18 LRD LT235/65R17 LRD In 2014, MHR Fund Management LLC made a LT255/65R17 LRD LT255/65R18 LRE LT375/45R22 major move on Titan, increasing the private equity shareholder’s infuence over the company. On its LT355/40R22 LT375/40R24 LRF LT225/70R17 LRE website, MHR says it seeks to “exert control or LT265/65R18 LRD LT285/60R18 LRD LT315/70R17 LRC signifcant infuence on its portfolio companies.” 37x12.50R22LT LRE 35x13.50R20LT LRE 38x13.50R20LT LRE Dealer Tire already has had two investment partners. Te minority stake owned by the frst, TA Source: Tire & Rim Association Associates, was purchased by the second, Lindsay Goldberg LLC, late last year. Truck tire pricing is a concern among retreaders. In 2014, Carlisle Transportation Products was sold to American the average price diferential between a new and retreaded Industrial Partners. Wheel Pros LLC was acquired by Audax truck tire was a healthy 46.5%. Unfortunately, some low-cost Group Inc. from Platinum Equity LLC. imports skewed the average. Most recently, Raben Holdings LLC, which does business According to Bob Majewski, owner of Sumerel Tire Service as Raben Tire Co. Inc., sold an equity interest to Palladium Inc. in Newport, Ky., truck tires from China are almost meet- Equity Partners LLC. President Tom Raben said Palladium ing retread prices on a cap and casing. He said a low profle “shares our vision of expanding the Raben Tire footprint within 295/75R22.5 import is selling for $178 ($150 plus the Federal our existing markets and into adjacent markets across the U.S.” Excise Tax) “and they are geting lower. A cap and a casing is 3. Eco-friendly tires. Corporate Average Fuel Economy more than that. Tey need a tarif on it.” (CAFE) standards seting a 49.6 mpg average fuel-efciency Nick Mitchell, senior vice president of research for Northcoast goal for 2025 almost necessitate eco-friendly or low rolling Research Holdings, believes a tarif is a possibility. resistance tires at OE. Te afermarket is a diferent story, however. “Te ITC (International Trade Commission) voted unaniAccording to Modern Tire Dealer’s 2014 Eco Tire Survey, mously in early 2014 to retain the antidumping and counter- tire dealers say 7% of their customers ask for environmentally vailing duties that were levied against Chinese of-the-road friendly tires. Te highest request ratio is, not surprisingly, tires in response to a 2008 judgment, despite the fact that for hybrid vehicles, followed by sedan owners and electric Chinese manufacturers are pressing forward with eforts to vehicle owners. When asked if consumers were willing to fght the ruling. pay more for eco tires, 61% of the dealers responding to the “Te odds look good that similar measures will be fnalized survey said “no.” ■

56

MTD January 2015


feature

There were 580 new exhibitors at AAPEX 2014.

Te center of the automotive universe Attendees fnd equipment innovations, professional development opportunities and demonstrations on the latest products, services and repair techniques at AAPEX By the MTD staff

F

or three days last November, 2,364 exhibitors and 5,343 booths transformed Las Vegas’ Sands Expo Center into an international try-and-buy venue for automotive afermarket products. But the 2014 AAPEX (Automotive Aftermarket Products Expo) did more than bring buyers and sellers together. Te organizations that co-own AAPEX, the Auto Care Association and the Automotive Afermarket Suppliers Association, report 3,348 atendees participated in conferences and education sessions, up 8% versus 2013. Other AAPEX atendees got a heads-up on business trends from business leaders such as Steve Forbes, chairman and editor-in-chief of Forbes Media. He predicted a new businessfriendly environment for the afermarket in a keynote address atended by more than 1,200 people. “AAPEX 2014 was one of the best, if not the best, AAPEX

58

ever, for so many reasons,” says Kathleen Schmatz, president and CEO of the Auto Care Association. “From the quantity and quality of key atendees and record participation at education sessions to hiting a home run with the new general session featuring Steve Forbes and other successful activities, the AAPEX experience was an industry-wide win.” Tere were more than 145,000 people in Las Vegas for AAPEX and the SEMA (Specialty Equipment Market Association) Show, which was held at the Las Vegas Convention Center. Exhibitors and buyers came from 141 countries. Te trade shows run simultaneously during Automotive Afermarket Industry Week. Te afermarket professionals who came to the Sands Expo Center for AAPEX Nov. 4-6 discovered products, tools and technologies designed to add efciency and proftability to their businesses.

MTD January 2015


Bosch shows all its product lines From spark plugs and air filters to fuel pumps, battery chargers and starters for vehicles equipped with start/stop systems, the complete line-up of products from the Automotive Afermarket division of Robert Bosch LLC was on display. For wiper blades, B o sc h ha s a n ew technology and a new product line. Te company added a patented technology called ClearMax 365 to its premium Bosch Icon wiper blade line. ClearMax 365 is a synthetic rubber compound bonded both physically and chemically with a polymer powder coating. It provides longer wear, delivers superior all-weather per formance and resists damage from Thu Teesdale, customer acquisition external contaminants project manager, says the Bosch with ClearMax 365 program like ozone, road debris Icon consists of 29 part numbers such as salt and grime, providing 96% coverage of U.S. as well as chemicals and vehicles in operation.

www.moderntiredealer.com

waxes. Te company also introduced a premium hybrid beam blade based on its patented beam technology called InSight. Te enclosed hybrid construction of the Bosch InSight wiper blade minimizes gaps to reduce snow and ice buildup. Te new wiper has a graphite-coated natural rubber wiping edge with patented internal tension spring, versus the conventional style claws of other hybrid blades. To further reduce the environmental impact of its brake products, the company has developed a proprietary copper-free ceramic friction formulation using renewable materials for which it has fled for patent protection. Bosch says the design and technology behind the new formulation are signifcant industry developments. To indicate the level of copper in its QuietCast brake pads, Bosch is rolling out new packaging Jan. 1, 2015, that will include the industry standard LeafMark. Te LeafMark is a three-leaf cluster with one, two or all three leaves flled in to indicate the level of legislative compliance. Te company’s Blue Disc brake pads will now come in a greener package. Bosch has replaced the paper-and-shrinkwrapping traditionally used in packaging with a heavy-duty coton towel. Te Bosch Towel Wrap package protects the pads, and technicians can use the towel to clean their hands afer servicing a vehicle. Other new products include the C1 Batery Charger for recharging all 12V fooded car bateries, except bateries with Absorbent Glass Mat technology, to their original strength, power and performance. It is scheduled to be available in early 2015. Bosch also introduced afermarket starters for vehicles

Quik-Link: 800-687-1557 ext. 11128

59


AAPEX 2014 equipped with start/stop systems. An original equipment design fne wire double platinum spark plug which complements Bosch’s OE fne wire iridium spark plug was on display for the frst time. Also introduced were engine air flters for the Workshop Filter program and original equipment Displays of gasoline direct platforms for Bosch’s preinjection systems helped Bosch demonstrate its new Parts, Bytes mium afermarket turbine & Services solutions concept, fuel pump modules for which combines replacement late-model vehicles and parts, diagnostics information, many earlier applications workshop business solutions with fuel pumps built on and training for a holistic older technology. approach to vehicle service.

force will sell both brands’ products to the light-vehicle channel. Seventy part numbers were added to the Bendix disc pad brake program to provide coverage for 393 more late-model applications including 2015 vehicles. Ride Control added more than 200 light vehicle SKUs for mainstream, light truck, sport, niche and luxury vehicles to the Gabriel shocks and struts brand. Te new product introduction (NPI) covers more than 10 million popular vehicles in operation. Gabriel’s 2015 NPI includes frst-to-market additions to its premium ReadyMount line. Gabriel says it is frst to ofer pre-assembled struts for the Suzuki Forenza and Reno and early 2000 Honda Pilot and Acura MDX. Ride Control will launch a loyalty program for service professionals in 2015. Te Gabriel Answerman Advantage program will be available to technicians and shops in the

Gabriel expands sales force Ride Control LLC has more sales professionals along with new products and a loyalty program. “We are investing in Gabriel and our frst step is an expanded Gabriel sales force,” says George Ruhl, president and chief operating ofcer of MAT Holdings Inc., which purchased Gabriel in 2012. In August 2014, MAT Holdings licensed the rights to the Bendix brand in the U.S. Te company says its expanded sales

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Ride Control announced frst-to-market additions to the Gabriel ReadyMount line of preassembled struts.

Quik-Link: 800-687-1557 ext. 11129

MTD January 2015


U.S. and will include POS materials, promotions, rewards and business tools.

New bearings and seals program Schaefer Group USA Inc. launched a full line of premium bearings and seals through its FAG brand for the North American afermarket. Schaefer says the bearings and seals program is focused on passenger cars and light trucks. New to North America, the program has more than 3,500 SKUs providing over 95% coverage of product categories from the 1980s to today. Jens Schueler, president of Schaefer Automotive Afermarket North America, says the company is an ideal strategic partner for the automotive afermarket due to its: global manufacturing and distribution facilities; comprehensive in-vehicle presence through the LuK, INA and FAG product lines; and research and development teams.

Dull, general manager. “For example, our new tool features the ability to decode a vehicle identifcation number in one second with one click. Plus, the speed of diagnosis is measured in seconds versus minutes for competitors’ tools.” Features include J-2534 pass-through capability for refashing and reprogramming. Other functions include cylinder balance tests, compression testing, key

relearn and misfire graphing. Mahle says it is not necessary to buy or lease extra hardware as the scan tool’s vehicle communication interface and sofware can be used with a technicians’ current desktop, laptop or tablet. To further lower cost, TechPro is available as a subscription and sofware-based model instead of a large investment in hardware.

Pennzoil simplifes oil portfolio Shell Lubricants, a subsidiary of Royal Dutch Shell plc, introduced a redesigned Pennzoil brand portfolio of transmission and axle oils. Te Pennzoil Platinum Transmission and Axles Oils are designed to cover 95% of the passenger cars and light trucks in North America. Te tiered line of automatic transmission fuids, manual transmission fluids and axle oils are part of the Pennzoil Platinum product. “Te Pennzoil Platinum Transmission and Axles Oils build on the technology of Pennzoil Platinum motor oils by ofering full synthetic performance with a wide range of products designed to meet vehicle needs,” says Doug Kooyman, Pennzoil global brand manager. Te simplifed line of Pennzoil driveline oils allow shops to stock only one premium brand of driveline lubricants to meet their needs, according to the company.

Mahle speeds diagnosis Mahle Service Solutions, a division of Mahle Afermarket Inc., introduced its frst diagnostic scan tool exclusively for the afermarket. Te company called TechPro, which provides results within seconds, a “game changer” for its speed, ease of use and low cost of entry ownership. “TechPro is all about making technicians more efcient,” says Max

www.moderntiredealer.com

Quik-Link: 800-687-1557 ext. 11130

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WHO WILL BE THE ONE IN 2015? Our new, faster and easier MODERN TIRE DEALER’S online nomination process 23rd ANNUAL for Modern Tire Dealer’s Tire Dealer of the Year makes nominating your candidate a breeze! There is no higher honor a tire dealer can receive than joining the prestigious list of winners of MTD ’s Tire Dealer of the Year award. In selecting our Tire Dealer of the Year, judges will consider fve elements: 1. Business Success 2. Marketing Skills 3. Management Skills 4. Industry Knowledge 5. Community Involvement Any independent tire dealer, except our previous winners, is eligible for the competition. Qualifcations of nominations will determine the winner, so keep entries factual and simple. Support material may be included, but is not mandatory. In addition to the industry recognition, the MTD Tire Dealer of the Year will receive a minimum of $1,000 from MTD for his or her favorite charity. The winner also will be featured on the cover of our September issue and spotlighted in a feature article. To immediately nominate a dealer, log onto www.moderntiredealer.com and fll out our online nomination form. For more information about nominations, contact MTD Editor Bob Ulrich at: bob.ulrich@bobit.com.

I nominate for Modern Tire Dealer’s Tire Dealer of the Year: Name _____________________________________ Dealership __________________________________ City _____________________________ State _____ Email ______________________________________ Phone______________________________________ Nominated by: Name ______________________________________ Relationship with nominee ______________________ Email ______________________________________ Phone______________________________________ Mail to: Modern Tire Dealer of the Year, 3515 Massillon Road, Suite 350, Uniontown, OH 44685. Deadline for entries is May 22, 2015.

NOW is the time to act! You’ll fnd the nomination form on our website: www.moderntiredealer.com/doy-2015


“To be recognized as MTD’s Tire Dealer of the Year is a great honor and one I’m very proud to receive.”

Bruce Halle | 2014 Tire Dealer of the Year


AAPEX 2014 for Fram Filtration. Te Fram Pro Series is the frst product line to align oil flter selection with the specifc oil used most frequently by professional installers and commercial garages. Two oil flter choices are available. Fram Pro Synthetic is engineered to pair with synthetic and blended oils. Te Fram Pro flter is engineered for vehicles that use conventional oil with short change intervals. More than 90 oil flter, 170 air flter and 70 cabin air flter part numbers are available. Fram Group also manufactures and markets the Prestone and Autolite brands.

Advance adds Subaru to MotoLogic

Mike Mavrigian, editor of MTD’s sister publication Auto Service Professional, gets a hands-on demonstration of Advance Auto Parts’ MotoLogic diagnostic tool.

Fram unveils flter line Fram Group IP LLC announced the rollout of the Fram Pro Series product line, a set of oil, air and cabin air flters. “With the Fram Pro Series, we’re giving shops the opportunity to grow their business by ofering a more complete oil change with trusted, quality flters engineered to pair to a specifc oil ofering,” says Rich Fleming, vice president of sales and marketing

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Advance Auto Parts Inc. demonstrated the newest capabilities of its Web-based MotoLogic Repair and Diagnostics service, part of its MotoShop Technology Tools portfolio. Te company added Subaru original equipment data for all Subaru models from 2005 to 2015 to the service. The company says MotoLogic provides unedited OE content for more than 94% of cars and light-duty trucks on the road today. Te new Subaru content includes in-depth repair articles, wiring and diagnostic articles, and Subaru tech tips, which are typically released exclusively to dealers. In addition to Subaru, the MotoLogic tool features OE repair and diagnostic information from most major manufacturers. MotoLogic supports enhanced color wiring diagrams and the preservation of OEM-specifc features and functionality, such as electrical fow diagrams. An advanced search function, including the recent addition of auto-complete suggestions,

Quik-Link: 800-687-1557 ext. 11131

MTD January 2015


II vehicles (1996 and newer). With Golo, a technician is able to remotely read and clear codes and review live data from thousands of miles away, according to Launch Tech.

Autel unveils new universal sensors

The charging cable is inserted into a micro USB port in the tail of the new HP3R focusing penlight from Coast.

delivers instant results based on virtually any criteria: sounds, smells, OBD-II codes or components.

Autel Intelligent Technology Co. Ltd. introduced two programmable universal sensors and sofware for programming the sensors. Te company says the 315 MHz and 433 MHz sensors are specially built for sensor replacement to perform like OE sensors in terms of signal interval, durability and functionality. Te sensors allow technicians working with two SKU sensors and the company’s programming tool to replace over 98% of OE sensors and cover up to 99% of U.S. and Canadian vehicles. Te universal sensors are part of Autel’s MaxiTPMS Universal Service Series.

Coast adds rechargeable penlights Coast Products Co. introduced a rechargeable focusing penlight with a brightness of 275 lumens that is designed for the close work performed by vehicle inspection and service technicians. Te HP3R provides service professionals with an all-purpose light for troubleshooting problems and working under the hood, according to Coast. For close work, the user dials in the exact flood beam needed by twisting the focusing bezel. Te universal focusing optic enables the HP3R to cast a nearly perfect circle of smooth and consistent light.

Launch Tech troubleshoots remotely

The Golo connector from Launch Tech transmits live vehicle data via Bluetooth to the car owner’s cell phone.

Products displayed in the Launch Tech USA Inc. booth included Golo, a realtime remote diagnostics platform. Launch Tech says technicians use the Golo OBD interface with its new Android-based Scan Tool tablet to perform remote vehicle diagnostics on OBD

Innova debuts coil, control module tester Innova Electronics Corp. unveiled its 4400 Coil and Control Module Tester. Te tester is designed for in-store use to easily and safely test the ignition circuitry of ignition coils and DIS/ EIM control modules to determine if the part is good or bad. Te company says the 4400 Coil and Control Module Tester is user-friendly and saves time and money at the point-of-sale by helping counter personnel quickly evaluate modules and sell the right part the frst time.

Conti’s belt is quiet and durable ContiTech AG introduced the Conti Unipower Tough Grip multi V-belt with textile surface developed by the ContiTech Power Transmission Group. Te company says the special automotive drive belt greatly minimizes noise buildup when accessories like the air-conditioning system, power-steering pump or generators are in operation. Te pulley side of the belt has a fabric reinforcement to make it highly resistant to wear. “Tis multi V-belt shows itself to be extremely sturdy when having to operate with misaligned components in the drive system, says Ralf Berger, head of sales and key account management at the ContiTech Power Transmission Group.

Mitchell 1 enhances ProDemand Mitchell 1 has incorporated a dashboard into its ProDemand with 1Search sofware that provides the user with the top 10 most common repair issues and lookups for a selected vehicle. In addition, it is “mobile optimized,” according to Ben Johnson, director of product management. “Technicians just tell ProDemand what vehicle they are working on and we provide what we know about the vehicle, broken down into four lists — components, codes, symptoms and lookups.” Mitchell 1 spent time with customers “to learn what they really needed,” said Johnson.

DENSO releases iridium spark plug

Autel says its new TPMS universal sensors have a clampin pivoting system design to ft all types of wheels.

www.moderntiredealer.com

Te new Iridium T spark plug from DENSO Products and Services Americas Inc. is engineered to last more than 100,000 miles on the road. Te company says Twin Tip technology allows the spark plug to create the largest spark concentration and explosion, which translates into more power and superior fuel economy than other spark plugs. ■

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Focus on dealers

Worth more than 1,000 words Direct Tire & Auto Service sees real results with video By Joy Kopcha

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fer 40 years in business, Barry Steinberg found a way to increase efciency at his Direct Tire & Auto Service location in Watertown, Mass., by 15% to 20%. His secret: video. “Tis product is just sensational,” Steinberg says of the tool from Quik Video LLC. Te tool allows Steinberg’s technicians to take videos of cars in the shop and show customers what repairs, if any, are needed. Te technician inspects the car. Ten, using an iPod, the technician presses the record buton on the Quik Video app (VSS Studio in the iTunes app store) and tells and shows the customer what he found. Tere’s no editing. No squeezing or compressing to make the fle small enough to send. Videos can be up to four minutes long, but at Direct Tire they’re usually half that long. With the customer’s contact information already inputed into the system, the technician sends the video to the customer via e-mail and text message. It might not sound like a revolutionary thing, but Jack Gardner, chief operating ofcer for Quik Video, says it’s a tool that gives customers a mini mechanical lesson, and also eliminates the fear their service tech is taking advantage of them. “We’ve given them proof that this is what they need, and we’ve empowered them to make a decision,” says Gardner. Video messages are color coded. Green means the car is in great shape and no work is needed. Yellow warns of a repair that will be needed down the road, like worn brakes or cracks in a control arm bushing, and a red-coded video shows a repair that needs atention now. Shops can monitor when a customer watches a video, how much of it is viewed, if they watched it once or 10 times, and if they sent it to anyone else. At the end customers are invited to call the shop, or they can ask the store to contact them. Steinberg says nine out of 10 times the customer agrees to the recommended repair afer viewing the video. “In the past, 60% of the people would say ‘can I call you back?’” It’s a phrase service managers know too well, Steinberg says. Tey present a list of items that need atention and a total price. Ofen customers didn’t understand the repair. Sometimes customers needed time to digest the information, or the cost of the repair, or maybe needed to talk it over with a spouse. “What that forced us to do was put that car back together, take it out, pull the next one in, and hope they call us back the same day.” It was typical to roll cars in and out of the shop twice, but the video is changing that. Customers are watching the video, calling back and ordering the work — with confdence, he says. “People are just blown away by the transparency. It’s a very honest presentation of the work,” Steinberg says. “Te sell rate is very high.”

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Bob Lane, vice president of operations and general manager at Direct Tire, flms a customer video. Direct Tire starts each video by showing the vehicle’s license plate so the customer is certain he’s seeing his vehicle.

Steinberg and his team log into their Quik Video dashboard. It tracks every video and customer, as well as the price of the original work order and the fnal invoice. If a technician determines a customer’s vehicle needs multiple repairs, but the customer only elects to do some of the work immediately, the service advisor can immediately schedule a follow-up message. Tat message — with the original video — can be sent a week, month or even a year later to remind the customer of the needed repairs. Direct Tire started using the video program in October 2014, and by mid-December Steinberg said “a dozen or so” customers who had opted not to get all of the diagnosed work done originally had returned for the repairs. “Our efciency has increased a good 15 to 20%. It’s an improvement in efciency, an improvement in transparency to the customer. Te sale is made a lot more easily. We’re saving time on the sales side,” Steinberg says. “Tis is a real wow for us.” Gardner calls that the biggest advantage. “Instead of the service advisor calling the customer and trying to sell them something, the customer is calling looking to buy something. Not only did we sell the work, but I gave the service advisor 17 minutes, 45 seconds of his time. Tat’s the single biggest diference at the end of the day.” Additionally, Steinberg is watching which technicians are taking videos and monitoring how each person’s videos result in sales. He sees that competition amongst the team as a good thing to drive beter business. Steinberg plans to expand Quik Video to his other three shops in the Boston area. Direct Tire is the frst tire store to use the product. So far Gardner has primarily marketed Quik Video to car dealerships. Users sign up for a minimum of a 12-month subscription and pay a monthly fee that ranges from $795 to $1,295. ■

MTD January 2015


Counter intelligence

Let’s start at the beginning: It starts and ends at the counter

T

he main premise of this column, Counter I was in an auto dealership a few days ago, Intelligence, is that the sales counter is and I always take a moment to check out the the most important place in a tire and accommodations in the showroom and service service store. department waiting area. Tese areas have hisWe started with the idea that if it doesn’t happen torically been accommodating, but it’s geting at the counter, it doesn’t happen. We’ve looked at ridiculous; high-end coffee machines, qualthe activities at the sales counter from professionality vending machines, full-on leather seating, ism, customer service, sales skills, presentation giant oversized TVs. Te sales counter in the skills and listening skills to product knowledge, service/parts department was complete with etc. We’ve discussed the impact of competition By Wayne Williams sof lighting, real plants, and a small shelf on and Internet pricing on the sales counter staf. the front of the counter for a customer to rest In addition to being cognizant of all the personal inter- their purse or backpack while retrieving a wallet, credit action and communication that takes place at the sales card or checkbook. Of course, there were clean foor mats counter, it’s important to recognize that it is a place. It’s in front of the counter with the brand logo on them. Did I the most important piece of real estate inside the store. mention free WiFi? Oh, and the smell; I couldn’t see the Every visit, every customer, every sale runs through the air-freshener, but wow. Te look and feel was superior to sales counter. In a retail tire and service store, it all starts most tire stores. and ends at the counter.

Building a beter experience Te physical space I’d like to discuss the physical place (aka the physical space) where all the action happens. We generate work orders from the sales counter, and in a well-run store, nothing happens without a work order. No vehicle gets looked at, inspected, or fnds its way into a service bay and onto a lif without a work order. It all starts at the sales counter. As we all know, a good frst impression is important. What does your sales counter look and feel like to a customer? Most sales counters are much defned; one side (the inside) is for employees, and the other side, or outside, is for customers. Customers just walk to the front of the counter without being told, and they don’t need a sign, they understand the space. Many are aware of the look and feel of the area. Te customer notices if the area is orderly or in disarray; they notice if it’s clean or could use a shot of 409. It’s interesting to watch customers when they are in the counter zone. If every customer starts out and ends up at the sales counter, if it’s the prime piece of real estate, doesn’t it make sense to make customers as comfortable as possible? It stands to reason that a comfortable customer will feel more cared for versus an uncomfortable customer. I’ve noticed that many sales counters have stools for the employees to sit on, yet customers are required to stand. I’ve noticed sales counters where most of the counter surface space is taken up by the tools that employees need to do their jobs, such as computer monitors, keyboards, printers, work-order holders, etc., with very litle space lef for consumers. It’s as though the counter was designed for the store personnel, and customers were an aferthought. Te question is, of course, is your sales counter customer friendly?

www.moderntiredealer.com

Meanwhile, back at the tire store, we forgot, or perhaps never considered, the impact of the space we have provided for the customer. In the coming articles, I’m going to make some solid suggestions for improving the sales counter, making it a more pleasant space for both sides of the counter. I’m going to borrow some ideas from a few retailers that execute skillfully thought-out counter experiences. As an example, Starbucks moves many people in and out of their locations, and they all start at the counter and move to another counter. While at the frst counter area in Starbucks, Is your sales counter there are lots and lots of items prop- customer friendly? Is it erly merchandised: gif cards, music, convenient for you and etc., etc. You can’t see the back of the your customers to concomputer/register because it is hidden duct business? It’s time took a hard look at with a well-executed merchandising we this prime real estate. plan. On the other hand, at the tire store, there is an $80 tire-rebate advertising card taped to the back of the monitor right above where the cables lay on the surface space. As retailers, we actually compete at some level with all other retailers when it comes to the look and feel at the sales counter. We can do beter, and beter is beter for everyone. Let’s be beter. ■ Wayne Williams is president of ExSell Marketing Inc., a “counter intelligence” frm based in La Habra, Calif. He can be reached at exsellmkting@gmail.com.

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European notebook

Optimism and designer innovation for 2015

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s we start a new year in the European tire ment in the tire industry but also look extremely market, the main question is, “What is realistic. First of all there is the very interesting going to happen in the next 12 months development of the tire industry and the fashion in this unpredictable but never dull business of world joining forces in the future in an interesting ours?” Well, before I look ahead, I want to look and highly unique partnership. back at what has happened in the last 12 months Recently I learned of Singapore-based tire which will give me a fair prospectus for the future. producer Omni United (S) Pte. Ltd. , manufacturer If I were to say it was a successful trading year of the Radar tire brand, linking with the universally then it would be with mixed aspirations as it has successful Timberland clothing brand (which is been extensively documented that many European By John Stone a leading label in Europe) to use recycled tires in countries have experienced contrasting trading future Timberland footwear. (See MTD’s account periods. Tere is no doubt that some countries in Europe of this in the November issue, “Tires as a lifestyle choice.”) have enjoyed a modestly promising period while others A specially produced compound has been used in this have signifcantly sufered in terms of tire sales and profts. new tire range that is particularly suited for recycling. Te Te UK has continued to enjoy a growing economy which process will be carried out by a selected network of tire obviously has been refected across all industries including recyclers who will collect worn Timberland tires and recycle the tire and wheel market. them into crumb rubber before being further processed into Taking everything into consideration, as far as Europe is sheet rubber and implemented into Timberland footwear. concerned 2014 cannot completely be writen of as a failure When I spoke with G. S. Sareen, CEO of Omni United, he as there have been a number of product successes. One of pointed out that at the moment the tires will not be available the most exciting is Continental’s development in Germany in Europe, but it is hoped that following an international of using the dandelion fower as trial sales period in North America the concept of tires a futuristic source for rubber. being turned into shoes will hit the European designer During the next 12 months it shopping scene. will be extremely interesting to However, I am reliably informed that the concept of see if the developments so far linking tires and fashion footwear has really caught the eventually lead to tires being imagination of European-based tire producers, and I am produced from dandelion confdent that other equally enterprising deals will be fowers. announced during the coming 12 months. Moving on and looking to Also, the running saga of Michelin’s long-awaited Tweel the future, I’m sure the big airless tires is once again being predicted to gather momenquestions in 2015 have to be, tum in Europe during 2015. I have been following this “What will happen in the Euro- development for the past few years. Many people believe pean tire industry? and, “Will the Tweel is now a step closer to having a signifcant impact the European Union recover, on tomorrow’s tire industry. Tey feel it could eventually A true “designer” tire is comwhich hopefully will lead to replace the radial patern in many market segments — ing from Omni United. sales growth in our market?” including passenger cars. To be honest (and sorry to At the moment the Tweel is available in the industrial be a bore), but at this stage... sector for use on small, front-end skid steer loaders, but nobody is really sure and only the growing belief in Europe is that the day will come time will tell. On the other when people will drive cars with airless tires. hand, there has to be a much So certainly technology is booming as we enter a new more positive atitude when trading year, and it will be interesting to see if these positive it comes to new, innovative vibes are matched by a growth in sales and profts. ■ developments that are currently in the pipeline for 2015. John Stone has been working within the global tire industry for the past 20 years. In 2004 he launched his own consulting Promising areas company, Sapphire Media Services, which caters to business In particular there are two media clients around the globe. Stone also writes for tire and signifcantly promising areas automotive-related publications in Europe, South Afica The airless Tweel is being developed by Michelin. that not only arouse excite- and Asia.

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MTD January 2015


Focus on industry

New tires and pro basketball promotions boost Kumho brand By Ann Neal

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umho Tire U.S.A. Inc. is replacing its products and refreshing its image in 2015. Te company previewed six tires and a brand awareness campaign built around professional basketball at its 2015 dealer meeting in Vieques, Puerto Rico. Te new products for 2015, and the quarters in which they will be released, are: • Ecsta V720, an extreme performance summer tire initiallyy available in six sizes in 15-inch to 18-inch rim diameterss and W speed rating, frst quarter; • Ecsta 4XII, a UHP all-season tire in 53 sizes in 15-inchh to 20-inch rim diameters, V and W speed ratings with a 40,000-mile tread wear warranty, replaces the Ecsta 4X, X, second quarter; • Solus TA71, a grand touring all-season tire in 38 sizes inn 15-inch to 19-inch rim diameters, V and W speed ratings, s, replaces the Ecsta LX KU27, second quarter; • Crugen Premium KL33, an all-season CUV and SUV tiree in 30 sizes in 16-inch to 20-inch rim diameters, T, H andd V speed ratings with a 50,000-mile tread wear warrantyy and is an OE ftment on the 2013-14 Hyundai Santa Fee and 2013-14 Kia Sorrento, second quarter; • Road Venture AT51, an all-terrain tire in 43 P-metric and LT-metric sizes, in 15-inch to 20-inch rim diameters, replaces the Road Venture AT KL78, second quarter; and • Solus TA11, a touring all-season tire in 44 sizes in 13-inch to 18-inch rim diameters, T speed rating, 70,000-mile tread wear warranty, replaces the Solus KR21, third quarter. In September 2014, Kumho released the Solus TA31, a high-performance all-season tire in 28 sizes in 14-inch to 18-inch rim diameters, T, H and V speed ratings and 60,000mile tread wear warranty. An OE ftment on the 2014 KIA Soul, 2014 Chrysler 200, and 2014 Hyundai Sonata, the Solus TA31 replaced the Solus KH16. Eric Domme, sales manager at Lisac’s Tire Inc. in Bute, Mont., says his company is “defnitely looking forward to” the AT51 all-terrain tire. “Since we’re in LT country, 60% to 70% of our sales are LT. We know the AT51 will be a big seller. We’re prety fred up about it.” He expects high demand for Ecsta 4XII, the UHP all-season tire, too. Te TA31 launched last September is also selling well for the company, which has four retail and two wholesale locations in Montana. Kumho CEO and President Harry Choi says the company has taken two steps to resolve recent product availability issues. One was to relocate production of tires for the North American market from its plants in China to plants in Korea and Vietnam (the Chinese capacity is now used for the European market). Te other was to increase production of original equipment ftments.

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Kumho’s frst plant in the U.S. is in Macon, Ga., and is scheduled to begin producing four million tires annually in January 2016. Te plant will be dedicated to OE production in its frst phase of operation, which will enable Kumho to increase replacement capacity at other plants. Te company is growing its OE presence in North America with 36 ftments for 2015 Chrysler, General Motors, Hyundai and Kia models compared to 28 ftments in 2014. Te company is aiming to sell 10 million units by 2018 for a 3.5% share of the U.S. market.

The introduction of six new tires to the U.S. market in 2015 will help improve Kumho’s image, according to CEO and President Harry Choi.

Kumho hits the hoops

E ic Domme, Eric Domme sales manager at Lisac’s Tire in Butte, Mont., examines one of the new Kumho tires on display at the company’s 2015 dealer meeting.

The company is raising awareness of the Kumho brand through a professional sports sponsorship. Kumho signed a three-year agreement to be the ofcial tire of the NBA and the NBA Development League (D-League) earlier this year. “We’re the ofcial tire of the NBA and that brings a lot of collateral with it and a lot of benefts from the sales side, not just the brand building,” says John Hagan, national vice president of sales. Te company’s NBA-related marketing activities create opportunities for dealers to engage customers, according to Hagan. An integrated and intensive marketing program using social media, television, print and digital advertising, subway and train signage, billboards and contests is planned during the National Basketball Association’s All-Star Weekend in February 2015. Hagan says Kumho is “taking over New York City” for the All-Star Weekend. “We’re hiting every touch point we can possibly hit during this event.” Te company will continue its NBA promotions throughout the season. ■

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Focus on dealers

E.T. Paul Co. closes after 119 years Dealer loses property to eminent domain By Joy Kopcha

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fer 119 years in business, the second-oldest independent tire dealer in America closed its doors on the last day of 2014. Te state of Ohio has exercised its power of eminent domain to take the property the E.T. Paul Co. has owned for more than a century and use it to expand Interstate 71. Mike Paul, the fourth-generation owner of this tire shop near downtown Columbus, Ohio, has had 12 years to worry about it. But because the road project was delayed over and over again, business continued. “For 12 years we’ve been in a Catch-22,” says Paul, 64. “For probably six of those years (the state) led me to believe they were going to take us that year. It puts you in an awfully crummy spot. “It has adversely afected our business. Do you spend money on capital improvements? Do you hire somebody?” Ten, two months ago, appraisers showed up. It was a sign the state ofcially had determined the business was in the right of way. “Once the appraisers come in, it’s just a mater of time,” Paul says. Before plans to expand the interstate were announced, Paul says business was growing by 10% each year. But it tapered of. Twelve years ago one in every dozen customers mentioned the roadwork and inquired what it might mean for E.T. Paul Co. By 2014, four in 12 customers were asking the question. “Lots of customers were incredibly loyal to us,” Paul says. “For them to continue to come here knowing that we may or may not be here is a real testimonial to the company, and especially to Mike (Cremeans) the general manager who’s done just a terrifc job.” Te one good thing, Paul says, is he was able to satisfy his top concerns before the business closed. Tanks to a partnership with another independent tire dealer about a mile away, all eight E.T. Paul Co. employees have a job. Grismer Tire and Auto Service also will honor every tire, parts and service warranty. Paul sent letters to customers and vendors on Dec. 16 announcing the business would close at the end of the month. Establishing the relationship with Grismer Tire was key, Paul says. He called them “friendly competitors” that served slightly diferent customers. While E.T. Paul focused more on high end vehicles, Grismer is more of an all-around tire shop. Still, it seemed like a natural ft he said, especially since Grismer is a family-owned, generational business, too. Paul and his shop’s manager, Cremeans, have 50 and 52 years, respectively, of experience at E.T. Paul. Both will spend time in the new year at Grismer welcoming customers. In addition, Paul has lots of work to do. Closing the doors to the public was step one. Next he’ll liquidate the assets and then deal with

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the state to setle the fair market value of the property. Afer that, he’s going to go to work. E.T. Paul Co. is more than a tire business, and Paul says he’ll work with the investment and real estate portions of the company in the future. “I’m certainly not going to retire,” he says. Does he have advice for another tire dealer who might face an eminent domain challenge? “Once they’ve established their right of way, do your best to fnd another location as soon as you can,” Paul says. Initially he hoped to follow his own advice, but because his tire business was heavily dependent on two nearby hospitals, his focus was on a small geographic area. One parcel of land became available a few years ago, but the state wasn’t interested in seizing it early. Plus, Paul says his two grown sons aren’t interested in making the tire business their careers; they’re both following in the footsteps of two great-grandfathers who were doctors. It was Paul’s great-grandfather, E.T. “Eddie” Paul, who founded a blacksmith shop in 1896. As horse-drawn carriages and the need for horseshoes gave way to vehicles, he added a tire shop. Relics of the original business, including horseshoes and a certifcate proclaiming the business a “practical horseshoer,” hung on the wall until the last day. ■

The Columbus Museum of Art’s “Think Outside the Brick” exhibit features the E.T. Paul Co. tire store near downtown Columbus. The model was built by a member of the Central Ohio LEGO Train Club.

LEGO inspiration Carolyn Cheney lives in the Olde Towne East neighborhood near E.T. Paul Co. She recreated the shop out of LEGOs because “it has such interesting brickwork.” She feels bad about having to omit “Son Co.” from the name on her creation, but noted the current owner, a great-grandson of the founder, is left out of the sign, too.

MTD January 2015


TPMS

Jeep Grand Cherokee 2005-2013 Two TPMS systems, base and premium, are available Tire pressure monitor warning indicators

SUBJECT VEHICLE: 2005-2013 Jeep Grand Cherokee RELEARN PROCEDURE? Yes. SPECIAL TOOLS NEEDED? Sensor IDs can be programmed using a TPMS-RKE analyzer tool. Te tire pressure monitoring system (TPMS) in the 20052013 Jeep Grand Cherokee monitors air pressure in the four road tires and the spare tire (if the vehicle is equipped with a full-size spare). Te TPMS uses radio and sensor technology to monitor tire air pressure levels. Sensors, mounted to each road wheel as part of the valve stem, monitor tire pressure, air temperature inside the tire, wheel acceleration and the sensor internal batery status for all four active road tires (and the spare tire, if applicable). Tere are two tire pressure monitoring systems available, a base system and a premium system. Te base system does not specify how many tires are low or where they are located. The premium system does indicate which tire is low. The sensor will broadcast this information, along with a unique 32-bit ID, to a central receiver circuit located inside the wireless control module (WCM). On premium models, sensor transponders are mounted in wheel housings (two in front, and one in rear). If a warning or fault condition exists, the WCM will send a bus message request to illuminate the low pressure warning light and to sound a chime. On some models, the instrument cluster will display warning messages. Te TPMS remains active even if no tire pressure-related message is displayed. Te sensors lay dormant (Park mode), then wake and start transmiting (Drive mode) when the vehicle frst reaches speeds over 20 mph (32 km/h). Once the wheels stop rotating for a period of approximately 20 minutes, the sensors shut down until again awakened. Although not transmiting as when in Drive mode, while in Park mode, the sensors still transmit approximately once every 13 hours to let the receiver know air pressure status at that time.

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If the TPMS module detects that the tire pressure in any road tire is going low, a chime will sound and the indicator lamp will turn on. In addition to the chime and lamp, if equipped with the Electronic Vehicle Information Center (EVIC), a graphic display of the pressure value(s) and the position of the low tire(s) will fash. Once pressure in the suspect tire(s) raises above the Low Pressure OFF Treshold, and the TPMS module receives a valid transmission from the sensor the lamp will go out. If a system fault is detected due to a missing sensor signal, in addition to a chime and an indicator lamp fashing, a “Check TPM System” text message will be displayed in the EVIC (if equipped), and the tire pressure graphic display will display “ – -” in place of the pressure value. Afer the fash sequence the TPMS indicator lamp will remain illuminated. Te system will return to normal once the TPMS module receives a valid transmission from that sensor location. If a system fault is detected, the indicator light will fash on/ of for 10 to 60 seconds, once every 10 minutes. See appropriate manufacturer service information. NOTE: On some models, if one of the vehicle’s active tires has been replaced by the spare or a wheel rim not equipped with a TPMS sensor, the indicator light will fash for approximately three seconds every 10 minutes.

Reset procedures NOTE: If a tire pressure sensor has been replaced, the TPMS needs to relearn tire pressure sensor IDs. If the warning light is lit continuously due to low pressure in one or more tires, adjust tire infation to specifcation. Te light will remain on until tire pressure is properly set. Afer adjusting air pressure in a tire, allow approximately two minutes for the message or indicator lamp to go out.

Tire pressure sensor retraining Te TPMS automatically learns and stores the sensor’s ID while driving afer a sensor has been replaced. Tere is no formal retraining procedure necessary. Drive the vehicle for a minimum of 10 minutes while maintaining a continuous speed above 20 mph (32 km/h). During this time, the system will learn the new sensor ID code and will clear any DTCs automatically. If a sensor cannot be trained, see appropriate manufacturer service information. Te sensor IDs also can be programmed using the TPMS-RKE analyzer tool. Scan each TPM sensor at each road wheel, and store each Sensor ID in the correct location (lef front, lef rear, right front and right rear). Connect the TPM-RKE analyzer tool to the scan tool. Ten follow the programming steps outlined in the diagnostic scan tool for “Program Tire Pressure Sensor ID w/ TPM Tool.”

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TPMS CAUTION: To prevent moisture and contamination from entering the valve stem, Nut (with Metal the cap used on this valve stem contains an pressed-in Cap Seal washer washer) (with seal) O-ring seal. Retain the original valve stem cap for reuse. A regular valve stem cap cannot be used as a substitute. Afer inspecting or adjusting the tire pressure, always reinstall the valve stem cap. Tis TPM sensor will prevent moisture and dirt entry into the Sectional cut-away valve stem, which could damage the wheel of wheel rim sensor. CAUTION: Te valve stem used on this vehicle is made from aluminum, and the core Figure 1: Identifying the tire pressure sensor components (one of two). is nickel-plated brass. Once the new sensor ID has been programmed, the vehicle Retain the original valve stem core for reinstallation. Do will need to be driven above 20 mph until the fault is no longer active (lamp extinguishes) and display is updated (for up to 20 minutes). Antenna strap

Demounting/mounting procedures CAUTION: Te tire should be demounted from the wheel using the tire changer manufacturer’s instructions. Use the following information to avoid damage during the demounting/ mounting procedures. CAUTION: Te TPMS has been optimized for the original equipment tires and wheels. TPMS pressures have been established for the tire size equipped on the vehicle. Undesirable operation or sensor damage may result when using replacement equipment that is not of the same size, type and/or style. Afermarket wheels can cause sensor damage. NOTE: If a tire pressure sensor has been replaced, the tire pressure sensors must be retrained. See Reset procedures. NOTE: Wheels and tires are match-mounted at the factory. Before demounting a tire from its wheel, a reference mark should be placed on the tire at the valve stem location, to ensure that it is remounted in the original position on the wheel. For match-mounting procedures, refer to appropriate manufacturer service information.

Valve stem

Figure 2: Identifying the tire pressure sensor components (two of two).

Tire pressure sensor IMPORTANT: Te vehicle uses the 315 MHz TPMS sensor. Although 315 MHz and 433 MHz sensors are identical in size and shape, they are not interchangeable. Always make sure the correct sensor is being used. On a domestic vehicle, the TPMS sensor operates on a 315 MHz radio frequency. Export vehicle sensors operate on a 433 MHz radio frequency. Te 315 MHz sensors can be easily identifed by a white outline oval (black center) insignia on the sensor body. Te 433 MHz sensors can be easily identifed by either a solid white oval insignia on the body or a solid white oval insignia with 433 printed in the center. Te domestic and import vehicles’ sensors are identical except for the oval insignia. Te 433 MHz sensors can either have a black or grey sensor body. CAUTION: Te use of tire sealants is strictly prohibited for vehicles equipped with the TPMS. Tire sealants can clog tire pressure sensors.

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10°

10°

Figure 3: Demounting the tire with a tool.

MTD January 2015


Quik-Link: 800-687-1557 ext. 11132


TPMS Wheel interior Wheel Sensor Nut

Figure 4: Removing and installing the tire pressure sensor.

not substitute a valve stem made of a diferent material, as the diferent metals will cause corrosion. CAUTION: Any time a sensor is to be installed in a wheel, a new seal and washer must be installed on the stem to ensure an air-tight sealing (see Figure 1). CAUTION: Do not reuse the sensor-to-wheel grommet. Always use a new grommet when installing a pressure sensor and properly torque the sensor nut.

Tire pressure sensor

Figure 5: Installing the tire pressure sensor.

valve stem from pushing rearward, which could damage the antenna strap (see Figure 2). 4) Remove the sensor from the wheel (see Figure 4).

Installation Removal 1) Remove the tire and wheel assembly from the vehicle. 2) Demount the tire from the wheel following tire changer manufacturer’s instructions while paying special atention to the following to avoid damaging the pressure sensor: • When breaking the tire bead loose from the wheel rim, avoid using the bead breaker in the area of the sensor. Tat includes both front and rear beads of the tire (see Figure 3). • When preparing to demount the tire from the wheel, carefully insert the mounting/demounting tool at the valve stem +/- 10 degrees, then proceed to demount the tire from the wheel. Use this process on both the upper and lower tire beads. 3) Using a thin-walled socket, remove the special nut retaining the sensor to wheel. While removing the nut, hold pressure against the rear of the metal valve stem to keep the

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Quik-Link: 800-687-1557 ext. 11133

NOTE: Before reinstalling an existing tire pressure sensor, replace the seal and metal washer at the base of the valve stem to ensure proper sealing (see Figure 1). 1) Wipe the area clean around the sensor/valve stem mounting hole in the wheel. Make sure the surface of the wheel is not damaged. CAUTION: To avoid damaging the sensor antenna strap, hold pressure against the rear of the metal valve stem while the sensor is inserted through the wheel mounting hole and the nut is installed (see Figures 2 and 4). 2) Insert the sensor through the wheel as shown keeping pressure against the rear of the metal valve stem. Te poted side of the sensor is to be positioned toward the wheel. Do not atempt to mount the sensor otherwise, or damage may occur. Install the sensor nut (with the pressed-in washer) by hand (see Figures 4 and 5). NOTE: Before tightening the sensor nut, push downward on the sensor housing in an atempt to make it fush with the interior contour of the wheel. 3) Using a thin-walled socket, install the sensor nut. While holding the sensor in position, tighten the sensor nut to 58 in.-lbs. (6.5 N.m) CAUTION: Over-torquing the sensor nut by as litle as 106 in.-lbs. (12 N.m) may result in sensor separation from the valve stem. Under this condition, the sensor may still function; however, the condition should be corrected immediately.

MTD January 2015


Head of changer located here

Valve stem

Band breaker (keep clear of sensor)

Mounting end of tool

Valve stem

Figure 7: Mounting the tire using a rotating tool machine. Figure 6: Mounting the tire using a rotating wheel machine.

4) Mount the tire on the wheel following the tire changer manufacturer’s instructions, paying special atention to the following to avoid damaging the tire pressure sensor: • Rotating wheel tire changers: Once the wheel is mounted to the changer, position the sensor valve stem approximately 210 degrees from the head of the changer in a clockwise direction before rotating the wheel (also in a clockwise direction) to mount the tire. Use this procedure on both the upper and lower tire beads (see Figure 6). • Rotating tool tire changers: Position the wheel on the changer so that the sensor valve stem is approximately 210 degrees from the head of the changer in a clockwise direction from the mounting end of the tool (see Figure 7). Make sure the sensor is clear of the lower bead breaker area to avoid damaging the sensor when the breaker rises. Always rotate the tool in a counterclockwise direction when mounting the tire. Use this

procedure on both the upper and lower tire beads. 5) Adjust air pressure to specifcation. Make sure the original style valve stem cap is securely installed to keep moisture out of the sensor. Install the wheel and tire assembly on the vehicle. 6) Drive the vehicle for a minimum of 10 minutes while maintaining a continuous speed above 20 mph (24 km/h). During this time, the system will learn the new sensor ID code and will clear any DTCs automatically. If a sensor cannot be trained, see appropriate manufacturer service information. REMINDER: Do not use chromeplated lug nuts with chrome-plated wheels. Over-torquing the sensor nut by as litle as 106 in.-lbs. (12 N.m) may result in sensor separation from the valve stem. Under this condition, the sensor may still function; however, the condition should be corrected immediately. ■

Systems Guide” for domestic and import vehicles. Headquartered in Poway, Calif., Mitchell 1 has provided quality repair information solutions to the automotive industry for more than 80 years. For more information, visit www.mitchell1.com.

Information for this column comes fom Mitchell 1’s “Tire Pressure Monitoring

TORQUE SPECIFICATIONS Component Ft.-lbs. (N.m) Spare tire winch..................................28 (39) Wheel nut............................................85-115 (116-156) In.-lbs. (N.m) Tire pressure sensor nut....................66 (7.5)

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Quik-Link: 800-687-1557 ext. 11134

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Products Bosch debuts towel-wrap brake pad packaging Robert Bosch LLC has introduced an innovative towel-wrap interior packaging concept for its line of Bosch Blue Disc Brake Pads. The new Bosch Towel Wrap package replaces the paper and shrink wrap previously used in packaging with a heavy-duty cotton towel in a distinctive blue color similar to those used by technicians. The concept is intended to reduce the amount of interior packaging (while still protecting the pads) and to be more environmentally-friendly by using a material which technicians can repurpose to clean their hands after servicing a vehicle. ROBERT BOSCH LLC Quik-Link: (800) 687-1557, ext. 11170 www.mtdquiklink.com/11170

Perfect Steel non-lead clip-on wheel weight Wegmann automotive USA Inc.’s Perfect Equipment brand has introduced a non-lead wheel weight alternative to the North American aftermarket. The Perfect Steel clip-on features a newly patented clip design called the SecureClip, adding increased clip retention to meet or exceed OEM standards. The versatile weight’s hump-down design helps to decrease overall body length and its curve-shaped body contours to multiple rim sizes. The clip-on is available in all eight standard series, has a three-year proven powder coating for corrosion protection and is stamped with the perfect ‘P’ for quality. WEGMANN AUTOMOTIVE USA INC. Quik-Link: (800) 687-1557, ext. 11173 www.mtdquiklink.com/11173

Bartec adds Qwik-Sensor coverage Bartec USA LLC has released the next software update for its TPMS tools. Release 52 features the ability to program the multi-coverage programmable sensor from Standard Motor Products Inc., Qwik-Sensor. All that’s required to program the Qwik-Sensor is to have a current account at www.bartecusa.com and to download and update the Tech400+, Tech400SD or Tech500 tools with R52. Once the tool is updated with R52, programing the Qwik-Sensor is as easy as a few button clicks of the tool. The Qwik-Sensor offering covers 94% of all domestic, European and Asian applications with three multi-coverage TPMS sensors. BARTEC USA LLC Quik-Link: (800) 687-1557, ext. 11171 www.mtdquiklink.com/11171

Cardone releases diesel parts catalog Cardone Industries Inc. has released a diesel products digital catalog featuring more than 5,400 remanufactured and new replacement parts for diesel vehicles built between 1947 and 2014. The parts include brake calipers, EGR coolers and valves, engine control modules, fuel injector control modules and pumps, IPR valves, mass air i ffow sensors, oilil coolers, l pumps and rail repair kits, transfer case motors, turbochargers and vacuum pumps. CARDONE INDUSTRIES INC. Quik-Link: (800) 687-1557, ext. 11172 www.mtdquiklink.com/11172

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Tenneco unveils shocks for lifted trucks and sport utility vehicles Tenneco Inc.’s Rancho brand has released a larger RS5000X shock series that helps deliver precisely controlled off-road performance to lifted trucks and sport utility vehicles. The new RS5000X shock series includes Cross-Tuned Technology, a new and unique valve design that allows for increased control and consistent ride profle with a larger shock body. The new Rancho RS5000X shock series has a 2.25-inch diameter reserve tube that delivers greater oil capacity and can enhance overall performance. The larger body diameter allows the RS5000X shock to run cooler and more consistent in more extreme conditions and varying vehicle speeds while extending shock durability. TENNECO INC. Quik-Link: (800) 687-1557, ext. 11174 www.mtdquiklink.com/11174

CMA introduces Warrior winter tire Available in 19 sizes, the Warrior brand WR200 winter tire from China Manufacturers Alliance LLC (CMA) features a special winter compound formulation for superior snow and ice traction performance, an enlarged contact patch with four circumferential grooves and a unique oval sipe technology designed for improved winter traction. The studless Warrior WR200 is available in January 2015. CHINA MANUFACTURERS ALLIANCE LLC Quik-Link: (800) 687-1557, ext. 11175 www.mtdquiklink.com/11175

MTD January 2015


Amsoil Synthetic CVT Fluid

KTI adds three digital torque wrenches K-Tool Corp.’s K-Tool International (KTI) division has added three digital torque wrenches and a 1/2-inch drive digital torque adaptor. The 3/8-inch drive wrench (pictured) offers up to 73.8 ft.-lbs. of torque (P/N KTI72133). One of the 1/2-inch drive wrenches offers up to 147.5 ft.-lbs. of torque (P/N KTI72134), and the other 1/2-inch drive wrench handles up to 250 ft.-lbs. of torque (P/N KTI72135), says the company. The digital torque adaptor (P/N KTI72138) works with a 1/2-inch drive ratchet and has a torque range of 29.5-147.5 ft.-lbs. K-TOOL CORP. Quik-Link: (800) 687-1557, ext. 11176 www.mtdquiklink.com/11176

Amsoil Inc.’s Synthetic CVT Fluid provides outstanding metal-to-metal frictional properties and excellent protection and performance for CVT transmissions throughout vehicle manufacturer recommended drain intervals. Amsoil Synthetic CVT Fluid is a cost-effective, premium-quality alternative to original equipment manufacturer (OEM) fuids. Its excellent frictional properties help prevent belt and chain slipping and outstanding wear protection helps extend CVT service life. Amsoil Synthetic CVT fuid resists varnish and thermal breakdown and provides superior wet-clutch performance for outstanding anti-shudder durability. The product is available in quarts, twin packs and 55-gallon drums. AMSOIL INC. Quik-Link: (800) 687-1557, ext. 11179 www.mtdquiklink.com/11179

Hunter’s QuickComp brake lathe is now made in America

Pennzoil’s driveline oils portfolio is simplifed Shell Lubricants (SOPUS Products US) introduced a redesigned Pennzoil brand portfolio of transmission and axle oils. The tiered line of Automatic Transmission Fluids (ATF), Manual Transmission Fluids (MTF) and Axle Oils are part of the Pennzoil Platinum product line for complete drivetrain protection. The Pennzoil line-up of driveline oils makes selecting the proper level of protection easier. The simplifed line of Pennzoil driveline oils allows shops to stock only one premium brand of driveline lubricants to meet their needs. They offer OEM service fll approvals or performance that meets many of the latest specifcations and requirements on the road. SHELL LUBRICANTS Quik-Link: (800) 687-1557, ext. 11177 www.mtdquiklink.com/11177

The QuickComp on-car brake lathe from Hunter Engineering Co. is now made in the U.S.A. Hunter’s QuickComp lathe features a two-way adjustable compensation adaptor that works with Hunter’s patented ProComp computerized compensation to adjust for lateral runout of the hub in seconds. This feature allows rotors to be refnished to OEM specifcations in minutes. Patented anti-chatter technology oscillates machining speed to prevent buildup of vibration or chatter. Hunter’s patented variable-speed drive system allows the operator to change speeds during machining and resurface rotors at the fastest possible speed. HUNTER ENGINEERING CO. Quik-Link: (800) 687-1557, ext. 11180 www.mtdquiklink.com/11180

ScanPad 101 tablet gives full system diagnosis

NitroShield Tire Protectant

The ScanPad101 from Launch Tech USA Inc. is a robust, drop-tested Android-based scan tool tablet with a 10.1 inch ultra-high resolution In-Place Switching (IPS) touch screen. The ScanPad 101 has the same award-winning software as previous Launch Pro-line scan tools. Full system diagnosis is through a Class-1 Bluetooth 2.1 connector for optimum wireless connectivity. A built-in customer management system and online user community link further extends the utility and effciency of the ScanPad 101. LAUNCH TECH USA INC. Quik-Link: (800) 687-1557, ext. 11178 www.mtdquiklink.com/11178

NitroShield is an easy-to-apply tire dressing that not only provides a lustrous gloss fnish that can last the life of your customers’ tires, but also permanently shields them from UV rays, ozone damage and oxidation. NitroShield is available to the professional trade only and was designed to provide tire and automotive service retailers with a high-value, high-proft service upgrade or option. NitroShield also is available with an optional warranty providing three years of “dry rot and cracking coverage” as well as tire repair and replacement benefts and roadside assistance. NITROSHIELD Quik-Link: (800) 687-1557, ext. 11181 www.mtdquiklink.com/11181

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Instant information direct from MTD advertisers

To request free product information by phone, call 800-687-1557, enter the extension number listed below, and you will be immediately transferred to the company you want to talk with — it takes only seconds. To request information online, log on to www. mtdquiklink.com/ plus the corresponding Quik-Link number. You’re just a click away from receiving free information on the new products that interest you.

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800-687-1557 + Toll Free Extension

Advertiser

Page

Web site

31 Incorporated

53

11126

www.mtdquiklink.com/11126

Aeolus Tires

59

11128

www.mtdquiklink.com/11128

Aftermarket Auto Parts Alliance Inc.

41

11121

www.mtdquiklink.com/11121

American Omni Trading Company

49

11124

www.mtdquiklink.com/11124

ASA Automotive Systems Inc.

22

11111

www.mtdquiklink.com/11111

Bartec USA

75

11134

www.mtdquiklink.com/11134

BKT Tires USA Inc.

11

11105

www.mtdquiklink.com/11105

Blackburn’s Hubcap & Wheel Solutions

37

11119

www.mtdquiklink.com/11119

Bosch Automotive Service Solutions

13

11106

www.mtdquiklink.com/11106

Camoplast Solideal

50-51

11125

www.mtdquiklink.com/11125

Continental Gold Retailer Program

42-43

11122

www.mtdquiklink.com/11122

Continental Tire, Commercial Vehicle Tires

61

11130

www.mtdquiklink.com/11130

Gaither Tool Company Inc.

74

11133

www.mtdquiklink.com/11133

GT Radial

64

11131

www.mtdquiklink.com/11131

Hennessy Industries Inc.

39

11120

www.mtdquiklink.com/11120

Hercules Tires

33

11117

www.mtdquiklink.com/11117

Horizon Tire Inc.

7

11103

www.mtdquiklink.com/11103

Independent Tire Dealers Group

25

11113

www.mtdquiklink.com/11113

Ken-Tool

20

11109

www.mtdquiklink.com/11109

Kenda USA

IBC

11135

www.mtdquiklink.com/11135

Kumho Tire USA Inc.

5

11102

www.mtdquiklink.com/11102

Mahle Aftermarket Inc.

31

11116

www.mtdquiklink.com/11116

Marangoni Tread North America Inc.

47

11123

www.mtdquiklink.com/11123

Maxxis International—USA

17

11108

www.mtdquiklink.com/11108

Nexen Tire America Inc.

IFC

11101

www.mtdquiklink.com/11101

Nitto Tire U.S.A. Inc.

OBC

11136

www.mtdquiklink.com/11136

Pirelli Tire North America

27

11114

www.mtdquiklink.com/11114

Reliable Int’l Exhibition Services Co. Ltd.

60

11129

www.mtdquiklink.com/11129

Sentury Tire Americas

35

11118

www.mtdquiklink.com/11118

STEELMAN Select TPMS, by JS Products

73

11132

www.mtdquiklink.com/11132

Synchrony Financial

21

11110

www.mtdquiklink.com/11110

TBC Wholesale

29

11115

www.mtdquiklink.com/11115

Tire Industry Association (TIA)

55

11127

www.mtdquiklink.com/11127

Tire Rack Wholesale

15

11107

www.mtdquiklink.com/11107

Toyo Tires

23

11112

www.mtdquiklink.com/11112

Yokohama Tire Corporation

9

11104

www.mtdquiklink.com/11104

MTD January 2015


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Your turn

Using common sense trumps overreacting, reader says Dear Editor: It seems like the human condition never changes, so we need to be reminded of common sense principles in times of overreacting. Your excellent commentary in the November issue of MTD is one such timely reminder. I hate to admit it, but I jumped the gun on Richard Jewell in the 1996 Olympic Park bombing and who I thought was responsible for the 1995 Oklahoma City bombing. I was totally wrong in my assumptions in both cases. We had a bit of overreacting with the 1950’s McCarthyism, as well. Today I will be more patient with customers, carriers and vendors in the spirit of the MTD column. It wouldn’t be a bad idea if Gannet, the New York Times, Hearst newspapers, etc., ran this column. You made an important point without sermonizing or hiting readers over the head with a tire iron. Good job. David Walsh, Sales Director Dacotah-Walsh Tire Inc. Chanhassen, Minn.

Question of the month: Each month we ask members of our National Advisory Council (NAC) a question or questions on a current hot topic. Tis month we asked, “For a second time, tarifs have been levied on consumer tires imported fom China. How will this afect your business?” Here are some of their responses. 1. Tings will be changing for entry-level customers. 2. In the short term, margins will increase. Mid- to long-term is dependent on what the majors do with pricing. 3. Te short-sighted and special interest placating tarif decision is bad economics, bad diplomacy, bad politics and harmful to U.S. consumers. One possible future result of this tarif which may afect our business may be the fact that China is the most signifcant buyer of U.S. government debt, and has already expressed concern about the future value of the dollar. If China stops buying U.S. T-bonds, there might not be an efective market for them. 4. Any price increase in the marketplace allows us to make more proft on our existing inventory. So far the tarif has increased the market value about 5%. 5. Since we operate in a small town, we deal with the whole spectrum of price range of the tires, and the ability of the people to pay for them. Te “price increase” on the lower-

priced Chinese tires impacts our customers who have a lower income, forcing them to pay a higher price. Te non-tarif tires are there, but at a higher price. With the last time as an example, we will get more requests for used tires, the tires will be run longer, and price resistance will be greater. I don’t feel that our business was adversely impacted, but we have the young families who have problems making ends meet, and we have nothing to sell them in their price range. 6. Unfortunately, the consumer will be afected by having to pay a higher price. 7. Unfair subsidies the Chinese government has granted to tire exporters both directly and indirectly have resulted in thousands of lost American tire manufacturing jobs. In South Carolina, we are quite pleased to see these manufacturing jobs return to our state as we lead the nation in tire production. 8. Tis will obviously increase our costs, and if it follows suit to the last tarif the domestic manufacturers will increase their pricing. Consequently, we will see increases in our inventory costs and also ultimately retail prices. 9. I know the last time it raised the price of all tires. Te domestics increased the prices which hurt the consumers. Te only ones that made out were the domestic tire manufacturers. Our shop does not sell many Chinese tires. If other shops were like ours that sell benefts and features instead of price only, we would not need these tarifs. Te Chinese would swim in tires!

What’s on our NAC’s mind? We are making a commitment to training our people. Wow! It is really paying of. Our employees are our BEST investment. Jef Cohen, Co-owner Traction Wholesale Center Bensalem, Pa.

Recent 2014 data from the National Small Business Administration is alarming, especially when detailing how America’s small businesses are dealing with rising health care costs, what kind of benefts they ofer and how the Afordable Care Act (ACA) is impacting their business. Tirty-four percent of small businesses report holding of on hiring a new employee while 12% report they had to lay of an employee. Fifeen percent report they plan to drop coverage in the coming year — up from just 2% that reported dropping coverage in the last year. Having just renewed our health plan for another year, this has been on our mind! Tripp Lee, General Manager Frasier Tire Service Inc. Sumter, S.C.

Join Modern Tire Dealer’s National Advisory Council

Each month, Modern Tire Dealer is guided and infuenced by a select group of readers — members of our National Advisory Council. Tese members’ opinions are the heart of the monthly Your Marketplace column, compiled by industry analyst Nick Mitchell. If you’d like to join this prestigious group, please let us know. We’d love to hear from you. Contact Editor Bob Ulrich at Bob.Ulrich@bobit.com or call (330) 899-2200, ext. 11.

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MTD January 2015


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Quik-Link: 800-687-1557 ext. 11136

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Modern Tire Dealer January 2015  

The Tire Industry’s Leading Publication

Modern Tire Dealer January 2015  

The Tire Industry’s Leading Publication