Modern Tire Dealer - January 2014

THE WATCH LIST: More optimism at the retail level (but fewer wholesalers) TIA AND THE RMA Speaking with a united voice?

THE INDUSTRY’S LEADING PUBLICATION

FACTSISSUE 48th annual

2014

$477 BILLION AND CLIMBING Innovations help spur aftermarket spending January 2014 | Vol. 95, No. 1 | $30 | A Bobit Publication | www.moderntiredealer.com

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Features 16 Tire dealer watch list for 2014

Labor market conditions, gas prices and tire afordability will afect the health of the tire market, says analyst

Te Industry’s Leading Publication January 2014, Volume 95, Number 1

52 AAPEX represents $477 billion Spending is likely to increase, says NPD Group

48th annual Facts Section 24 Facts Section Index

MTD presents more charts, exclusive information

26 Tire shipments

Te signposts up ahead?

Tire Tire sales: With the economy starting to Ti pick pick up, there are many indications that pi 2014 will be a year to remember

Departments 4 Editorial Friend or foe? The RMA says the industry comes frst

6 Online

News and navigation tools for MTD’s website

8 News/views Dealer-inspired program prepares the next generation of managers, owners

22 Your marketplace Dealers report strongest volume growth in more than a year

58 Focus on industry

32 Market share

Anchors A nc aweigh! Michelin remains the ffavorite brand among the MTD 100

40 Plant capacity

Who said manufacturing is dead?

3 plants open, with 3 more to come

42 Commercial

Retreading R Re etre revitalized: More casings and hhigher ig prices complemented new tires

46 Tire sizing

Keep these sizes in inventory! You can’t rely on your wholesalers for everything

Choi’s vision for Kumho: New products anchor his fve-year plan

60 European notebook It’s crystal ball time for future European tire sales: How will the tire market fare in 2014?

64 TPMS Special switch resets warning thresholds on Prius: Tire pressure settings vary due to tire types and installation positions

74 Your turn There’s more to issue than tire age alone

67 Products 68 Quik-Link 70 Classifed

48 Tire dealer profle

Tire dealers vs. car dealers: Both are making noise; only one is way up in market share

Modern Tire Dealer is a proud member of: TRIB

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Member An Industry Association

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3

Editorial

Friend or foe?

Te RMA says the industry comes frst

R

emember when the relationship beics that drive important and engaging dialogue tween the two largest associations in throughout the year. I look forward to helping our industry was contentious? We had to guide those discussions.” the former National Tire Dealers and Retreaders Selleck says the RMA has several priorities.

Association (NTDRA) on one side, and the “One is our continued pursuit of state legislation Rubber Manufacturers Association (RMA) on to prohibit the sale of unsafe used tires. We’ll be the other. active on this issue in at least four states in 2014.

Tire dealers versus tire manufacturers. You “The RMA will also continue to advocate know what that is like. Sometimes you get along. strongly for responsible scrap tire management

By Bob Ulrich laws and regulations. It’s imperative that we do Sometimes you don’t.

Times have changed, however. Te NTDR everything we can to ensure that both legacy and the American Retreaders Association morphed into and new scrap tire piles are cleaned up; that regulations the Tire Industry Association (TIA), which includes both on scrap tire haulers and businesses are enforced; and that tire dealers and tire manufacturers. Te RMA benefted states work with industry to promote economically viable from new leadership in the form of CEO and President markets for end-use tires.”

Charles Cannon.

Environmental regulatory eforts will be monitored They don’t always agree, but the associations have closely by the RMA in 2014, according to Selleck. worked well together of late, especially when it comes “For example, California has issued a regulation requiring to helping craf national and state legislation. Ridding companies doing business in the state to evaluate the use the afermarket of unsafe used tires and promoting the of chemicals in products, and this could be unnecessarily necessity of state vehicle inspections are two of the issues disruptive to many of our member companies. Additionally, they have supported jointly. the EPA is taking a more active role in chemical regulation “We are very encouraged by our increasingly positive that may have a broad efect on U.S. businesses overall.” working relationship with RMA,” says Roy Litlefeld, TIA’s Another priority for RMA will be to urge the National executive vice president.

Highway Trafc Safety Adminis“Whether it is working together tration to issue a proposed regulaon legislative issues on the federal or tion on the long-awaited tire fuel state levels, sharing information, or efciency information program speaking out on industry issues in the and rating system for consumers, media, our industry is speaking with he says. “It was back in 2007 that a united voice, and we are making RMA successfully championed a diference. And the tremendous legislation that required this rulesupport that RMA members are making, so we obviously have an giving to TIA in the development, interest in seeing it through to funding, and expertise of our training completion.” programs is producing the best industry training programs Selleck describes the RMA’s relationship with TIA as in the world.” “strong, collegial and efective.”

As dealers, you are probably more familiar with TIA “Te RMA board of directors strongly believes that the than with the RMA, which is made up of eight domestic, industry as a whole is best served by a healthy working and fercely competitive, tire manufacturers. I asked new relationship between RMA and TIA. During my past two RMA Chairman Pete Selleck, who also is chairman and years as a member of the RMA board, I have been pleased president of Michelin North America Inc., to explain what to see the important improvements made in how TIA and his job entails, and what lies ahead for the organization.

RMA interact. We want that to continue.

“Certainly, the two organizations won’t agree on every “Te RMA chairman presides over the board of directors and helps to facilitate the discussions that take place around issue, every time. But in those situations, we want both the issues addressed,” says Selleck. “Te RMA consists of organizations to fnd consensus where it may exist. In the those tire manufacturers who have a manufacturing pres- end, RMA and TIA will be close allies on more issues ence in the United States — Bridgestone, Continental, than not.” ■ Cooper, Goodyear, Michelin, Pirelli, Toyo and Yokohama.

If you have any questions or comments, please email me “Each RMA board member has the ability to raise issues for board consideration, so there’s an ongoing slate of top- at bob.ulrich@bobit.com.

‘RMA and TIA will be close allies on more issues than not,’ says Selleck.

4

MTD January 2014

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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

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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: Bob Bissler, ext. 15 Bob.Bissler@bobit.com Associate Editor: Ann Neal, ext. 18 Ann.Neal@bobit.com

How Ford is taking food off your table Duck Dynasty star has a lot to say about...

Find out how far Walmart is willing to reduce prices on Black Friday

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ACCC announces plans to dissolve

Yokohama and Kumho agree to discuss a formal alliance

MTD does the linking for you Cooper Tire & Rubber Co. has terminated the merger agreement with Apollo Tyres Ltd. Read all about it on page 14. Modern Tire Dealer brought you the news daily as it happened on our website, www.moderntiredealer.com. Our editors have been covering this story since it broke in June of last year. The twists and turns of the canceled deal can be easily followed by clicking on the latest news and following the links provided at the end of the news item. Or, simply type in the key words, in this case Cooper or Apollo, in the search bar and hit go. You will fnd a chronological listing of the news as it played out. Use this quick tip when reading articles you like, too. As an example, in the Articles pull down bar you will fnd Features. Say you read a great article by our Counter Intelligence columnist Wayne Williams and want to read more. We link you to some recent articles, plus when you put Wayne Williams in the keyword search, you will fnd every article written by Williams since he started writing for us in 2010.

Michelin recalls commercial LT tires

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6

MTD January 2014

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News/views

Dealer-inspired program prepares the next generation of managers, owners ‘I want to build a team that doesn’t need me’ Northwood University has introduced Tire Leadership 21, an educational program aimed at developing leadership, management and business skills for the next generation of tire dealer managers and owners.

Tire Leadership 21 gives retail and commercial dealers a way to develop executives who will lead their businesses, according to Stu Zurcher, president of 20 Group operator Strategic Alliance Group and one of the industry veterans who helped create the program.

“This program addresses the tire dealer’s biggest problem. He wants to grow, and he needs people more than anything else,” says Zurcher. In early 2013, Zurcher assembled a group of tire dealers who collaborated with Northwood University to create Tire Leadership 21. The group became the Center for Tire & Service Education (CTSE), an independent organization which advises Northwood University on Tire Leadership 21’s marketing and content.

“I’ve got great techs and great salespeople who developed into good managers but they don’t know the fnancial side of the business,” says Rich Brahler, a founding member of the CTSE advisory board and owner and president of Brahler’s Truckers Supply Inc. in Jacksonville, Ill. His company has seven commercial locations and one retreading plant.

“This is my biggest challenge to grow. It’s not bricks and mortar. I’ve invested in trucks, equipment and training, but we do very little to take the young people in my business and make them great managers and great leaders.” Brahler says Tire Leadership 21 will “show our key people that we truly want to build them up as much as we build the business. I want to build a team that doesn’t need me.”

Historically there has been nowhere to send a potential store manager to learn the skills to effciently manage a tire and service facility, says Kim Sigman, partner and manager of Community Tire Pros & Auto Repair of Phoenix, Ariz., and a founding member of the CTSE advisory board. “This is a university-level education program geared directly to the tire and service business that will elevate all independents and allow them to thrive.”

The program covers topics that are essential to the success of future independent tire dealer managers and owners, according to Brian Cruickshank, program director. Faculty will come from Northwood’s DeVos Graduate School of Management and subject-matter

8

(From left): Brian Cruickshank, director of Tire Leadership 21 at Northwood University, and some of the dealers who helped develop the new business skills program: Stu Zurcher and Tom Gyuriak Sr. of Strategic Alliance Group; Kim Sigman, partner and general manager of Community Tire Pros and Auto Repair; and Rich Brahler, president of Brahler’s Truckers Supply Inc.

experts from the tire and service industries. Subjects include fnance, accounting, business strategy, management, corporate vision, marketing and social media and team and corporate culture.

“One of the keys to long-term growth and success is continuity of management,” says Mike McGee, president of McGee Tire Stores Inc. in Lakeland, Fla., and a founding member of the CTSE advisory board.

“That continuity has to come from employees who are engaged and invested in that business. They have to see a career, not just a job.”

Tire Leadership 21 is designed for managementpotential, management-track or current management professionals in a tire service environment. There are no formal educational prerequisites.

Participants attend a pair of one-week, on-campus sessions. The frst session will be April 14-18 at Northwood’s campus in Midland, Mich. Participants will meet again Sept. 7-12 at Northwood’s campus in West Palm Beach, Fla. Between sessions, they will complete an individual project that must deliver $25,000 in annual additional revenue or savings to their employers.

The 2014 program is limited to 30 participants. The $5,995 cost includes tuition, meals and class materials. Discounts are available for tire dealers sending more than one participant. Contact Cruickshank (brianc@northwood.edu) for details.

To register, visit www.universityoftheaftermarket.com or call (800) 551-2882. — Ann Neal

MTD January 2014

Quik-Link: 800-687-1557 ext. 11104

News/views

bites

Tire Discounters expands Tire Discounters Inc. plans to open 12 stores in the Nashville, Tenn., area by early 2015. Stores will open in Nashville, Mt. Juliet, Smyrna, Bellevue, Hendersonville and Brentwood in the first half of 2014.

Redburn chooses TIA program Redburn Tire Co. is the first company to sign on with the Tire Industry Association group employee benefits program offered through The Association Benefits Solution.

Double H Tire supports shelter Bids placed on two sets of tires furnished by Todd Hamilton, owner of Leroy’s Corp. dba Double H Tire in Mineral Wells, Texas, for a charity auction raised $2,500 for a local battered women’s shelter.

Belle Tire opens store Belle Tire Distributors Inc. opened a retail store that includes a warehouse for more than 3,000 tires in Grand Blanc, Mich. Belle Tire now operates 88 retail outlets.

Video promotes retreading The Tire Retread & Repair Information Bureau (TRIB) and American Commercial Tire Network have produced a video on the environmental benefits of retreading.

Yokohama, Kumho team up Yokohama Rubber Co. Ltd. and Kumho Tire Co. Inc. announced plans to enter into a capital alliance to buy each other’s shares and exchange technology to increase their global competitiveness.

Network merges brands The Automotive Distribution Network announced it merged the Auto Pride and CMB subsidiaries on Jan. 1, 2014.

ALI’s board elects Calarco The board of directors of the Automotive Lift Institute has elected its first representative from the lift inspection side of the business, Evan Calarco of Total Tool Ltd. in Castleton, N.Y. OTR duties will continue The United States Department of Commerce has ruled that duties leveled on OTR tires exported to the U.S. from China under a previous duty order will remain in place.

10

ASA will continue TireMasterG4 rollout under Constellation ownership Although ASA Automotive Systems LLC (ASA) has a new corporate parent, it will be “business as usual” for customers, according to ASA President Ken Halle.

Constellation Software Inc. of Toronto, Ontario, purchased ASA in December 2013. ASA is now an independent division of Constellation’s Friedman Corp. of Deerfeld, Ill. Friedman is a division of Constellation’s Vela Operating Group.

“This new relationship will give us access to a broad network of software professionals along with providing the support and security of a strong global parent company to enable us to continue growing and building the ASA software brand,” says Halle.

“We are now part of a much bigger and fnancially secure organization that provides software solutions to multiple business verticals. We look to leverage the best practices of Constellation and fnd possible product synergies with the other Constellation divisions that can enhance what ASA has to offer to our clients.”

The rollout of ASA’s TireMasterG4

ASA enterprise sales representative Lou Marengi demonstrated the TireMasterG4 point-of-sale module at the recent Global Tire Expo in Las Vegas.

The rollout of TireMasterG4 software will continue under ASA’s new owner, Constellation Software Inc.

cloud-based point-of-sale software suite will continue with the full support of Constellation. Halle says Constellation is looking for ASA to grow its enterprise sales with the new G4 product. Also, ASA will continue to expand its Cornerstone software solution developed with Bridgestone Americas Tire Operations LLC for use by Bridgestone’s consumer tire dealers.

More than 3,000 U.S. tire dealer locations are using ASA products, which represents the majority market share, according to Halle.

Max Finkelstein opens its 11th D/C Max Finkelstein Inc. chose Rochester, N.Y., as the site for its 11th distribution center. The move allows the company to ‘better serve dealers’ in the Rochester, Buffalo and the Finger Lakes area.

“Having a distribution center in the Rochester area increases the productivity of our supply chain, achieving positive customer satisfaction,” says Joe Cote, the region’s sales director.

The D/C is the company’s ffth in New York. The other warehouses are located in Connecticut, New Jersey (two), Maine, Vermont and Pennsylvania.

“It is great to have a wholesaler with such a large selection of G3 products and a history of great customer service in the Rochester area,” says Tim Trombley, co-owner of Trombley Tire & Auto, a six-store chain based in the region.

Max Finkelstein is a wholesale distributor based in northeast New York.

The company sells Goodyear, Dunlop, Kelly, Pirelli, Kumho, Aeolus, Wind Power, Centara, Goodride and Carlisle products.

MTD January 2014

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News/views

bites

Toyo breaks ground Toyo Tire & Rubber Co. Ltd. has broken ground on a $371 million project to expand capacity by 2.5 million tires annually at its Toyo Tire North America Manufacturing Inc. plant in White, Ga. W. Springfield adds location The Automotive Distribution Network’s West Springfield Auto Parts has acquired Ansonia, Connecticut-based Service Auto Parts/ARP Warehouse.

Omni is carbon neutral Omni United Pte. Ltd., parent company of Omni United USA Inc., announced it has been certified as a carbon neutral company for its flagship tire brand, Radar.

Goodyear picks finance leaders Goodyear Tire & Rubber Co.’s board of directors elected Scott Honnold as vice president, business development and Tom Kaczynski as vice president, treasurer and investor relations, effective Jan. 1, 2014.

Yokohama expands test center Yokohama Rubber Co. Ltd. has expanded the Tire Test Center of Asia, its tire proving ground in Thailand. Additions include a 2.5-kilometer dry-test course and a 1.5-kilometer wet-test course.

Federal-Mogul is honored The Federal-Mogul Corp.Vehicle Components Segment (VCS) was selected as 2013 Channel Partner of the Year by shareholders of the Aftermarket Auto Parts Alliance.

Mitas to supply Claas Mitas a.s., the Czech Republicbased parent company of Mitas Tires North America Inc., will supply Continental and Mitas branded farm tires for combines and tractors manufactured by Claas KGaA mbH. Continental to expand TBR Continental AG plans to expand its truck and bus tire production facilities in Otrokovice, Czech Republic, to almost 1.5 million units annually.

Discount Tire adds two stores Discount Tire has opened stores in Hanover Park, Ill., and Omaha, Neb. The company is part of ReinaltThomas Corp. and operates more than 875 stores in 28 states.

12

Kumho hires ToyoÕs Hagan

Michelin recalls tires, opens plant

Kumho Tire U.S.A. Inc. has hired John Hagan as national sales vice president. Prior to accepting the position, Hagan was senior director of sales operations at Toyo Tire U.S.A. Corp.

He replaced Armand Allaire, who became vice president of marketing for Giti Tire USA Ltd. Hagan comes to Kumho with more than 20 years of John Hagan has experience in been hired to lead the industry, the national sales at Kumho. last four with Toyo.

Michelin North America Inc. announced a safety recall of approximately 1.3 million of its Michelin LTX M/S commercial light truck tires. About 1.2 million of these tires were sold in the U.S. The tires are typically found on commercial light trucks, full-sized heavy duty vans, small RVs and some large pickup trucks.

ATD acquires WTD in Canada American Tire Distributors Inc. (ATD) has acquired all outstanding common shares of Wholesale Tire Distributors Inc. (WTD) based in Vaughan, Ontario, Canada. WTD operates two distribution centers in southern Ontario servicing approximately 2,300 customers.

ATD entered the Canadian market in November 2012 by purchasing Triwest Trading Canada Ltd. dba TriCan Tire Distributors (TriCan). ATD acquired Regional Tire Distributors Inc. (RTD) in the Ontario and Atlantic regions in May 2013.

ATD will continue to run its Canadian operation as a stand-alone business unit, based in Burlington, Ontario, with Mike Kustra serving as the president of the entity.

Based in Huntersville, N.C., ATD is one of the largest independent suppliers of tires to the North American replacement tire market. It operates 129 distribution centers, including 21 in Canada, serving approximately 70,000 customers in the U.S. and Canada.

The recall, which has been reported to the National Highway Traffc Safety Administration, is being issued because an increasing number of tires are experiencing tread loss and/or rapid air loss. Michelin says the U.S. customer returns for these conditions are currently 0.015% of the total population, or less than 200 tires. No returns for tires with these conditions have been reported outside the U.S. The recalled tires were manufactured between January 2010 and June 2012.

Michelin also began producing earthmover tires in January 2014 for sale in mid-2014 at its new plant in Anderson, S.C. The new facility, known as US10, is Michelin’s 19th plant in North America and ninth in South Carolina. It will produce large earthmover tires as high as 13 feet tall weighing as much as 5.5 tons for more than 1,300 mining operations around the world.

In addition, the company’s Michelin Earthmover division has certifed six additional Michelin Professional Earthmover Dealers and has added them to the Michelin Earthmover Performance Repairs program. They are: Boulevard Tire, Orlando, Fla.; Pomps Tire, Elk Grove Village, Ill.; TCi Tire Centers, Kilgore Texas; Purcell Tire, Salt Lake City; Inland Tire, Hayward Calif.; and Kal Tire, Hermosillo Mexico.

MTD January 2014

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News/views

dates

February 19-22 Tire Industry Association OTR Tire Conference, Marco Island Marriott Resort & Golf Club, Marco Island, Fla. (800) 876-8372 www.tireindustry.org March 6 – 8 Louisiana Independent Tire Dealers Association Annual Convention and Trade Show, Bourbon Orleans, New Orleans, La. (225) 767-7640 www.litda.org March 14-16 Mid-America Tire Dealers Association Annual Convention, Drury Inn at Broadview Place, Wichita, Kan. (785) 286-1110 www.matda.org March 28-29 North Carolina Tire Dealers Association Annual Expo/Trade Show, Marriott City Center & Raleigh Convention Center, Raleigh, N.C. (877) 784-0111 www.nctda.com April 4-5 New England Tire & Service Association Trade Show & Convention, MGM Grand at Foxwoods, Mashantucket, Conn.

(207) 846-0986 www.netsa.org April 4-5 Arkansas Independent Tire Dealers Association Annual Convention, Hot Springs Convention Center, Hot Springs, Ark. (501) 268-8473 www.aitda.net April 11-13 Virginia Automotive Association Convention & Trade Show, The Homestead, Hot Springs,Va. (804) 739-1400 www.vaautomotive.org April 23-25 Texas Tire Dealers Association Annual Convention & Services Display, Marriott Town Square, Sugarland, Texas (512) 343-8604 or (800) 844-8748 www.texastiredealers.org April 27-30 Battery Council International 126th Convention and Power Mart Expo, Manchester Grand Hyatt Hotel, San Diego, Calif.

(312) 644-6610 www.batterycouncil.org

14

Cooper walks away from Apollo deal Cooper Tire & Rubber Co. ended its proposed sale to Apollo Tyres Ltd., on Dec. 30, 2013, citing lack of fnancing for the $2.5 billion deal and saying it will pursue damages against Apollo. According to Cooper Chairman, CEO and President Roy Armes, it is a “reality that the agreement both companies signed on June 12 will not be consummated by Apollo.

Further, we have been notifed that fnancing for the transaction is no longer available.”

In a webcast to answer questions from investors, Armes said addressing the situation at Cooper’s passenger and truck tire plant, Cooper Chengshan Tire (CCT) in Rongcheng, China, is the company’s top priority. The plant is a joint venture between Cooper and Shandong Chengshan Group Co. Ltd. The Chinese workers have been producing non-Cooper branded tires to protest the deal, and the Chengshan Group fled a lawsuit against Cooper to dissolve their joint venture.

Cooper’s Roy Armes says the company can focus on Vice President, Chief Financial Offcer and building its business “unTreasurer Brad Hughes said the challenges encumbered” by a merger at CCT were driven by the merger agreement. agreement with Apollo.

“With the agreement now terminated we are hopeful that our work to restore normal operations, including obtaining the information needed for Cooper to resume regular fnancial reporting as soon as possible, will be more effective.”

Hughes also said Cooper plans to pursue damages. “We believe Apollo has breached the merger agreement and given this, we will continue to pursue the appropriate legal steps to protect the interests of our company and our stockholders.”

Hughes said the companies will return to the Delaware Chancery Court for resolution of several issues, including whether Apollo used reasonable best efforts to reach an agreement with the United Steelworkers (USW) and whether Apollo should have signed a tentative agreement Cooper reached with the USW. Cooper does not believe it owes Apollo a $50 million termination fee, according to Hughes. “As to the $112.5 million reverse termination fee from Apollo, Cooper is pursuing this and other possible damages.”

Armes said he wanted to “set the record straight” on whether the litigation with Apollo and subsequent termination of the deal could have been avoided if a reduced price had been negotiated between Cooper and Apollo.

“Cooper never received a proposal from Apollo to reduce the share price that included committed fnancing or that did not come with unreasonable risks for our company and our stockholders.”

Likewise, Apollo says it will seek damages. “While Cooper’s lack of control over its largest subsidiary and inability to meet its legal and contractual fnancial reporting obligations has considerably complicated the situation, Apollo has made exhaustive efforts to fnd a sensible way forward over the last several months.

“However, Cooper has been unwilling to work constructively to complete a transaction that would have created value for both companies and their shareholders. Cooper’s actions leave Apollo no choice but to pursue legal remedies for Cooper’s detrimental conduct.” ■

MTD January 2014

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feature

Tire dealer watch list for 2014: Labor market conditions, gas prices and tire afordability will afect the health of the tire market, says analyst

By Lori L. Mavrigian

W

hile tire prices remained calm, there were enough elements stirring the waters to keep the tire industry rocking in 2013.

First, there was the proposed purchase of Cooper Tire & Rubber Co. by Apollo Tyres Ltd. Ten there was the food of tires from China following the removal of Tarif 421 in late 2012 (and their efect on the market). And there was anticipation on whether or not customers would fnally release the pent-up demand for tires and auto service while continuing to recover from the recession.

For insights into what happened in the tire and automotive service industries in 2013 and what to expect in 2014, Modern Tire Dealer turned again to tire industry analyst Nick Mitchell.

Mitchell works for institutional equity research frm Northcoast Research Holdings LLC in Cleveland, Ohio. He joined the company in April 2009 as a senior vice president and equity research analyst. He now covers several segments, including the tire and automotive afermarket.

He has received awards from the Wall Street Journal and Financial Times that recognize the performance of his investment recommendations.

Mitchell began his fnancial career at McDonald Investments Inc. in Cleveland, where he was an investment consultant within the frm’s brokerage division. He holds the Chartered Financial Analyst and Chartered Market Technician designations.

MTD: What do you see as the defning moments in the tire industry in 2013?

Mitchell: Besides the ongoing drama between Cooper Tire and Apollo, the most notable trend in 2013 was defnitely the food of tires from China. Tis phenomenon clearly drove the improving trend in Rubber Manufacturers Association (RMA) shipments and pressured unit volumes of manufacturers that concentrate on the botom half of the Tier Two category.

MTD: Trough your conversations with tire dealers, what is their atitude about business going forward?

Mitchell: Most of the retail players who I have spoken with over the last two months noted that they expect light passenger unit volumes to increase 1% to 3% in 2014, which would be a modest step up from the consensus opinion that volumes were fat to up 2% in 2013. Interestingly enough, the dealers who I spoke with at the end of 2012 indicated that volumes would likely range from a 1% decline to a 1% gain in 2013. Tat means the collective mood among the installer community was a litle brighter heading into the holidays in 2013, and I can assure you that everyone has their fngers crossed in hopes

16

Tire indu Tire iindustry ndustr stry y anal a analyst nalyst yst Ni Nick ck Mit Mitche Mitchell chell ll als also o auth a authors uthors ors ou ourr monthly Your Marketplace column (see page 22).

that Old Man Winter will bring cold temperatures and lots of snow this year.

MTD: In 2013, we continued to see wholesalers geting larger by buying up smaller wholesalers. Will that trend continue?

Mitchell: Absolutely. As long as there are folks willing to sell their distribution businesses, there will be a short list of buyers eager to bid on those assets. Large synergies can be gained through scale when it comes to distribution, and ftment proliferation is a growing problem for the smaller, and ofen less well fnancially capitalized, distributors. As a result, I see no end in sight for the consolidation trend.

MTD January 2014

MTD: What were the U.S. replacement shipment highlights in 2013 vs. 2012 for passenger tires?

Mitchell: Tere was a nice recovery in shipment trends in 2013 with volumes up 3% to 4% through the frst 11 months of the year. Te recovery was led by stronger import trends, largely from China.

MTD: How about replacement shipment highlights for light truck tires?

Mitchell: Light truck tires were fairly stable in 2013, with volumes approximately flat through November.

MTD: What are the lasting efects of the elimination of the Chinese tire tarif on Sept. 26, 2012?

Mitchell: Tis is an interesting question as it naturally assumes that we will not see another tarif implemented in the next decade, which I think is a risky bet for these retailers that are shifing more of their product ofering toward Chinese manufacturers. I can say without a doubt that the greatest lasting impact has been the rude awakening it provided to select high-cost manufacturers that compete in the botom half of the Tier Two segment and in the Tier Tree category.

MTD: And for medium truck tires?

Mitchell: Demand for medium truck tires performed the worst, as volumes were fat to down 1% headed into the fnal month of 2013.

MTD: There was a lot of pent-up demand for tire purchases in 2013. Are consumers still puting of buying tires?

Mitchell: Despite the modest improvement in volumes in 2013, consumers are still reluctant to spend money on tires unless they need to. Similar to last year, dealers continue to say that their internal data suggests that the average tire coming of the road today only has 2/32-inch of tread, which is well below the historical average of 4/32 to 5/32.

As a result, dealers continue to note that they expect to see some of the pent-up demand to make its way back to the market over the next 12 months.

Te one caveat is that the enthusiasm behind this thesis has been tempered slightly over the past 12 to 18 months as some folks think that the recovery will be very gradual without the market ever really experiencing that one-time snap back in volumes that everyone has hoped for since the onset of the Great Recession.

MTD: What is the state of dealers’ and manufacturers’ inventory levels?

Mitchell: Sell-in to the channel has signifcantly outpaced sell-out in 2013, which means inventory levels are much healthier among wholesalers and installers relative to this time last year. I estimate that units at these two stages in the supply chain are probably up 3% to 4%. I do not get the sense that inventory at the manufacturing level has changed much over the past year as all the players are focused on limiting working capital investments.

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17

Industry analysis Te increased supply from China has defnitely forced these manufacturers to accept the reality that they were pricing their product higher than the brand and product quality would support in the long-run. Te question is how will these manufacturers adjust to the more competitive environment and, unfortunately, I am not sure that they all have found a productive answer to this real problem.

MTD: How are premium tire brands, the broad-line brands, and value brands doing in the market?

Mitchell: Te strength of the market resembles a barbell right now, with brands at both ends of the market performing much beter than those that constitute the middle. Going forward, I expect that demand trends over the next year will continue to be segmented, with relative strength expected in the Tier One and Tier Tree categories, and relative weakness to continue in the Tier Two bucket. Installers continue to suggest that an aging car parc will continue to place downward pressure on the mix in the coming quarters as more light vehicles are entering the fnal replacement cycle, which typically occurs in year 11 or 12 of the vehicle life cycle. Tis trend clearly plays to the strengths of Tier Tree/opening price point product. However, these same operators believe that the value propositions of Tier One suppliers are strong enough to insulate them from being share donors in the coming years, especially given the fact that the market is shifing to high value-added (HVA) tires at the front-end of the vehicle life cycle. Tis outlook naturally means that Tier Two suppliers as a group are expected to lose share.

MTD: What economic factors afected tire sales in 2013, and what do you see afecting the replacement tire market this year?

Mitchell: Tere were three main economic factors at play that afected the behavior of consumer demand in 2013: 1) income tax refunds were disbursed later than normal; 2) a return to normalized payroll tax rates; and 3) tires became more afordable. Te frst two items pressured the market at the start of the year, but as we moved into April and May, the lower prices at retail trumped the other headwinds. I expect job growth will have the biggest impact on tire volumes in 2014. While we have seen gradual improvements in labor markets over the past two years, I think we could see beterthan-expected sellout trends at retail this year if job growth accelerates and if gas prices and tire afordability do not move against the consumer.

MTD: What is going on in the OE tire market segment?

Do you see car manufacturers demanding anything diferent?

Mitchell: Te OE channel is clearly a bright spot for the tire manufacturers right now. Te new vehicle market continues to recover, and auto makers continue to turn to the Tier One and Tier Two tire manufacturers for help improving the ride quality and fuel efciency of the cars and light trucks that are being built today. Given the fact the automobile manufacturers can gain decent benefts in these two areas for a marginal cost by leveraging the technology of their tire suppliers, I expect this area of the market will continue to trend favorably for those manufacturers with signifcant OE exposure.

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MTD January 2014

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Industry analysis MTD: What is happening with raw material prices?

Mitchell: I expect the raw material cost component of building the average passenger tire will remain fat through the frst six months of the year before starting a gradual ascent in the back-half of the year. I think the move higher will be slow enough to allow the manufacturers to efectively recover the higher costs in a timely manner. I do not expect to see a lot of pressure on price/mix-to-raw spreads among the manufacturing community, especially Tier One players.

MTD: What predictions do you have for the Big Tree — Goodyear Tire & Rubber Co., Bridgestone Americas Inc. and Michelin North America Inc. — this year?

Mitchell: I do not think that the Big Tree will make any acquisitions in 2014, but I would not be surprised to see consolidation or strategic alliances — platforms to share technology, gain purchasing capital, and capital alliances — formed among some of the manufacturers in the Tier Two or Tier Tree segments.

MTD: How about any of the smaller companies?

Mitchell: Hankook is doMitchell Mitche chell ll exp expect expects ectss raw raw mat materi material erial al ing an excellent job gaining Mit to remain fat the frst traction in the OE market, prices half of 2014, then rise slowly. with notable wins on some high profle luxury vehicles, including the BMW X5; BMW 1.3 and 5 series; and MercedesBenz S-Class. Ongoing support by these premium brands should help Hankook further strengthen its image, which ultimately increases its long-term potential in the replacement market.

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20

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MTD: What impact on the U.S. replacement market will Chinese tire companies have going forward?

Mitchell: You defnitely cannot ignore the fact that the Chinese manufacturers are growing their presence at SEMA and in the North American replacement market. Most of the players in the North American tire industry that I have spoken with in recent months noted that they were surprised by the strong impact the infux of Chinese tires had on volumes and pricing in 2013. I think the Tier One and Tier Two manufacturers underestimated the consumer acceptance of Chinese products. I also believe the manufacturers that use a portion of their production capacity for entry level private label product realized that the increased supply of opening price point tires from overseas exposed defciencies in the breadth of their product oferings that will clearly need to be addressed if these branded producers want to continue to make value/ opening price point tires. Some manufacturers delayed price investments due to the fact that they misread the strength of their relationship with distributors and underestimated the need to lead with price in this segment of the market. Tis,

MTD January 2014

combined with a smaller product ofering of opening price point tires — fewer ftments/SKUs, was the primary reason some Tier One and Tier Two manufacturers lost share with their opening price point/private label ofering. I think we are still 10 or more years away from a point in time when these producers will have a product that would be deemed an HVA/premium tire that consumers would seriously consider purchasing. In other words, for now I expect the Chinese manufacturers will only be a noticeable competitor in the Tier Tree/opening price point segment of the market.

MTD: Auto service remained a bright spot for tire dealers throughout 2013. What will happen in this segment in 2014?

Mitchell: I think business trends will be a litle more balanced in 2014. I do not expect you will see a huge acceleration in demand for light service and maintenance work, but I do expect tire unit volume trends will be a litle healthier, which should help return the sales mix to more normalized levels.

MTD: What are the demand trends for the do-it-for-me (DIFM) channel?

Mitchell: I have defnitely seen demand trends pick up nicely in the DIFM channel over the last six months following a string of lackluster quarters stretching back to the second quarter of 2012. Taking a long-term perspective, I continue to expect the commercial channel will yield growth rates 1% to 2% higher than the do-it-yourself (DIY) channel.

MTD: What are the trends in the average repair order?

Mitchell: It really depends on the type of service that the tire dealer ofers. For those shops that specialize in light service — brake work, oil changes, bateries, tune-ups, etc. — the average ticket has likely been fat over the past 12 months.

However, operators who ofer a wide assortment of services, including medium- and heavy-duty repair work, are seeing a nice lif in their average ticket. Indeed, as a car moves from the eight- to 11-year-old bucket to the 12-plus-year-old bucket, the amount of regular maintenance and light service performed declines in certain key categories, while there is a noticeable lif in the volume of more complicated repairs. Interestingly, the sharpest drop of in demand trends are in the categories that generate the most trafc.

installers and DIYers trading down to lower quality and/or private label products to lower the cost of the average repair.

MTD: What’s next for the big automotive parts chains?

Mitchell: I expect Advance Auto Parts, AutoZone, O’Reilly Automotive, and Genuine Parts will have share gains in the coming years, especially in the DIFM channel. I expect Monro Mufer will more or less hold its share in its existing markets, while expanding share in new markets via its aggressive acquisition strategy. I expect Pep Boys will continue to lose market share in the DIY and commercial delivery segments, but I do think that the company can increase its scale in the tire and service market through organic growth and acquisitions.

Industry stakeholders will be watching Advance Auto Parts closely to see how well it can integrate the assets of General Parts International, including managing the relationships with the independent CARQUEST network.

MTD: What economic factors do you see afecting automotive service profts during 2014?

Mitchell: At the end of the day, the level of profts will be driven largely by the strength of consumer demand. Job growth, trends in gas prices, and consumers’ desire to replace their existing automobiles will be key determinants of how much consumers will invest in their vehicles in 2014. In short, we expect the operating environment will be up 1% to 3% in 2014.

MTD: Tanks for your insights, Nick. ■

MTD: Have wallets been opened for preventive maintenance?

Mitchell: In the commercial channel there has been a nice pick up in the amount of preventive maintenance being done in 2013 relative to 2012, when many garage owners were reporting a lot of consumers were deferring non-essential repairs and routine maintenance. Demand for routine maintenance supplies has been somewhat lackluster in the DIY channel during 2013.

However, I expect trends will improve somewhat in 2014 as we cycle the headwind from the higher payroll tax rate at a time when fuel prices are projected to fall.

MTD: What changes have there been in the demand trends of the light vehicle feet?

Mitchell: Tere is an ongoing shif toward more medium- and heavy-duty repair work given the average age of a light vehicle is over 11 years old. We are also seeing more professional

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21

Your marketplace

Dealers report strongest volume growth in more than a year

W

hile October was a big month for the New tire sales momentum grew tire industry, it appears that NovemAccording to dealer reports, replacement tire ber was even beter thanks in large volume in November improved sharply from the part to Mother Nature. While we did get a lot of demand levels in October. Specifcally, dealers snowfall very late in the winter season last year, reported that they sold 1.9% more new tires last most dealers indicated that it came too late in the month on a year-over-year basis, which compares season to scare consumers into buying the set of to the 0.7% increase reported in October. In adreplacement tires that so many people desperately dition to being the strongest growth that we have need. Tat said, Old Man Winter has been far seen in more than a year, November marked the more helpful to tire dealers as the amount of By Nick Mitchell fourth consecutive month of year-over-year sales snowfall increased signifcantly in many markets increases. Te strength was not limited to passenger during November — a key month for tire sales. tires as truck tire volumes increased 4% following a 2.3% According to our survey, consumer demand for replace- increase in October. In the retread business, volumes were ment tires increased sharply in November as dealers reported essentially fat (declined 0.3%) afer increasing roughly the strongest volume growth that we have seen in more 8.0% in October. than a year. Following the results of our latest study, it is easy to see why the dealers we were talking with at last Dealers’ costs stabilized, but retail prices drop month’s Specialty Equipment Market Association (SEMA) Dealers reported that tire costs more or less stabilized Show in Las Vegas were so much more optimistic than they in November. While dealers indicated that manufacturers had been a year earlier. Obviously, we would expect to see were still ofering creative incentives (63% of tire dealers strong volume growth if the inclement weather continues. indicated that manufacturer pricing was aggressive), they reported that their efective cost for top-selling branded Monthly survey tires was essentially fat. Te value brands, which have seen A number of independent tire dealers were surveyed the most price degradation over the past year, fell less than concerning current business trends. Except for tire prices 0.5%. On the pricing side of things, consumers continued to beneft as prices on premium brands fell roughly 1% at retail, while value brands were of nearly 2%.

How dealers view near-term business Dealers

JUL

AUG

SEP OCT(R)

Passenger tire Will improve Will worsen Will stay level

46% 9% 45%

46% 0% 54%

45% 25% 30%

46% 36% 18%

38% 12% 50%

9% 36% 55%

Truck tire Will improve Will worsen Will stay level

29% 0% 71%

53% 0% 47%

27% 0% 73%

46% 9% 45%

57% 0% 43%

0% 36% 64%

R-Revised

NOV(P) NOV(12)

P-Preliminary

and costs, the results of the November 2013 survey are compared with those of November 2012.

Outlook for early 2014 is relatively upbeat

According to our dealer survey, 38% of passenger tire dealers believed business would improve over the next six months, 50% believed it would stay about the same, while the rest thought it would worsen. Meanwhile, 57% of the truck tire dealers we spoke with saw business improving, while the rest believed that business trends would stay about the same. Tis as a relatively upbeat outlook for 2014 as dealers clearly felt beter about the future than at this time last year.

22

Dealers thought inventory was too high

Slightly more than a third (37.5%) of the dealers that we spoke with indicated that they had the appropriate amount of inventory in stock for demand, while the balance of the dealers cited that inventory levels were too high.

Tis compares to October, when 45% of dealers indicated that their inventory level was appropriate and 55% said that it was too high. For the sixth straight month, dealers reported much cleaner inventory levels in the truck tire business. Only 14% of the truck tire dealers we surveyed indicated that their inventory was too high, with the rest indicating that it was at a near-optimal level.

Service work helped drive sales

Afer hiting a modest speed bump in October, tire dealers reported that service work trends returned to the road they have been on all year: driving sales higher. Sales in the service category, which accounted for almost 25% of the study participants’ total revenues, jumped 2.4% on a year-over-year basis. ■

Nick Mitchell is a research analyst with Northcoast Research Holdings LLC based in Cleveland, Ohio. Mitchell covers a variety of subsectors of the automotive industry.

MTD January 2014

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feature

FACTS ISSUE 2014 Modern Tire Dealer breaks down the North American marketplace for the 48th consecutive year, with 27 charts (four more than last year!) spread over 13 pages. Here’s a list of what you’ll fnd.

Tire shipments: 26, 28, 30 U.S. replacement tire sales Replacement and OE tire shipments Chinese imports Canadian tire shipments and market share Market share: 32, 34, 36 Brands listed by the MTD 100 Replacement consumer tire market share World leaders in new tire sales OE consumer tire market share Tire plant capacities, North America: 40-41 Commercial tires: 42, 44 Replacement truck tire market share Retreaded truck tire market share New vs. retreaded truck tires Farm tire market share Tire sizing: 46 OE passenger and light truck tires, 2011-2012 Top passenger sizes, 2012 Top LT sizes, 2012 New sizes in 2014 Tire dealer profle: 48, 50 Distribution channel market share Average advertised tire prices Automotive service jobs per month Oil change prices All fgures in the 13-page Facts Section are Modern Tire Dealer fgures unless otherwise noted.

24

MTD January 2014

Quik-Link: 800-687-1557 ext. 11114

Facts section: Tire shipments

Te signposts up ahead? Tire sales With the economy starting to pick up, there are many indications that 2014 will be a year to remember

By Bob Ulrich

I

f the headline sounds familiar to my fellow baby boomers, it may remind you of the classic television series “Te Twilight Zone.”

”You’re travelling through another dimension... a journey into a wondrous land whose boundaries are that of imagination. Tat’s the signpost up ahead — your next stop, the Twilight Zone!”

In this case, there are multiple signposts indicating pent-up demand may be released in 2014. Te signs are not imagined.

Passenger tire shipments were up 5% in 2013 vs. 2012, while light truck tire shipments remained stable (see Chart 2).

Nick Mitchell, senior vice president for Northcoast Research Partners LLC, says “afermarket demand recovery” began prior to the fourth quarter of 2013, and carried through the Chart 1 2013 U.S. REPLACEMENT TIRE SALES (A $37.3 billion industry) Passenger tires:

$25.0 billion

Light truck tires:

$4.9 billion

Truck tires:

$6.3 billion

Farm tires:

$560 million

OTR tires:

$590 million

In 2012, U.S. replacement tire sales totaled $37.7 billion.

end of the year. “We believe persistent tailwinds should drive continued expansion in early 2014.”

Bret Jordan, managing director and senior analyst for BB&T Capital Markets, a division of BB&T Securities LLC, also is optimistic about automotive and tire sales in early 2014. He says increased demand for maintenance, a trend that began in the fourth quarter of 2013, will continue to gain momentum in the U.S. He cites the following signs:

• early inclement winter weather on the East Coast; • below historic mean November temperatures through most of the country; • a record high mean age of the vehicle feet; and • a growth in miles driven through the frst 11 months.

“We believe the afermarket’s most sluggish category post the Great Recession (i.e., tires) could also be poised for solid Chart 2 U.S. UNITS SHIPPED 2009-2013 (in millions) PASSENGER TIRES Year

Replacement

OE

2013

201.6

44.0

2012

192.0

40.5

2011

196.5

36.0

2010

198.7

34.6

2009

184.0

25.0

LIGHT TRUCK TIRES Chart 3 2013 REPLACEMENT PASSENGER TIRE MARKET (Based on 201.6 million units shipped)

Other 62.2% HP 18.1% UHP 17.4% Winter 2.3%

26

2013

28.3

4.4

2012

28.3

4.2

2011

28.6

4.1

2010

28.0

3.5

2009

26.0

2.6

The record for re p l a c e m e n t passenger tire units shipped is 205.8 million, set in 2005. The OE record is 61 million, set in 1999.

MEDIUM/HEAVY TRUCK TIRES 2013

15.7

5.0

2012

16.0

5.3

2011

17.0

4.9

2010

15.3

3.0

2009

12.7

2.1

MTD January 2014

Quik-Link: 800-687-1557 ext. 11115

Facts section: Tire shipments expansion in 2014 as higher wear rates and improving utilization trends point to likely improving replacement demand.”

Vehicle miles driven were at a pace to close in on the 3 trillion mark before severe winter weather struck many parts of the U.S. in December. However, that led to more winter tires being sold, which more than ofset any loss in sales due to the reduction in miles driven.

Lower fuel costs were partially responsible for the 11-month increase in miles driven, which were the most since 2008. According to the American Automobile Association (AAA), gasoline prices were down in 2013 compared to the previous year.

“As a result of increased domestic oil production and lower demand... the national average price of gasoline should peak at $3.60 to $3.80 per gallon barring any signifcant unanticipated events,” said the AAA before the fnal statistics were in. “Tat compares to a peak of $3.94 a gallon in 2012.”

Drivers paid an average of $3.49 per gallon of gas at the pumps in 2013. Tey paid a record average of $3.60 a gallon in 2012.

“Our hope is that prices will continue to fall as cars grow increasingly fuel efcient and refneries expand production to take advantage of the recent boom in North American crude oil,” says Avery Ash, a AAA spokesman.

Mintel Group Ltd. expects modest growth in the replacement consumer tire industry over the next fve years. Te market research company estimates sales will increase to $33.5 billion by 2017, a 12.1% increase. Tat is in-line with our estimate of $29.4 billion passenger and light truck tire sales for 2013 (see Chart 1 on page 26).

“However,” according to Mintel, “at an infation-adjusted basis, sales will only increase to $30.8 billion, a 3.3% increase.”

Dr. Ken Mayland, president of ClearView Economics LLC, says the immediate future for replacement tire sales looks bright.

For example, North American light vehicle manufacturing, which fnished the year at close to 16.3 million units (13.4 million in the U.S. and Canada), has not maxed out yet.

Also, the average age of passenger cars and light trucks in the U.S. is 11.4 years and 11.3 years, respectively, according to Polk, a division of IHS Inc. Because tires are a “necessary purchase,” tire retailers can’t help but beneft as a result.

Mayland adds that because the price of labor in China has been escalating, tire dealers “are in a beter position to underwrite tires (for the consumer) with beter quality.”

In the frst full year since the 25% tarif on passenger and light truck tires imported from China expired, a record 170 million consumer tires were imported into the U.S. China accounted for 30% of that total, or 51.2 million units (see Chart 4). Tat, too, is a record, more than 10% higher than the 46.5 million Chinese imports from 2008 — the year before the tarif frst went into efect.

Canada surpassed South Korea as the second most popular consumer tire import partner of the U.S. (see Chart 5). South Korea had fnished runner-up to China the last two years. But the biggest leap in the top 10 rankings was by Indonesia, which fnished ffh and was close to passing Mexico for fourth place.

Mexico also jumped two spots, helped by increased production at Pirelli Tire LLC’s two-year-old plant in Silao, Guanajuato, Mexico.

Domestic truck tire imports were down 8.5%, to 9.7 million units, last year versus the year before, when 10.6 million units were imported. China again led the way as the top importer, accounting for 65% of the total, or 6.3 million units (see Chart 6).

28

Chart 4 U.S. CONSUMER TIRE IMPORTS FROM CHINA (In millions of units) Year

Units

2013

51.2

Yr./yr. change +57.5%

2012

32.5

+25.0%

2011

26.0

-16.1%

2010

31.0

-27.9%

2009

43.0

-7.5%

Sources: U.S. government, MTD fgures

Chart 5 U.S. CONSUMER TIRE IMPORTS BY COUNTRY 2013 rank/ country

2012 rank

% change vs. 2012

1. China

1

+57.5%

2. Canada

3

-0.4%

3. S. Korea

2

-14.0%

4. Mexico

6

+0.8%

5. Indonesia

7

+10.0%

6. Thailand

4

-3.0%

7. Japan

5

-1.4%

8. Taiwan

8

+26.2%

9. Chile

9

+31.7%

10. Germany

11

+5.5%

The top 10 countries account for 90.2% of all consumer tire imports in the U.S. Sources: U.S. government, MTD fgures

Chart 6 2013 U.S. TRUCK TIRE IMPORTS FROM CHINA (Based on 6.3 million units)

500,000 bias 7.9% 5.8 million radial 92.1% Sources: U.S. government, MTD fgures

MTD January 2014

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Facts section: Tire shipments RMA predictions

Te Rubber Manufacturers Association (RMA) estimates passenger, light truck and truck tire demand will total 302 million in 2014, an increase of nearly 2%.

“A declining unemployment rate, a rebound in housing, increases in vehicle sales and vehicle miles traveled, as well as other macroeconomic factors are expected to account for the 2014 increase.”

Here are the RMA estimates for 2014 by category, based on its own fgures for 2013, and the reasons behind them.

(Te RMA includes an estimation of temporary spares in total original equipment and total replacement shipments, but does not report them publicly.)

1. OE passenger tires: up approximately 1.5 million units.

“Light vehicle sales are expected to approach 16 million units.”

2. OE light truck (LT) tires: up 100,000 units, or 2%, “as the economy continues to expand.”

3. OE medium/wide-base/heavy truck tires: up nearly 200,000 units, or 5%, “New truck demand is expected to rebound in 2014.”

4. Replacement passenger tires: up 2 million units, or 1%,

because of “continued improvement of economic conditions coupled with lower fuel prices.”

5. Replacement LT tires: up 600,000 units, or nearly 2%, “as the economy gains additional momentum.”

6. Replacement truck tires: up 300,000 units, or 2%, “as truck tonnage and manufacturing continue to grow.”

Canadian vs. U.S. tire shipments

Canada has one-tenth the number of residents the United States does. It makes sense, then, that tire shipments should follow the same patern.

Last year, there were 18. 7 million replacement consumer tires shipped in Canada. Tat compares to nearly 230 million in the U.S. Here is the breakdown in millions, including truck tire shipments: Tire type 2013 Passenger: 15.8 Light truck: 2.9 Truck: 1.7

2012 15.6 2.8 1.6

% change +1.3% +3.5% +6.2%

However, there are more winter tire shipments in Canada. An estimated 4.7 million “true” winter tire units (those displaying the mountain snowfake symbol) were Chart 7 2013 CANADIAN REPLACEMENT shipped in 2013, which made up 30% of Canada’s CONSUMER TIRE BRAND SHARES total replacement passenger tire units.

In the U.S., winter tires made up about 4.6 milPASSENGER TIRE LIGHT TRUCK TIRE lion units, or less than 3% of total units (see Chart (Based on 15.8 million units) (Based on 2.9 million units) 3 on page 26).

Brand % of total Brand % of total Te RMA, in its yearly Factbook, includes winter Goodyear 12.5% Goodyear 16.0% tires in the “traction and snow treads” category.

Because it is made up of not only winter tires but Michelin 12.0% Michelin 11.0% also tires with “all-terrain and traction treads,” the Motomaster 12.0% Motomaster 9.5% number is much higher than Modern Tire Dealer’s Bridgestone 8.0% BFGoodrich 9.0% estimate.

Michelin North America Inc. has more consumer BFGoodrich 6.0% Bridgestone 8.5% tire market share in Canada than any other brand.

Hankook 6.0% Firestone 5.5% With its Michelin, BFGoodrich and Uniroyal brands, Continental 4.0% Yokohama 5.0% the company owns a 20.8% share of the market (see Chart 7).

Toyo 4.0% General 4.5% Goodyear Tire & Rubber Co., with Goodyear, Firestone 3.5% Toyo 4.0% Dunlop and Kelly, is second with a 15.2% market General 3.5% Hankook 4.0% share, followed by Bridgestone Canada Inc. which is third at 11.8%.

Nexen 3.5% Continental 3.0% Motomaster, a private brand tire owned and sold by Yokohama 3.5% Uniroyal 3.0% Canadian Tire Corp., is fourth with a consumer tire Cooper 3.0% Hercules 2.0% market share of 11.6%. Motomaster is manufactured

by Hankook Tire Co. Uniroyal 2.5% Kumho 2.0% Private brand tires ac- Ltd. and Cooper Tire Dunlop 2.0% Pirelli 2.0% count for 16.6% of the & Rubber Co. Hercules 2.0% Dunlop 1.5% replacement consumer Canadian Tire, tire market in Canada. w ith 490 stores Kumho 2.0% Cooper 1.0% across the country, Nokian 1.5% Kelly 1.0% is the largest tire retailer in Canada. It also sells the Delta 1.0% Multi-Mile 1.0% Goodyear, Pirelli, Michelin, Continental, Dunlop, Falken 1.0% Others 6.5% BFGoodrich, Hankook, Cooper, General, Uniroyal and Toyo brands.

Numbers are rounded to the Pirelli 1.0% nearest one-half percent except to The largest independent tire dealer group in reach 1% in market share.

Others 5.5% Canada is OK Tire Stores Inc. with 285 outlets. ■

30

MTD January 2014

Quik-Link: 800-687-1557 ext. 11117

Facts section: Market share

Anchors aweigh!

Michelin remains the favorite brand among the MTD 100

T

he Modern Tire Dealer 100 is the largest, most infuential list of independent retail and commercial tire dealers in the United States. Tey represent 18.6% of the 30,000 independent tire dealers.

Tey average 12 tire brands per outlet, and sell more than 110 diferent brands combined. Tey are a microcosm of the afermarket as a whole.

Would you be surprised, then, that 82 of the dealers (there were 102 in 2013 because of an eight-way tie for 95th place) ofer the Michelin brand? For the eighth consecutive year, Michelin topped the list of brands sold by the MTD 100.

Te brand is sold by 82 dealers representing 81% of the outlets (see Chart 8). Tat is signifcant growth from 2007, when Michelin was sold by 71 of the 102 dealers on the list (another tie) that represented 3,318 outlets.

(In the eight-year span between 2006 and 2013, the MTD 100 dealers increased their store count by 29%. Tat’s either a lot of growth, a lot of consolidation, or both.)

Goodyear, second in number of dealers last year, was tied for second in number of dealers this year, but fell behind BFGoodrich in number of outlets.

Chart 8 2013 BRANDS LISTED

BY THE MTD 100 (Total outlets: 5,578)

32

1. Michelin

82/4,519

2. BFGoodrich

71/4,319

3500

3. Goodyear

71/4,289

3000

4. Bridgestone

61/4,437

5. Continental

57/3,383

2500

6. Firestone

57/3,012

2000

7. Yokohama

55/3,769

8. Cooper

54/3,496

1500

9. Dunlop

47/3,602

1000

10. General

47/3,094 46/2,243 41/1,758

13. Hankook

40/3,374

14. Pirelli

37/3,825

15. Toyo

32/2,444

16. Falken

26/3,011

17. Kumho

24/2,569

In the replacement passenger tire market, the anchor brands lead the way. Goodyear is the clear number one in market share, followed by Michelin and Bridgestone (see Chart 10 on page 34).

However, when taking associate brands into account, Bridgestone Americas Inc. comes out on top. Its Bridgestone, Firestone and Fuzion brands account for 14.5% of the market.

Goodyear Tire & Rubber Co., with its Goodyear, Dunlop and Kelly brands, is second at 13.6%, while Michelin North America Inc., with its Michelin, BFGoodrich and Uniroyal

Chart 9 MTD 100 MOVERS AND SHAKERS

Dealers/ outlets

12. Kelly

Replacement market share

Michelin has been the most popular brand among our Modern Tire Dealer 100 dealers for the last eight years.

Rank by number of dealers

11. Uniroyal

Bridgestone was second in outlets represented because of its strong afliation with the larger dealers, but compared to the other brands, was down in the number of dealers who sell the brand. Bridgestone is ofered by 10 of the top 12 dealers in the country, including the top six; no other brand can make that claim.

In the last four years, the fve biggest gainers in terms of outlets represented by the MTD 100 are Falken, Cooper, Kumho, Firestone and Toyo (see Chart 9).

From 2010 to 2013, the biggest brand gainers on the MTD 100 list in terms of outlets represented were:

2013 2010

500 0

e

6 n9

lk Fa

.6%

1.7

o Co

p

9 er

% m Ku

8 ho

2.6

%

%

.7 61 e1

n sto

e Fir

%

8.0

5 yo To

Compared to 2010: Bridgestone was up 51.5%; only the Uniroyal brand was down in outlets.

MTD January 2014

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

Facts section: Market share brands, is third at 12.7%. Together, the three companies account for 40.8% of the replacement passenger tire market.

Bridgestone also is frst in new tire sales in the U.S. and Canada, with Goodyear and Michelin tied for second (see Chart 11). Te numbers do not include retail sales through company-owned outlets.

OE market share

For the frst time, Cooper Tire & Rubber Co. has an original equipment tire with a major vehicle manufacturer. Te Cooper Zeon RS3-A, in size 215/50R17, was selected by Ford Motor Co. as a standard ftment for the 2013 Ford Focus SE and Titanium models.

Chart 10 2013 U.S. REPLACEMENT CONSUMER TIRE BRAND SHARES PASSENGER TIRES (Based on 201.6 million units) Brand Goodyear Michelin Bridgestone

% of total 13.0% 8.5% 8.0%

LIGHT TRUCK TIRES (Based on 28.3 million units) Brand Goodyear BFGoodrich Bridgestone

% of total 12.0% 9.0% 8.0%

Firestone

7.5%

Michelin

7.0%

Cooper

5.5%

Firestone

6.5%

BFGoodrich

4.5%

Cooper

6.0%

Chart 11 WORLD LEADERS IN NEW TIRE SALES (Fiscal year 2013; in billions of U.S. dollars) Company

2013

Bridgestone Corp.

$31.2

Groupe Michelin

$26.8

$27.4

Goodyear Tire & Rubber Co.

$18.9

$20.2

Continental AG

$13.0

$12.4

Pirelli & Cie SpA

$8.0

$7.7

4.0%

General

4.5%

Yokohama

4.0%

Multi-Mile

4.5%

Falken

3.5%

Yokohama

4.0%

General

3.5%

Hankook

3.5%

Continental

2.5%

Toyo

3.5%

Kumho

2.5%

Pirelli

2.5%

Nexen

2.5%

Falken

2.0%

Pirelli

2.5%

Hercules

2.0%

Toyo

2.5%

Kumho

2.0%

Hercules

2.0%

Mastercraft

2.0%

Multi-Mile

2.0%

Uniroyal

2.0%

Dunlop

1.5%

Big O

1.5%

GT Radial

1.5%

Continental

1.5%

Mastercraft

1.5%

Cordovan

1.5%

Sumitomo

1.5%

Dunlop

1.5%

Uniroyal

1.5%

Eldorado

1.5%

Big O

1.0%

Kelly

1.5%

Cordovan

1.0%

Maxxis

1.5%

Delta

1.0%

Nexen

1.5%

Fuzion

1.0%

Delta

1.0%

Kelly

1.0%

GT Radial

1.0%

Nitto

1.0%

Others

6.0%

Sigma

1.0%

Others

8.0%

1

32.0

$7.7

Sumitomo Rubber Industries Ltd.

$6.9

Hankook Tire Co.

$6.6

$6.3

Yokohama Rubber Co.

$4.91

$5.61

Cheng Shin Rubber Ind. Co. Ltd.

$4.5

$4.4

Kumho Tire Co. Ltd.

$3.4

$3.6

Cooper Tire & Rubber Co.

$3.2

$4.2

2

Hankook

2012 1

Toyo Tire & Rubber Co. Ltd.

1

$3.0

$3.63

U.S./CANADIAN LEADERS IN NEW TIRE SALES (Fiscal year 2013; in billions of U.S. dollars) 2013

2012

Bridgestone Americas Inc.

Company

$9.21

$9.4

Goodyear Tire & Rubber Co.

$8.0

$8.6

Michelin North America Inc.

$8.0

$8.2

Continental Tire the Americas LLC

$2.9

$2.7

Cooper Tire & Rubber Co.

$2.4

$3.1

Sumitomo Rubber Industries Ltd.4

$1.41

$1.4

Hankook Tire America Corp.

$1.4

$1.3

1

Yokohama Tire Corp.

$1.3

Kumho Tire U.S.A. Inc.

$.7

Pirelli Tire North America Inc.

$.64

Toyo Tire Holdings of America Inc.

$1.3 $.8

1

$1.4

$.61 $1.53

1

The average exchange rate between the yen and U.S. dollar increased 22.3% from 2012 to 2013 in favor of the U.S. The strong yen hurt the results from Bridgestone, Sumitomo, Yokohama and Toyo.

2 3

4

Doing business as Maxxis International.

Toyo’s fscal 2012 was a one-time-only nine months long. The 2012 total includes 4Q 2011 results.

Sumitomo Corp. of America is run independently of Sumitomo Rubber Industries.

Because numbers are rounded to the nearest one-half percent, the total may not equal 100%. Brands must have at least 1% of the market in shipment numbers to be listed at 1%.

This applies to all the market share charts.

34

MTD January 2014

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

Facts section: Market share (In 2008, the Cooper RS3 was named the “ofcial tire” of Roush Performance Products Inc. Te W-rated, ultra-high performance tire, in size 275/40ZR18, ran on all of Roush’s 2009 modifed Mustangs.)

Te ftment gives Cooper a 1% share of Ford’s OE business in the U.S. and Canada, and a 0.2% share of overall OE market.

Nine other brands also increased their OE market share in the last two years (see Chart 12).

“Tis new relationship with Ford marks our company’s entry into the U.S. passenger car OE tire market, a strategic decision aligned with our goal to drive proftable sales by diversifying product mix, expanding sales channels and leveraging technology,” said Roy Armes, Cooper’s chairman, CEO and president, last February. Ford is the second largest vehicle manufacturer in the U.S. and Canada, with a 19.5% market share. General Motors Corp. is frst at 19.9%.

Chrysler Group LLC, which soon will become a wholly-owned subsidiary of Fiat SpA, is third at 15.4%, followed by Toyota Motor Sales U.S.A. Inc. (13.5%), American Honda Motor Co. Inc. (12.9%), Nissan North America Inc. (6%) and Hyundai Motor America (5.8%).

Falken Tire Corp. will have an OE ftment in the U.S., its frst, on a 2014 Chrysler model, according to Andrew Hoit, Falken’s vice president of marketing. ■ Nexen Tire Corp.’s CP671, an all-season passenger tire, is OE on the 2014 Chrysler 200 and Dodge Avenger.

36

Chart 12 U.S./CANADIAN OE CONSUMER TIRE MARKET SHARE (Excluding imported vehicles; based on 57.4 million units) 2013

2011

Goodyear

27.2%

27.5%

Michelin

20.0%

22.9%

Continental

10.7%

9.9%

Bridgestone

10.4%

13.6%

Firestone

6.3%

5.0%

Hankook

4.9%

4.0%

Kumho

4.4%

3.2%

BFGoodrich

4.3%

5.5%

Pirelli

3.2%

3.4%

General

2.7%

2.5%

Dunlop

2.0%

1.2%

Toyo

1.6%

<0.5%

Nexen

1.1%

<0.5%

Yokohama

1.0%

<0.5%

Cooper

0.2%

0.0%

Others*

0.0%

<0.5%*

* Others refers to Uniroyal (General Motors). Because the numbers are rounded to the nearest one-half percent in 2011, the total may not equal 100%.

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

MTD January 2014

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

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

Facts section: North American plant capacities

Who said production is dead?

3 plants open, with 3 more to come

Y

early tire capacity, not production, in North America totaled 307.9 million tires at 55 plants as of Jan. 1, 2014. Tat’s up one-half percent compared to 2013, when capacity was 306.3 million tires. (Te total does not include race or aviation tires.)

In the United States, annual capacity increased by 2.1 million tires to 247.4 million units. Canadian tire plant capacity is 27.2 million tires a year, a 2% decrease versus 2013.

Mexican plant capacity remained at 33.3 million tires.

Tree new plants helped with additional production in the U.S., although two of the plants, Michelin North America Inc.’s OTR plant in Anderson, S.C., and Bridgestone Americas Inc.’s OTR plant in Aiken County, S.C., produce a combined 60 large OTR tires a day.

Te Michelin plant is part of a $750 million investment that includes expanding the company’s existing earthmover manufacturing plant in Lexington, S.C. Bridgestone also is entering phase two of the expansion of its consumer tire plant in Aiken County. When completed in August 2015, the plant will be able to produce 37,700 units a day.

Te combined cost of the expansion and building the OTR plant will reach $1.2 billion.

Continental Tire the Americas LLC’s new consumer tire plant in Sumter, S.C., began manufacturing consumer tires ahead of schedule. Te $500 million plant has the capacity to produce 4,500 passenger and light truck tires per day, or more than 1.6

40

Chart 13 NORTH AMERICAN TIRE PLANT CAPACITIES As of Jan. 1, 2014 (in thousands of units) Light Passen- truck Truck Others ger per per per Plant location/ Nonday: day: Year constructed union ISO1 QS2 per day: day: Bridgestone Americas Inc. Aiken County, S.C., 2013 x 0.0 0.0 0.0 0.05 La Vergne, Tenn., 1972 x x 0.0 0.0 6.2 0.0 Warren County, Tenn., 1990 x x 0.0 0.0 9.0 0.0 Bloomington, Ill., 1965 x x 0.0 0.0 0.0 0.29 Des Moines, Iowa, 1945 x x 0.0 0.0 0.0 4.57 x x x 30.5 3.5 0.0 0.0 Wilson City, N.C., 1974 3 Aiken County, S.C., 1999 x x x 20.5 9.2 0.0 0.0 Joliette, Quebec, 1966 x x 9.3 7.2 0.0 0.0 Monterrey, Mexico, 2007 x 8.0 0.0 0.0 0.0 Cuernavaca, Mexico, 1980 x x 11.0 4.4 0.0 0.0 Total: 79.3 24.3 15.2 4.91 American Industrial Partners (formerly Carlisle Tire & Wheel Co.) Jackson, Tenn., 2009 x 0.0 0.0 0.0 26.0 Clinton, Tenn. (Dico), 1974 x x 0.0 0.0 0.0 15.0 Total: 0.0 0.0 0.0 41.0 Continental Tire the Americas LLC Sumter, S.C., 2013 x 3.9 0.6 0.0 0.0 Mount Vernon, Ill., 1973 x x x 28.0 3.0 6.0 0.0 Total: 31.9 3.6 6.0 0.0 Cooper Tire & Rubber Co. Findlay, Ohio, 1917 x 7.0 16.0 0.0 0.0 Texarkana, Ark., 1964 x 24.0 8.0 0.0 0.0 Tupelo, Miss., 1984/1960 x x 42.0 0.0 0.0 0.0 Total: 73.0 24.0 0.0 0.0 Goodyear Tire & Rubber Co. Buffalo, N.Y., 1923 x 4.0 2.5 2.3 5.2 Danville, Va., 1966 x x 0.0 0.0 11.0 2.0 Fayetteville, N.C., 1969 x x 30.5 10.5 0.0 0.0 Gadsden, Ala., 1928 x x 14.5 11.5 0.0 0.0 Lawton, Okla., 1978 x x x 63.0 0.0 0.0 0.0 Topeka, Kan., 1945 x x 0.0 1.5 5.5 0.1 Medicine Hat, Alberta, 1960 x x 0.0 0.0 0.0 12.0 Napanee, Ontario, 1990 x x x 19.0 0.0 0.0 0.0 Total: 131.0 26.0 18.8 19.3 GTY (General/Yokohama) Mount Vernon, Ill., 1988 x x x 0.0 0.0 3.9 0.0 Michelin North America Inc. Ardmore, Okla., 1969 x x x 40.5 3.5 0.0 0.0 Dothan, Ala., 1979 x x 1.0 4.0 0.0 0.0 Fort Wayne, Ind., 1961 21.0 9.5 0.0 0.0 Greenville, S.C., 1975 x x 28.0 0.0 0.0 0.0 Greenville, S.C. (C3M), 1997 x x x 7.0 0.0 0.0 0.0 Lexington, S.C., 1981 x x 19.0 5.0 0.0 0.0 Lexington, S.C., 1998 x x 0.0 0.0 0.0 0.1 Spartanburg, S.C., 1978 x x 0.0 0.0 7.0 0.0 Starr, S.C., 2013 x 0.0 0.0 0.0 0.01

Total 0.05 6.2 9.0 0.29 4.57 34.0 29.7 16.5 8.0 15.4 123.71 26.0 15.0 41.0 4.5 37.0 41.5 23.0 32.0 42.0 97.0 14.0 13.0 41.0 26.0 63.0 7.1 12.0 19.0 195.1 3.9 44.0 5.0 30.5 28.0 7.0 24.0 0.1 7.0 0.01

MTD January 2014

Plant location/ Year constructed 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

Passenger per day: 23.0

Light truck per day: 7.0

11.0

3.0

Truck Others per per day: day: 0.0 0.0

7.0 1.0 0.0 0.0 6.0 0.0 163.5 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 2.8 1.2 Total: 4.0 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 7.8 7.8 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

Total 30.0

0.0

0.0

14.0

0.0 0.0 0.0 7.0

0.0 5.0 0.0 5.11

8.0 5.0 6.0 208.61

0.0

0.5

0.5

0.0 0.0 0.0

0.0 0.0 0.0

1.7 4.0 5.7

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

15.6

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

U.S. Totals Canadian Totals Mexican Totals TOTAL:

442.1 46.3 62.8 551.2

105.1 11.2 22.8 139.1

79.7 17.0 1.04 97.74

677.8 74.5 91.44 843.74

2014 vs. 2013

+0.4%

+0.9% +1.1% -0.1%

+0.5%

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 Chrysler LLC (www.qscertifcation.com).

3 ISO 50001 (Industrial Energy Management Systems). 4 ISO 14001 (Environment Management Systems).

www.moderntiredealer.com

million tires annually. By 2017, the plant will have a production capacity of approximately fve million units per year.

Additional capacity will be available in the next two years when three more plants come on-line.

1. Construction of Kumho Tire U.S.A. Inc.’s $200 million plant in Macon, Ga., which began in 2008 but was put on hold, is back on. CEO and President Harry Choi says the plant is on schedule to begin producing replacement and original equipment consumer tires in August 2015.

Initially, the facility will produce 2.1 million tires annually.

2. Yokohama Tire Manufacturing Mississippi (YTMM), the new manufacturing subsidiary of Yokohama Tire Corp., ofcially broke ground on its new commercial truck tire plant in West Point, Miss., on Sept.

23, 2013. It is slated to begin operations in October 2015. Yokohama is making an initial $300 million investment in the facility. When completed, it will produce up to one million tires annually.

3. Hankook Tire America Corp. will begin construction on a consumer tire plant in Clarksville, Tenn., this year. Production at the projected $800 million facility is expected to begin in 2016 following phase one.

When the facility is completed following phase two in 2018, annual capacity will be 11 million tires.

Toyo Tire & Rubber Co. Ltd. broke ground on a project to expand production capacity at its Toyo Tire North America Manufacturing Inc. plant in White, Ga., late last year.

Te $371 million project will add 2.5 million Toyo and Nito brand tires to the plant’s capacity.

On Oct. 20, 2013, Carlisle Companies Inc. entered into a defnitive agreement to sell its Transportation Products division to American Industrial Partners for $375 million.

Carlisle Tire & Wheel Co. is part of Transportation Products. Te deal closed before the end of the year.

American Industrial Partners is a middle market private equity frm based in New York, N.Y. ■

41

Facts section: Commercial

Retreading revitalized More casings and higher prices complemented new tires

T

he number of retreaded truck tires in the United States grew in 2013 compared to 2012. In contrast, replacement truck tire shipments decreased. Tat only brought the two segments closer together. Literally.

Te spread between retreads (14.9 million in 2013, up 100,000 units) and new replacement truck tires (15.7 million, down 300,000 units) is only 800,000 units. Te last time the two commercial segments were that close was 2009, when retreaded truck tires actually outnumbered new tires (see Chart 15).

Does it really mater who winds up on top every year? It does to the 680 retread shop owners in the U.S., who enjoyed a steep 9.6% increase in retread pricing last year.

Chart 14 2013 U.S. MARKET SHARE, RETREADED TRUCK TIRES (Based on 14.9 million units)

Others 4.0% Marangoni 5.0% Michelin 23.0% Goodyear 26.0% Bandag 42.0%

Chart 15 2013 TRUCK TIRE REPLACEMENT MARKET BREAKDOWN (Before 2009, the number of retreaded truck tires produced last topped new truck tire shipments in 2004)

20

Retreaded

2010

2011

2012

2013

The average price of a retreaded truck tire in 2013 was $250.24.

The average price of a new tire in 2013 was $401.27.

42

2009: $184.61 2012: $228.24

2010: $209.79 2013: $250.24

Te average cost of a casing dipped from $79.10 to $78.61 in 2013. However, the retreaded truck tire market as a whole still rose to $3.7 billion. Combined with $6.3 billion in new truck tire sales, the replacement market totaled $10 billion.

Te order of the top retreading processes hasnâ&#x20AC;&#x2122;t changed since Michelin North America Inc. purchased Oliver Rubber Co. from Cooper Tire & Rubber Co. in 2007. In order they are: Bandag precure at 42%; Goodyear precure, mold cure and UniCircle at 26%; Michelin Pre-mold and Custom Mold and Oliver precure at 23%; and Marangoni RingTread and precure at 5% (see Chart 14).

Continental Tire the Americas LLC continues to add ContiLifeCycle retreaders to its network. Te company estimated more than 300,000 ContiTread precure retreaded truck tires were produced for North and South America in 2013.

What to expect

Te Big Tree tire manufacturers account for 60.5% of the replacement truck tire market with seven brands (see Chart 16). Not coincidentally, they have strong retreading networks, which will keep them entrenched at the top for a long time.

Cooper lost Roadmaster brand share when workers at its Cooper Chengshan (Shandong) Tire Co. Ltd. joint venture plant in China went on strike in protest of Apollo Tyres Ltd.â&#x20AC;&#x2122;s proposed acquisition of Cooper. Te deal has since been called of; if the strike also ends, Cooper could regain the market share it lost within the year.

Chart 16 2013 U.S. REPLACEMENT MEDIUM/HEAVY TRUCK TIRE BRAND SHARES (Based on 15.7 million units) 2013

BFGoodrich

2.0%

18.0%

Dunlop

2.0%

Bridgestone

17.0%

Dynatrac

2.0%

Goodyear

12.5%

Toyo

2.0%

Yokohama

10.0%

Roadmaster

1.5%

Michelin

15

2009

2008: $197.95 2011: $247.55

Brand

New

10

Retreaded truck tire pricing (including casings)

Firestone

8.0%

Sailun

1.5%

Continental

5.0%

Sumitomo

1.5%

Double Coin

4.0%

Gladiator

1.0%

Hankook

3.5%

Kelly

1.0%

General

3.0%

Kumho

1.0%

Hercules

3.0%

Other

3.0%

MTD January 2014

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

Facts section: Commercial Chart 17 2013 U.S. REPLACEMENT FARM TIRE MARKET SHARES REAR RADIAL (310,000 units)

Akuret

2.0%

Firestone

30.0%

Carlisle

2.0%

BKT

20.0%

American Farmer

1.5%

Michelin

16.0%

Others

2.5%

Goodyear

15.0%

SMALL FARM (1.25 million units)

Alliance

6.0%

Firestone

21.0%

Titan

5.0%

Goodyear

18.0%

Trelleborg

3.0%

Titan

17.0%

Others

5.0%

BKT

16.5%

REAR BIAS (470,000 units)

Carlisle

10.0%

BKT

40.0%

Akuret

4.0%

Firestone

23.5%

American Farmer

4.0%

Titan

10.0%

Harvest King

4.0%

Trelleborg

2.5%

Alliance

1.0%

Others

2.0%

Goodyear

7.0%

Alliance

6.0%

Harvest King

3.0%

Trelleborg

2.5%

Titan Tire Corp. produces both the Titan and Goodyear brands at its three plants.

44

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

Tere were more new commercial vehicle and trailer registrations last year than in any year since 2007. Tat bodes well for the future of both new and retreaded truck tire sales.

Farm tire shipments

Replacement farm tire units, both rear and small, were up only 1.3% year-over-year. Tey totaled slightly more than 2 million tires in 2013 (see Chart 17). Original equipment shipments, on the other hand, were up in every category: 9.2% in rear farm tires (see Chart 18) and 5.6% in small farm tires. â&#x2013; Chart 18 U.S. OE REAR FARM TIRE MARKET SHARE (730,000 radial and bias units) Firestone

41.5%

Goodyear

28.0%

Titan

20.0%

Others

10.5%

MTD January 2014

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

Facts section: Tire sizing

Keep these sizes in inventory!

You canâ&#x20AC;&#x2122;t rely on your wholesalers for everything

V

ehicle manufacturers drive tire sizing. If they applied the same size tire to similar chassis more ofen, size proliferation might cease.

Tat will not be the case in 2014. Tere are 343 radial passenger tire sizes, according to the Tire and Rim Association.

Tere are 199 radial LT sizes.

Together, they add up to 542 sizes, 1.7% more than in 2012.

Tat compares favorably to 2008, when there were 519 sizes.

Only a 4.4% growth in the number of sizes in six years seems to indicate a slowing down of size proliferation. Still, there has been a net gain in sizes every year.

So, what sizes should you be watching for in 2014? Tese SKUs, previously needed only for limited applications, will

be appearing on the popular cars that drive into your shop in the near future.

1. 205/65R16: OE on the 2011 Hyundai Sonata, 2011 Kia Optima, 2012 Toyota Camry and 2013 Honda Accord.

2. 195/50R16: OE on the 2011-2014 Ford Fiesta, 20122013 Hyundai Accent and 2012-2013 Toyota Yaris/Prius C. 3. 235/55R19: OE on at least a dozen large car and crossover vehicles since 2011, most recently the 2014 Kia Sorento SX.

Most popular

In Chart 20, we have listed the most popular OE P-metric and LT sizes for 2012 and 2011, courtesy of the Rubber Manufacturers Association, to give tire dealers a beter idea of what to look for and stock Chart 19 in 2014.

NEW P-METRIC, LT AND TRUCK TIRE SIZES/SKUS IN 2014 Tere were 150 consumer tire sizes in 1977, when the top 10 replacement radial passenger P335/25R20 SL P285/30R19 SL P215/50R18 SL/XL tire sizes covered more than 90% of the radial P185/60R16 SL LT275/55R20 LRE LT265/60R18 LRE market. In 2012, the top 10 P-metric/metric LT245/65R17 LRD LT255/70R17 LRE LT255/70R18 LRD sizes represented 22.5% of the replacement market, according to the RMA. â&#x2013; 33x10.50R17LT LRE 33x10.50R18LT LRE 34x10.50R17LT LRE 33x11.50R18LT LRE

34x12.50R18LT LRE

33x13.50R15LT LRC

40x13.50R17LT LRD 35x14.50R15LT LRC

38x15.50R20LT LRD

40x15.50R20LT LRD 40x15.50R22LT LRD 295/80R22.5 LRH/J Source: Tire & Rim Association

Size

2012 OE light truck (LT)

% of total

Size

% of total

6. P215/60R16

2. P235/75R15

7. P225/60R16

3. 225/60R16

8. 195/65R15

4. 215/60R16

9. 195/60R15

5. P265/70R17

10. 215/65R16

P215/55R17

6.1%

LT245/75R17

22.1%

P265/70R17

4.4%

LT245/75R16

14.7%

Chart 22 TOP U.S. LIGHT TRUCK TIRE SIZES, 2012

P215/60R16

3.8%

LT225/75R16

11.1%

P275/65R18

3.4%

LT265/70R18

8.1%

Replacement (Top 10 = 72.4%)

P205/65R16

3.1%

LT265/70R17

7.7%

2011 OE P-metric/metric

2011 OE light truck (LT)

Size

% of total

Size

% of total

P215/60R16

9.1%

LT245/75R17

22.3%

P265/70R17

5.1%

LT245/75R16

15.6%

P215/55R17

4.2%

LT225/75R16

11.9%

P235/70R16

3.2%

LT265/70R17

7.8%

P275/65R18

3.0%

LT265/70R18

7.0%

Source for Charts 20-22: Rubber Manufacturers Association

46

Replacement (Top10 = 22.5%) 1. 205/55R16

Chart 20 MOST POPULAR DOMESTIC OE PASSENGER AND LT TIRE SIZES 2012 OE P-metric/metric

Chart 21 TOP U.S. PASSENGER TIRE SIZES, 2012

1. LT245/75R16

6. LT285/75R16

2. LT265/75R16

7. 31x10.50R15

3. LT265/70R17

8. LT215/85R16

4. LT235/85R16

9. LT245/75R17

5. LT225/75R16

10. LT285/70R17

LT245/75R16 was the top OE LT size from 1993-2010, and has been the second most popular OE size the last two years. Not coincidentally, it has been the number one replacement size for the last fve years.

MTD January 2014

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

Facts section: Tire dealer profle

Tire dealers vs. car dealers

Both are making noise; only one is way up in market share

I

s the independent tire dealer market a mature market?

You might say that.

Independent tire dealers have owned their stores an average of 22 years, and 68% are single-store locations. Te typical owner is a Caucasian male in his 50s.

Tat will change eventually, at least for 37% of the owners who have their children in the business. But what about the other 63%?

Even with a succession plan, many of those dealers might be willing to sell for the right price. Two of the largest players in the retail market are looking for those very opportunities.

Monro Mufer Brake Inc. owns 941 outlets in 22 states and the District of Columbia.

Nearly 44% of them are independent tire dealerships doing business as Mr. Tire, Tread Quarters Discount Tires, Autotire, Tire Warehouse, Tire Barn, Towery’s Tire and Auto Care and, since August, Curry’s Auto Service. Te rest, classifed under “Miscellaneous” in Charts 23 and 24 below, are mufer shops that also sell tires. (Chart 24 indicates which channel received the tires from the factory. Tey are either then wholesaled or sold directly to the end user. Each tire sale is only counted once.)

“On a combined basis, the acquisitions we have completed and announced... in fscal 2014 represent nearly 5% annualized sales growth, and we are encouraged by the opportunities for additional atractive acquisitions by our fscal year end (on March 31, 2014),” says John Van Heel, CEO and president.

Pep Boys-Manny, Moe & Jack is also on the prowl for new Service & Tire Centers. Te mass merchandiser purchased 17 Discount Tire Centers in Southern California from AKH Co. Inc. last fall. Te acquisition gives the company 211 tire dealerships in addition to its more than 540 Pep Boys stores and Supercenters.

Chart 23 U.S. CONSUMER TIRE RETAIL MARKET SHARE (Based on retail sales)

48

Pep Boys averages 10 bays per retail store. Te average independent tire dealership averages eight bays.

But car dealerships are selling more tires at the retail level than ever before, and they are growing at a faster rate than any other distribution channel. In 1999, they accounted for 1% of the replacement consumer tire market. Tat number has increased dramatically since then.

Retail market share by distribution channel

Channel

1999

2013

Independent tire dealers Mass merchandisers Warehouse clubs Company-owned stores Auto dealerships Miscellaneous outlets

59.5% 17.5% 8.0% 8.0% 1.0% 1.5%

60.5% 14.0% 8.5% 7.5% 7.5% 2.0%

Since 2005, auto dealerships have more than doubled their share of the consumer tire market. Ford Motor Co. and its more than 600 Quick Lane Tire & Auto Centers outlets nationwide deserve a lot of the credit — no other vehicle manufacturer has its own tire-specifc retail stores.

In the fall, Ford aggressively ran a full-page color advertisement in USA Today promoting its Quick Lane tire and automotive services. Te ad promoted what is becoming an industry standard: a mail-in rebate on the purchase of four tires. Goodyear, Dunlop, Continental, Hankook, Pirelli, Bridgestone and Yokohama were the brands associated with the rebate, which jumped to $140 if the Quick Lane credit card was used. (Quick Lane also sells the Michelin, BFGoodrich, Uniroyal, General, Toyo and Firestone brands.)

For an oil change, the stores charge as high $39.95. Tat

Chart 24 CONSUMER TIRE DISTRIBUTION CHANNEL MARKET SHARE

Distribution channel

2013

2012

Initial channel

2013

2011

Independent tire dealers

60.5%

60.5%

Independent tire dealers

77.0%

77.0%

Mass merchandisers

14.0%

14.0%

Tire company stores

8.0%

8.0%

Warehouse clubs

8.5%

8.5%

Tire companyowned stores

7.5%

7.5%

Auto dealerships

7.5%

7.0%

Miscellaneous outlets

2.0%

2.5%

Miscellaneous*

2009

2007

75.0% 74.0% 8.5%

8.5%

15.0% 15.0% 16.5% 17.5%

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

MTD January 2014

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

Facts section: Tire dealer profle includes tire rotation, a multi-point vehicle check and up to fve quarts of synthetic blend oil, the same “routine” oil change that is regularly used as a loss leader. For the year, based on newspaper, direct mail and Web advertising, the price of a synthetic blend oil change was $21.63, about the same as last year (see Chart 26). Tat takes into account car dealerships, mufer, shops, auto repair shops, tire dealers, mass merchandisers and company-owned stores.

However, that total isn’t an apples-to-apples comparison to Ford’s price. Te average advertised oil change price with a multi-point inspection and tire rotation was $22.24. Te average price without them (meaning they were not listed in the advertisement) was $20.60.

Again, those are advertised prices. MTD’s most recent Tire Dealer Automotive Service Survey paints a diferent picture.

Te average price per what the survey refers to as “oil and lubrication service work” was $37.51, much closer to Ford’s advertised price (see Chart 25). Te proft margin per job is 34%.

Advertised tire pricing

Passenger tire pricing was down 5% last year compared to the year before. Te drop in advertised pricing was even greater.

Pricing on two of the sizes in Chart 27 also were tracked last year. Te advertised price on a P185/65R14 was down 28.1% compared to $88.32 in 2012. Te comparative price on a P195/60R15 was down 26.4% from $102.07.

In his analysis of consumer tire pricing over the course of 2013 and beyond, Nick Mitchell, senior vice president for Northcoast Research Partners LLC, was not surprised by the decrease in pricing.

“Generally speaking, retail tire prices trended as one would have expected at the start of the year. Specifcally, prices declined gradually throughout the year refecting the expiration of Tarif 421 at the end of 2012 and the impact of lower raw materials prices moving through the supply chain.

Chart 25 AVERAGE AUTOMOTIVE SERVICE JOBS PER MONTH Service

No. of jobs

Chart 26 2013 AVERAGE ADVERTISED OIL CHANGE PRICING (In the U.S.) $25 $20 $15

Avg. ticket

Air conditioning:

18

$353.55

Alignment:

67

$80.45

Batteries/electrical:

28

$134.28

Bearings/seals:

12

$242.96

Brakes:

45

$244.58

Chassis/suspension:

23

$309.33

Cooling systems:

19

$151.37

Engine diagnostics:

23

$123.77

Exhaust systems:

9

$246.30

Mounting/balancing:

250

$10 $5 0

2013

2012

2011

2010

2009

2008

Chart 27 2013 AVERAGE ADVERTISED TIRE PRICES (In the U.S.) Size

Price

$53.79

P185/65R14

$63.48 $77.18 $75.06

Oil/lubrication:

135

$37.51

P185/65R15

Shocks/struts:

11

$360.78

P195/60R15

TPMS:

21

$85.88

P205/55R16

$95.59

P225/45R17

$117.28

Source: MTD 2012 Tire Dealer Automotive Service Survey.

50

“Te average retail price for a light passenger tire dropped a litle more than 4%... with prices sliding more in the value category relative to the pressure seen among Tier One brands.

“I think retail tire prices will be down 2% to up 2% in 2014,” he says. “Te key drivers will be the trend in raw material prices and the strength of demand at retail, as I think the impact from the increased supply from China is largely behind us.”

Even before sales picked up in the fnal quarter of 2013, more than 40% of the retail tire dealers and wholesale tire distributors predicted they would fnish the year with doubledigit increases in both unit and dollar sales.

When asked in October how the year would end for them, 42.7% of the retail dealers and 43.7% of the wholesale dealers responding to MTD’s Exclusive State-of-the-Industry Survey believed their tire unit sales would be up by an average of 12%.

Another 16% of the retailers and 18.8% of the wholesalers predicted their unit sales would remain the same.

A similar number of retailers and wholesalers were as optimistic about their dollar sales as they were about their unit sales. Once again, they projected their dollar sales would be up by close to 10%.

However, the number of dealers who believed their dollar sales would be down was greater than the number of dealers who believed their unit sales would be down. Tis is in contrast to the results from MTD’s fnal 2012 survey, when many more dealers said higher prices ofset fewer unit sales. ■

MTD January 2014

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

305-621-5101

feature

AAPEX represents $477 billion Spending is likely to increase, says NPD Group

By Bob Bissler

W

hat can repair shops expect consumers to spend on automotive products and services in 2014?

Tat was a topic addressed at the 2014 Afermarket Outlook presentation at the Automotive Afermarket Products Exposition (AAPEX) in Las Vegas Nov. 5-7, 2013.

David Portalatin, executive director of analysis at the NPD Group Inc., said auto product spending was down because consumers drove 100 billion fewer miles in 2013 than in 2007.

What can the afermarket expect in 2014? Portalatin said consumers will remain in “cutback mode,” but will spend on necessities — and auto maintenance and repair are seen as necessary. Spending is likely to increase in 2014, he added.

Tat’s good news for the $477 billion global motor vehicle afermarket AAPEX represents. Atendance numbers for the event also turned out to be good news: 2,411 exhibitors and 5,257 booths; 59,193 buyers; and 139,587 atendees total for SEMA and AAPEX (separate numbers are not available).

AAPEX is jointly sponsored by the Automotive Afermarket Suppliers Association (AASA) and the Automotive Afermarket Industry Association (AAIA). Tis spring, AAIA will be renamed the Auto Care Association, or ACA.

changer that protects wheels and a more ergonomic machine to use,” said Roberto Rossi, Bosch sales director, Workshop Technical Equipment. “Tis tire changer is the culmination of their work, addressing key user concerns — safety, speed and comfort — and delivering a superior product.”

In addition to increased rigidity and a more ergonomic design, the TCE4435 THP automatic tire changer has a 24-inch internal and 22-inch external turntable capacity with a locking jaw cross system and a “perfectly balanced” opposed cylinder system.

Te two-speed turntable provides faster tire removal and mounting, and the Motoinverter provides optimum torque in every condition. Te tubeless infating system is 25% faster than the benchmark competition, the company says, and the four-position bead breaker is 40% faster than previous versions.

Bosch also introduced OTC’s next-generation scan tool, the Encore, the frst Android-based scan tool for the North American market, capitalizing on the operating system’s speed, ease of use and functionality.

“Like your smartphone, you can browse the Web, Google and do all the things you can do on an Android platform, which has permited us to develop a tool that boots up faster and allows technicians to move through testing more quickly,” said Patrick Pierce, director of Global Product Development, Bosch Automotive Service Solutions, a business unit of the Bosch Automotive Afermarket division of Robert Bosch LLC. Behind Encore’s 7-inch touch screen, which recognizes common device commands such as swipe and pinch, is a custom user interface with a boot time of less than 30 seconds or less.

In addition to a new operating system, Encore has full scan functionality, including OEM domestic, Asian and European bidirectional controls and enhanced data.

“Te purchaser of this product will be a combination of shop owners who are looking to equip their shops with new diagnostic tools, and it can also meet the budgets of serious technicians doing diagnostics every day,” said Pierce.

Epicor Estimator generates results Bosch says the TCE4435 THP Tire Changer, demonstrated here by Bosch product specialist Jim Prendergast, has the most rigid structure in North America.

Bosch unveils tire changer, OTC Encore

Robert Bosch LLC unveiled the TCE4435 THP Tire Changer featuring a rigid structure and a four-year parts and labor warranty. Te new automatic tire changer has been completely redesigned to eliminate rim damage and ofers the most rigid assembly available in North America, noted Bosch.

“Our engineering teams set out to develop a faster tire

52

Epicor Sofware Corp. showcased the Epicor Integrated Service Estimator (ISE) solution for the automotive afermarket and announced it set a recent record of 375,000 completed estimates over a one-month period.

Te Web-based solution reduces the time needed to generate comprehensive, accurate parts and labor estimates.

Epicor ISE now features a “Supplier+” tab that ofers oneclick access to non-application parts, tools, accessories and related products. Available through more than 20 leading shop management systems, Epicor ISE helps tire, transmission, oiland-lube and other auto service specialists increase their share of the general repair and preventive maintenance categories.

Epicor ISE also allows users to electronically check parts

MTD January 2014

You can’t get better than Perfect Perfect Stop delivers the complete package for unmatched stopping power ®

Perfect Stop brake pads, rotors, and calipers are precision engineered to Exact Spec® standards to deliver high performance, low noise stopping power s Brake pads feature superior friction formulations that are tested to extreme hot and cold temperatures s Brake pads feature OEM slots and chamfers to reduce noise, vibration, and harshness s Calipers feature Armor Plate™ anti-corrosive coating and come with clips and retainers pre-installed s Rotors feature Armor Plate anti-corrosive coating on all non-friction surfaces and Power Vent® cooling vanes www.PerfectStop.com

® Perfect Stop® is a registered trademark of Aftermarket Auto Parts Alliance, Inc.

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

AAPEX/SEMA Show availability and order the parts they need for the job with the click of a buton through the industry-leading Epicor seller network of approximately 26,000 distributor locations.

“By integrating Epicor ISE into your point of sale system, you have the ability to efciently and proftably expand into dozens of additional service categories, which helps drive sales, margin performance and customer loyalty,” said Scot Tompson, vice president, automotive eCommerce for Epicor.

Turn a smart device into an OBD II tool

Launch Tech USA Inc. introduced the EasyDiag that turns an Apple or Android smart device into a powerful OBD II diagnostic tool. EasyDiag provides full system coverage for reading and clearing codes, and enhanced Live Data with full graphing capabilities.

Te EasyDiag includes a Bluetooth OBD II connector, along with OBD II Generic sofware. Customize the EasyDiag with additional sofware for over 30 manufacturers for Asian, European and domestic vehicles.

Magneti Marelli expands Mopar coverage

Magneti Marelli Ofered by Mopar, the new high-quality afermarket parts program for all major vehicle makes ofered through Chrysler Group dealerships, has increased its 30-plus product lines to include more coverage for non-Chrysler vehicles.

Te Magneti Marelli parts list has recently grown with ignition coils and an all-makes batery program combined with Mopar for Chrysler as well as non-Chrysler applications.

54

Northwood University President Keith Pretty gives Charles Osgood his Automotive Aftermarket Management Education Award during a luncheon at AAPEX last November. Osgood is manager of sales operations and training for Tenneco Inc. and was one of seven aftermarket leaders so honored at the annual event in Las Vegas.

Additional product lines to follow soon are fuel injectors and additional AC components.

Te company is also continuing to expand the coverage of existing product lines. Te brake pad kits and brake shoe product lines have recently grown by 251 additional part numbers.

“Te Magneti Marelli All Makes line includes a wide variety of makes with a strong focus on all Ford and GM family brands as well as Toyota, Honda, Nissan, Hyundai, Kia and more,” said

MTD January 2014

Annete Wolford, director Sales and Business Development at Magneti Marelli Ofered by Mopar.

“Te new brake pad expansion focused on European applications such as Volkswagen, Audi, BMW and Mercedes-Benz, as well as feet and HD applications.”

Te distribution network of Magneti Marelli Ofered by Mopar parts has expanded as well, with 1,900 of approximately 2,600 Chrysler Group dealerships using Magneti Marelli Ofered by Mopar parts in daily operations.

Also included are 58 major distributors of the full line of products as well as 252 large stocking dealerships carrying a wider range of Magneti Marelli Ofered by Mopar parts, the company noted.

New search technology from Mitchell 1

Mitchell 1 launched the ProDemand with 1Search, a new search technology in its ProDemand repair information sofware. 1Search delivers complete OEM and experience-based information together in a single lookup.

ProDemand with 1Search streamlines the search process by integrating data from the SureTrack diagnostic resource to provide comprehensive, categorized repair information in a user-friendly interface, making it easier for users to fnd the complete repair information.

Te 1Search feature in ProDemand incorporates a single search feld for entering diagnostic trouble codes, components or symptoms, which then returns information from Mitchell 1’s vast library of OEM content as well as detailed parts

replacement records, tips and Real Fixes from SureTrack’s experience-based information database.

Te information is organized into the familiar tabs in the ProDemand dashboard, enabling the user to easily fnd the most relevant information to solve their specifc repair problem.

Permatex retools product packaging

Permatex launched a major new packaging initiative for its adhesives, sealants, gasketing and service products to make it easier for consumers to recognize the brand and identify the product they need.

Permatex graphic/media designer Courtney Riley said that in developing the new designs, the Permatex creative and product management teams focused on creating a fresh, consistent look that presented a clear and simple message at point of purchase. Avoiding information cluter and clarifying the product’s function and key applications as quickly as possible, were prime objectives of the initiative.

New packaging concepts were developed based on extensive analysis and feedback from the sales force and retail partners in all channels.

Headlight restoration made easy

Search Automotive Technologies LLC introduced LightRite, a premium headlight restoration kit that restores polycarbonate headlight lenses afer the factory coating wears of. UV exposure then cause the lens to become cloudy and faded, reducing the optical illumination.

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

www.moderntiredealer.com

55

AAPEX/SEMA Show Search Automotive President John Mangham Jr. said his team developed LightRite to provide a long-term solution to faded headlights. Mangham said there should be a demand for LightRite, because there are 100 million cars on the road today with bad headlight lenses.

LightRite provides for chemical, water, heat and abrasion resistance for a clear, hard and durable lens coating. Tis formula is over 65% solids, which forms a coating that is superior to the original factory coating, Mangham noted.

Te LightRite formula can be cured either by direct, natural sunlight or the company’s custom-made handheld wand.

Search Automotive Technology’s UV curing wand will cure the LightRite coating in approximately one minute depending on the size of the lens.

When using natural sunlight to cure, the lens fnish will be tack-free in approximately 10 minutes and the vehicle may be driven. Te lens will continue to cure in the natural sunlight, says the company. ■

Ken-Tool introduces products as different as night and day Company debuts its truck and trailer drain pan and Super Magnum tire cage Ken-Tool Corp. introduced the 30600 Professional Super Single Axle Drain Pan at the SEMA (Specialty Equipment Market Association) Show. The company says the new drain pan prevents gear oil and grease drips and spills on wheels and tires as well as on shop floors when servicing the axles of trucks and trailers.

Made in the United States from lightweight, high-density polyethylene (HDPE), the axle drain pan can be attached to the wheel using two or

56

three lug studs with fnger-tightened nuts. The pan is contoured to rest fat with the sides gripping the wheel’s drop-center.

The company says the pan fts most 22.5- and 24.5-inch, 10-hole hub or stud-piloted steel or alloy super single, wide-base and dual wheels.

The pan has a pair of self-draining shelves to place hub covers, bearings, retainers, seals and hub or axle nuts.

The high-capacity pan (124 ounces/3.66 liters) has two drip-proof drain spouts.

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

Ken-Tool also expanded its line of tire-restraining devices with the offcial introduction of the 36010 5-bar Super Magnum cage, which provides more inside clearance. The company says testing has shown the Super Magnum cage reduces the side-force energy resulting from a catastrophic sidewall zipper rupture of a super wide-base tire by 93%. This is achieved with expanded steel mesh defection barriers welded to the insides of the cage tubing.

MTD January 2014

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

Focus on industry

Choi’s vision for Kumho New products anchor his fve-year plan

By Bob Ulrich

U

nder Harry Choi, Kumho Tire U.S.A. Inc. has gone back to the basics. It was a necessary move, according to the frst-year CEO and president.

Te company had lost focus and “failed to read market trends very well.” New products were few and far between.

Pricing policies were inconsistent. Te associate dealer program, renamed Premium Fuel, needed to be revamped.

So Choi came up with a five-year plan to turn the company around. It centers on his “5 P’s, 1 S” philosophy.

Te fve P’s stand for product, price, promotions, place (i.e., distribution channels) and people. Te S stands for “system-based sales.”

If the plan is implemented successfully, Kumho will sell

‘We are truly trying to rebuild (Kumho’s) foundations, not only for one year, but also long-term.’

Harry Choi, CEO and president

at least 10 million replacement consumer and commercial tire units in the United States in 2017.

“We are truly trying to rebuild our foundations, not only for one year, but also long-term,” he said. “As such, we are sufering a lot of pain, both externally and internally.

“Our customers have been willing to share our pain, and we very much appreciate that.”

At the 2014 Kumho Dealer Meeting in Punta Cana, Dominican Republic, Choi and his team shared his vision one-on-one with key accounts — and Modern Tire Dealer.

New products

In 2014, Kumho will introduce two replacement tires.

Te frst will be the Kumho Solus TA31 in June.

Te new high performance all-season touring tire will be available in 37 H- and V-rated sizes ranging from 14 to 18 inches. It will replace the Solus KH16.

Tree of the sizes, ftments on the 2014 Kia Soul, were announced last October: 205/60R16 92H, 215/55R17 94V and 235/45R18 94V. Te symmetric, fve-rib tire features large inner and outer shoulder blocks designed for excellent dry traction

58

and handling. Sipes and cross grooves in the center ribs are responsible for the TA31’s ability to hold the road under wet (and snowy) conditions.

Te Solus TA71, a grand touring UHP all-season tire, will be available in 38 sizes in December. It will replace the Ecsta LX Platinum (KU27).

Kumho also will add six sizes to its Ecsta PA31 line in March 2014. Te high performance all-season tire, which Kumho backs with a 50,000-mile limited tread wear warranty, was introduced last September.

Perhaps the biggest news is the planned launch of the Road Venture AT51 in 43 sizes in March 2015. It will replace the Road Venture AT (KL78).

“Tis is the tire our dealers have been asking for,” said David Koh, marketing communications manager.

Premium Fuel

Te original Fuel associate dealer program has changed a lot since 2007, too much, according to Koh. “So our goal for 2014 is to elevate the Premium Fuel program and make it more consistent. It will include basically our entire product line.” Tere also will be improved marketing support, including customized dealer promotion programs, and three dedicated sales program coordinators.

Te new Kumho Dealer Portal allows members to see, in “real time,” where they stand in relation to their purchase targets, said Koh. Te company’s Edge training program, point-of-sale materials and wearables store also can be found in the portal. “We want the dealer to have a one-stop shop for everything related to Kumho.”

Te company is asking existing members to re-enlist through Feb. 28, 2014, so the company can keep them beter informed about program benefts and improvements.

Going to market

“All our marketing eforts are aimed at how to help our dealers sell our brand more easily,” said S.B. Kim, manager of Kumho’s North American marketing team. “To achieve that goal, we have to increase our brand awareness.

“Last year, we focused on the dealer side. In 2014, we are also going to focus on the end-user side, because our current brand awareness is weak and not enough compared with our expectations.”

Kumho will continue to rely on sports marketing and its annual spring and fall national consumer promotions to increase brand familiarity. Products for the promotions have yet to be chosen.

Te marketing plan will be backed by a reorganized, larger sales division, led by John Hagan, the new national vice president of sales. Hagan was formerly senior director of sales operations at Toyo Tire U.S.A. Corp. ■

MTD January 2014

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European notebook

It’s crystal ball time for future European tire sales How will the tire market fare in 2014?

A

When it comes to replacement sales, the pics we venture into yet another trading ture can be viewed altogether diferently as not year in the European tire industry, only is Europe virtually saturated with diferent thoughts naturally turn toward anticipated sales performance for 2014. Having taken competitive brands, but also both mid-range and a comprehensive look at what the analysts are premium brands have sufered at the expense of predicting amidst streams of reports that fow the budget segment.

To make maters worse the budget market is like confeti, the simple answer is that in Europe being increasingly confronted with more and the next 12 months seem to be clouded in equal amounts of uncertainty and optimism. more Chinese and Far East brands — some good Over the last year Europe has appeared to By John Stone and some not so good! struggle with the value of the euro against other It is also interesting to note that all-season tires global currencies, and it would be fair to say that the tire are becoming increasingly popular with European drivers. and automotive markets have seen some difcult periods in Tese are viewed as a cost-saving option enabling drivers the last couple of years. However, fying in the face of such to run the same tires throughout the year as opposed to gloom is the fact that the vehicle sales market has remained switching between summer and winter paterns. buoyant in almost every European country, therefore ensurAs previously mentioned, replacement tire market ing that tire manufacturers have enjoyed encouraging OE predictions for 2014 and beyond are conficting with sales — especially in the second half of 2013. different reports indicating varying sales figures. For

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31 Incorporated Advance Tire, Inc. Airboss Rubber Compounding AME International, LLC American Crane, Inc. ArncoPathway B&J Rocket America, Inc. BKT BR Retreading, Inc. Bridgestone Central Marketing, Inc. Coface North America, Inc. Community Tire Retreading CWS Industries (Mfg) Corp.

Doran Massachusetts Avenue Double Coin/CMA, LLC Elgi Rubber Exactra, Inc. Federated Insurance Companies Fuller Brothers, Inc. H&H Industries Haltec Corporation IMS Fabrication, Inc. Inter City Tire & Auto Center, Inc. International Tire Repair Solutions, Inc. Italmatic Kal Tire Mining Tire Group KLINGE Tyre Management Systems Marangoni Tread N.A., Inc. Maxam Tire International McCarthy OTR Retreading, Inc. Michelin North America, Inc. Modern Tire Dealer Monarch Vulcanising Systems Multi-Seal Corporation Patch Rubber Company & Myers Tire Supply Pewag Chain, Inc. Polar Rubber Products, Inc. Purcell Tire & Rubber Co. RAD Torque Systems RDH Tire & Retread Co. Rema Tip Top/North America, Inc. RIMEX Supply, Ltd. Robbins LLC Rubber, Inc. Shamrock Marketing, Inc. Shrader Retreading – A Division of Craft Tire, Inc. Stellar Industries Taray International Corporation TCF Equipment Finance, Inc. Tech International (Truflex/Pang) Tire Business Tire Review TRM a Division of Marangoni W.W.F., Inc. Yokohama Tire Corp.

European notebook

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Current as well as predicted tire demand has led to the opening of new original equipment and replacement tire plants across Europe.

example, TechSci Research states that the European tire market sector will reach in excess of 115 million units by 2017 with the UK expected to enjoy the most growth momentum.

Returning to the all-season tire market for a moment, it is also intriguing that market analysts specialists TechNavio considers that during the fve-year period between 2013 and 2018 this new market will grow at a compound annual growth rate (CAGR) of 11.6%. However, let us not forget that the overall performance rate of all-season tires is lower when compared with winter tires, which I believe could prove a sticking point to these long-term growth predictions.

In 2012, worldwide tire sales totalled U.S. $190 billion, of which U.S. $60 billion was atributed to Europe (according to TechNavio).

To be honest, it has been hard to track down reliable statistics for the coming 12 months. However, at least one major European tire manufacturer has gone on record to state that in 2013 there had been an encouraging 3% recovery rate in sales and an additional rise by 4% is predicted in 2014. Which adds further fuel to my opinion that the next year is certainly going to be an interesting and possibly eventful period in the European tire market.

From what I can see, the global tire markets view Europe as a trading continent in transition at the moment which is probably infuenced by the constant

media focus on the euro which appears to still be recovering (slowly) from a recent recession.

To combat this statement you only have to talk with tire producers, wholesalers and retailers across Europe — which I have done — and you will fnd a much more optimistic atitude toward the immediate future.

Tis positive opinion is very much fuelled by the recent developments that have taken place around the European continent which includes the opening of new OE and replacement tire plants by leading major producers which we are led to believe is by demand.

At the same time I was recently invited to the opening of a totally new tire production facility concept incorporating both truck tire production and tire recycling procedures in Germany which I will be covering in the February edition of Modern Tire Dealer.

Reflecting on all the information I have been able to discover, it would be a brave man (not me!) to predict exactly how the sales market will fare in Europe in 2014. ■ John Stone has been working within the global tire industry for the past 20 years. In 2004 he launched his own company, Sapphire Media Services, as a business media consultant with clients around the globe.

Stone also writes for tire and automotiverelated publications in Europe, South Afica and Asia.

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TPMS

Special switch resets warning thresholds on Prius Tire pressure settings vary due to tire types and installation positions SUBJECT VEHICLE: 2006-09 Toyota Prius.

RELEARN PROCEDURE? Yes, see Reset procedures.

SPECIAL TOOLS NEEDED? Yes, a Toyota Techstream.

Te tire pressure monitoring system (TPMS) on the 2006-09 Toyota Prius is designed to provide a warning when tire infation pressure of one or more tires is low. A tire pressure monitor valve sub-assembly equipped with a tire pressure sensor/transmiter is installed in each tire and wheel assembly.

NOTE: Te system will need to be initialized when tires are replaced with tires of diferent pressures; tire pressure sensor and/or tire pressure monitor ECU are replaced. When a tire pressure sensor and/or tire pressure monitor ECU are replaced, the sensor ID must be memorized by the tire pressure monitor ECU prior to system initialization. See reset procedures.

Te sensor measures the air pressure of the tire, then the measured value and transmiter ID are transmited to the tire pressure monitor antenna and receiver assembly on the body as radio waves. Tese radio waves are then sent to the tire pressure monitor ECU from the tire pressure monitor receiver.

Tire pressure monitor warning light

NOTE: Te tire pressure warning light may turn on due to natural causes such as natural air leaks or tire pressure changes caused by temperature. In this case, adjusting the tire pressure will turn of the warning light.

When the tire pressure warning light does not go of, or when it comes on during driving, check the tire pressure and adjust as necessary. Te warning light should turn of within a few minutes. If the warning light is still on even though the tire pressure is correctly adjusted, the tire could be punctured. Repair as necessary.

If the warning light turns on within several hours afer adjusting the tire pressure, the tire may have a slow air leak. If the warning light is still on or blinks, there is a malfunction in the TPMS. See appropriate manufacturer service information.

Reset procedures

NOTE: Te system will need to be initialized when tires are replaced with tires of diferent pressures; tire pressure sensor and/or tire pressure monitor ECU are replaced.

See initializing tire pressure monitor system. When a tire pressure sensor and/or tire pressure monitor ECU are

64

Figure 1: Here is the location of the 2006-2009 Toyota Priusâ&#x20AC;&#x2122; tire pressure sensor transmitter ID.

replaced, the sensor ID must be memorized by the tire pressure monitor ECU prior to system initialization. See tire pressure sensor registration.

When the tire pressure warning light does not go of, or when it comes on during driving, check tire pressure and adjust as necessary. Te warning light should turn of within a few minutes.

Initializing TPMS

NOTE: Te system will need to be initialized when tires are rotated; when tires are replaced with tires of diferent pressures; and when the tire pressure sensor and/or tire pressure warning ECU are replaced. If the tire pressure sensor and/or tire pressure warning ECU are replaced, ensure that tire pressure sensor IDs are registered prior to initialization. See tire pressure sensor registration.

CAUTION: DO NOT operate the reset switch without adjusting the tire infation pressure of all tires. Otherwise, the low tire pressure warning light may not come on even if the tire pressure is low, or it may come on when the tire infation pressure is actually normal. If you push the reset switch while the vehicle is moving, initialization is not performed.

NOTE: When initializing the system, the present tire condition is stored as a standard. During initialization, the tire pressure sensor measures the infation pressure of the tires, and registers the signals that are transmited into the tire pressure warning ECU at a frequency of one per minute. Te initialization process is completed when the signals from all tires have been received.

Te initialization process is canceled if the ignition

MTD January 2014

TPMS

Figure 2: Exploded view of tire pressure sensor.

Figure 3: Installing tire pressure sensor.

switch is turned to the OFF position during initialization. To initialize again, the tire pressure warning reset switch must be pressed again.

2. With the ignition switch OFF, connect the Techstream to the DLC3.

3. Turn the ignition switch to the ON position.

4. Enter the following menus: Chassis/Tire Pressure Monitor/Utility/ID Registration.

NOTE: If this step is not completed within 30 seconds, registration mode will be canceled.

5. Perform the procedures displayed on the Techstream.

NOTE: It may take about two to three minutes to update the tire pressure data. If the values are not displayed afer several minutes, perform troubleshooting according to the inspection procedure for DTCs C2121/21 to C2124/24. If the IDs have not been registered, DTC C2171/71 is set afer three minutes or more.

6. Confirmation of transmitter ID registration: a. Enter the Techstream menu items in this order: Chassis/Tire Pressure Monitor/Data List. b. Confrm that the expected tire pressures of all tires are displayed on the screen.

1. Set the tire pressure of all wheels to the pressure specifed on the tire and loading information label.

2. Turn the ignition switch to the ON position.

3. Press and hold the tire pressure warning reset switch until the tire pressure warning light blinks three times at onesecond intervals.

4. Connect the Toyota Techstream to the DLC3.

5. Enter the following menus: Chassis/ Tire Pressure Monitor/Data List.

6. Confrm that the expected tire pressure data of all tires are displayed on the Techstream screen in order to check the completion.

NOTE: Initialization is normally completed within fve to six minutes.

NOTE: If the initialization has not been completed successfully, DTC C2177/77 is set after the vehicle is driven for 20 minutes or more.

NOTE: Te initialization can be terminated by connecting terminals 13 (TC) and 4 (CG) of the DLC3.

Tire pressure sensor registration

NOTE: Before beginning the registration process on vehicles where tire pressure sensors have not been replaced, retrieve sensor transmiter ID(s) using the Techstream or by reading the ID on the tire pressure sensor. If the sensor is being replaced with a new one, make a note of the seven-digit number (transmiter ID) before installation, as it cannot be seen afer the sensor is installed (see Figure 1).

1. Set the tire pressure of all wheels to the pressure specifed on the tire and loading information label.

www.moderntiredealer.com

Demounting/mounting procedures

CAUTION: The tire should be demounted from the wheel using the tire changer manufacturerâ&#x20AC;&#x2122;s instructions.

Use the following information to avoid damage during the demounting/mounting procedures.

NOTE: The system will need to be initialized when tires are replaced with tires of diferent pressures; and tire pressure sensor and/or tire pressure monitor ECU are replaced. When a tire pressure sensor and/or tire pressure monitor ECU are replaced, the sensor ID must be memorized by the tire pressure monitor ECU prior to system initialization. See reset procedures.

NOTE: If the negative batery terminal is disconnected, initialize the Power Window Control System afer the terminal is reconnected.

Quik-Link: 800-687-1557 ext. 11138

65

TPMS Removal

• foreign mater on the washer and nut; • if the tire pressure monitor valve was removed, make sure that there is no damage or cuts, and no foreign matter such as mud, dirt or sand atached to the grommet; replace the grommet with a new one if any of these defects are found; and • oil, water or lubricant around the rim hole, tire pressure monitor valve, washer and nut, as failing to do so may result in improper installation.

1. When replacing a wheel or tire, tire pressure sensors must be set up in one of the following ways:

• remove the sensor from the old wheel and install it to the new wheel; • keep the same wheel with tire pressure sensor, and replace only the tire; and • use a new wheel and sensor (the new sensor must be registered after installation).

2. Remove the wheel. Remove the valve core and cap, and release the air from the tire (see Figure 2, page 65).

NOTE: Keep the removed cap, valve core, nut and washer.

3. Afer ensuring that air is sufciently released, remove the nut and washer that is used to fx the tire pressure sensor and drop the sensor inside the tire. NOTE: Be careful not to damage the tire pressure sensor due to interference between the sensor and tire bead.

4. After dropping the tire pressure sensor into the tire, disengage the bead CALL toll free:

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Figure 4: Positioning the tire pressure sensor (in the shaded area).

using the shoe of the tire remover. Remove the bead on the upper side in the usual operation.

5. Take out the sensor from the tire, and remove the bead on the lower side as in usual operation. NOTE: Check that no cracks or damage is identifed on the grommet. If so, replace the grommet together with the washer and nut.

6. Remove the inner grommet from the tire pressure sensor. NOTE: Tire pressure sensor is powered by a lithium batery.

When disposing of a sensor, remove the batery and dispose of properly.

Installation

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1. Insert the tire pressure monitor valve into the valve installation hole.

Insert from the inside of the rim so that the print surface can be seen (see Figure 1, page 64). Check for the following: • that there is no visible deformation, damage or other abnormalities on the transmiter; • that there is no foreign mater on the inner grommet and rim hole; • if installed in the reverse direction, the tire pressure monitor valve may be damaged or fail to transmit signals when running at high speed; and • if installing a new tire pressure monitor valve, write down the ID number before installation (see Figure 1); it is necessary to register an ID in the ECU afer installation.

2. Install the washer on the tire pressure monitor valve from the rim side, and tighten the nut to 35 in.-lbs. (4 N.m) (see Figure 3, page 65). Check for:

3. Afer the tire is infated, the valve nut may be loose. Retighten the nut to the specifed torque, and then check for air leaks with soapy water.

4. Set the wheel disc to the mounting machine, and install the lower tire bead.

Position the main body of the sensor in the shaded area as shown in Figure 4.

5. Making sure that the tire bead and tool do not interfere with the main body of the sensor and that the sensor is not clamped by the bead, install the upper bead.

6. When puting air into the tire, frst install the tire pressure valve straight on the stem of the tire pressure warning valve and transmiter.

7. Install the tire and wheel assembly.

8. When a new sensor is installed, the ID code will need to be registered.

See tire pressure sensor registration under reset procedures.

9. After completing the operation, remove the valve core to rapidly release the air in the tire.

Ensure the tire pressure warning light comes on. If warning light does not come on, refer to the appropriate manufacturer service information.

10. If there is an air leakage, tighten the nut to a force of 35 in.-lbs. (4 N.m), and push the valve core two to three times to remove any dirt attached to the valve core.

If air continues to leak, replace the grommet, washer and nut. ■

Information for this column comes fom Mitchell 1’s “Tire Pressure Monitoring Systems Guide” for domestic and import vehicles through 2012. 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 the company’s website at www.mitchell1.com.

MTD January 2014

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Pirelli Scorpion Verde A/S Plus The new Scorpion Verde All Season Plus highway SUV/CUV tire from Pirelli Tire LLC is available in 12 replacement sizes, and by July there will be 39 sizes ranging from 265/70R17 to 285/45R22 to cover 65% of the SUV/CUV replacement market. The Verde All Season Plus shares a tread design with the Verde All Season original equipment tire. However, it is built to provide greater tread wear than the OE version, and is backed by a 65,000-mile limited tread wear warranty.

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Petlas expands Velox Sport ort UHP tire with PT 741

every 10 seconds, while transmitting data every 90 seconds.

Pressure and temperature events cause the system to alarm in real-time. This rapid reporting makes TireStat as much as fve times faster than many other sensors, notes Mobile Awareness.

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The PT 741 Velox Sport, a UHP tire introduced last year by Turkish tire manufacturer Petlas Tire Corp. in 16- to 19-inch rim diameters, is also available in 20-inch sizes with 45, 50 and 55 aspect ratios. Petlas says the PT741 is developed and designed to provide high speed, comfort andd security at the same time. The tread ad profle enables high-speed capabilities, ii strong handling and cornering response on dry and wet road conditions for a wide range of sport and luxury car tires.

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Robert Bosch LLC has introduced Bosch Blue Disc Brake Pads targeted to general repair shops that service a variety of makes and models. Features include comprehensive coverage of domestic, Asian and European vehicles and advanced platformspecifc friction formulas (NAO-ceramic and semimetallic). OE-style multilayer shims provide enhanced noise-dampening and quiet operation, and a rust-prevention coating improves durability. Slots and chamfers match the

Permatex says its new Permatex singleuse Rotor Cleaning Wipe towelette makes it easier to clean and prepare new brake rotors for installation. Permatex Brake Rotor Wipe is a water-based cleansing wipe designed to remove oil residue and impurities from the rotor surface and help protect the rotor from corrosion. The formula contains no VOCs and helps to promote pad wear-in.

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Advertiser 31 Incorporated ADVICS North America Inc. Aeolus Tires Aftermarket Auto Parts Alliance Inc. Alliance Tire Group American Tire Distributors American Tire Distributors ASA Automotive Systems LLC Bartec USA BKT Tires USA Inc. Blackburn’s Hubcap & Wheel Solutions Continental Gold Retailer Program Continental Tire, Commercial Vehicle Tires Falken Tire Gaither Tool Company Inc. GE Capital General Tire GT Radial Hennessy Industries Inc. Hercules Tires Horizon Tire Inc. Horizon Tire Inc. Independent Tire Dealers Group Independent Tire Dealers Group Kenda USA Kumho Tire USA Inc. KYB Americas Corporation Marangoni Tread North America Inc. Maxxis International—USA Nexen Tire America Inc. Nitto Tire U.S.A. Inc. Pilot TPMS Pirelli Tire North America Reliable Int’l Exhibition Services Co. Ltd. Sentury Tire America TBC Wholesale Tire Centers LLC Tire Industry Association (TIA) Toyo Tires Toyota Motor Sales U.S.A. Inc. VDO TPMS Replacement Parts Yokohama Tire Corporation

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MTD January 2014

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MTD January 2014

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Your turn

Tere’s more to issue than tire age alone Dear Editor: Concerning Bob Ulrich’s recent blog titled “Tire aging issue hits home: Should I replace 12-year-old tires?”: Here are thoughts based on my own personal experience, primarily with top-name brands such as Goodyear, Firestone and Bridgestone.

I just retired a set of Bridgestone Blizzak snow tires which were made in 1993. Tey were only on the car for fve months a year, and up to this spring I never had any issues with them.

None! Te tires showed some cracking in the sidewall, but I never had any issues.

My summer wheels had a pair of Firestone Firehawk SZ50s on the rear. Tey were made in late 1999. Te tires had been stored in a temperature-controlled area away from any light since I purchased them in 2004. I’ve had no issues and have had many interstate drives on them this summer at up to 85 mph.

Te front of the car has some 2002 production date Potenza S-03s which have shown cracking between tread blocks.

Tey have been in service three years since being installed, and other than the cosmetic cracking, once again no issues.

Maybe I’m a crazy guinea pig, but there’s simply more to judging this issue than age alone. Te quality of the tire has to be top-notch to start with. Tire storage until being placed into service makes all the diference. Sunlight is the biggest enemy of tires, as we know, and limiting that is huge. Maybe I’m in the small percentage of those who don’t believe in the aging hype or maybe I’m just lucky. I do believe in real-world results and it’s based on my own experience with my own vehicles and not some book or published study backed by the companies that sell tires.

Chris Campbell, Owner Campbell Performance Tire Sterling, Ill.

TPMS is a good idea and it works — when it is properly maintained Dear Editor: A tire pressure monitoring system (TPMS) is a good idea and does work when properly maintained. Te only thing that

gives me doubt is the fact that the U.S. Congress agrees with me and that makes me worry if I am a moron or on crack.

Al Eisenberg, President Al’s Hubcaps & Wheel Repair Mineola, N.Y.

Question of the month We asked our National Advisory Council (NAC) members: “What are your predictions for 2014? Do you feel it will be a good year for the independent tire dealer? What kind of vibes are you geting of your customers concerning willingness or ability to spend money on tires and services?” Here are some of their responses:

1. I think the independent tire dealer will continue to face stifer and stifer competition from all channels. Car dealers continue to spend more on their physical plants, inventory and advertising to atract tire buyers. Mass merchandisers want the tire customer visiting stores, not just for the tire sale and subsequent service, but for that tire customer to be exposed to the thousands of available items on their shelves.

Internet suppliers are becoming a greater factor each year as the tire buyer becomes more and more knowledgeable about tire pricing through the Internet activities. Don’t forget that independents square of against each other to see just how short the margin rate can be in order to survive. Te trend will continue toward lower tire margins because we are forced to react to our market conditions almost daily. With all of that said, our company intends to sell more tire units in 2014 than we did in 2013. Trouble is, our margins will probably be lower than they were this year. To answer your question about the willingness or ability to spend money on tires and services, I’d say we are in a very high survival business because no mater the economic conditions, people in our country want to drive their cars and trucks and it takes folks like us to keep that happening for them. Most don’t like spending money with us, but they have to in order to continue driving.

2. I feel that tire pricing is going to remain sof through the frst half of 2014. People have forgoten how important tire replacement is for their safety. Tey seem to be puting their fnancial problems before their tire problems.

3. It looks like a good year coming up for the independent dealer in our rural area. Last month purchases of new tractors and combines were up over the same month a year ago, and purchases will continue to be strong in passenger and pickup tires. Most customers are willing to spend money on needed repairs and maintenance as well as on new tires.

4. Te forecast is revenue neutral. Customers are spending what they need and delaying longer to make purchases. Tere is an over-abundance of supplier goods and suppliers continue to stuf inventory in the channel, ignoring sell-out paterns. ■

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, 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 2014

Quik-Link: 800-687-1557 ext. 11141

Quik-Link: 800-687-1557 ext. 11142