THE INDUSTRY’S LEADING PUBLICATION
50TH ANNIVERSARY
Facts Issue
THE INDUSTRY’S LEADING PUBLICATION
January 2016 | Vol. 97, No. 1 | $30 | A Bobit Publication | www.moderntiredealer.com
Quik-Link: 800-687-1557 ext. 11101
Features 18 ‘Will we see a recession?’ Analyst and MTD columnist Nick Mitchell chose those fve words as his forecast for 2016. He also looked back on all that shook the industry in 2015 72 Te future of Discount Tire CEO Michael Zuieback says he sees no need to fx a 56-year-old company that isn’t broken
50TH ANNIVERSARY FACTS SECTION 30 Happy 50th anniversary (to us!) 32 Historical and hysterical: our cartoonist, George Booth 38 Retail tire dealership profle 1972 vs. 2015 40 How auto service changed the business of selling tires 46 Tire shipments Te ups and downs from 1929 to 2015
52 Tire brand market share Goodyear remains a strong No. 1
58 Commercial tire market New truck tires were plentiful, but not as proftable
62 Tire pricing and sizes MTD breaks down 50 years of popularity
66 Distribution channels Without wholesalers, no dealer can handle 600 sizes
Te Industry’s Leading Publication January 2016, Volume 97, Number 1
Departments 4 Editorial Adapt and conquer: Obamacare, tire labeling and tire registration
6 Online
News and navigation tools for MTD ’s website
8 News/views No timeline for tire registration: Two years? Four years? The effective date is anyone’s guess
26 Your marketplace Demand trends are holding strong despite lack of harsh winter weather
76 Focus on industry More off-highway tires to come: New plant in India will double BKT’s capacity
80 Focus on industry Kumho adds capacity for LT tires: New tires, factory, marketing and branding signal a ‘new era’ in North America
82 Counter intelligence A simple technique to compete with the big boys: Casting a little doubt has its advantages
83 TPMS Chrysler 200 — 2011-13: Two systems are available: a base system and a premium model
98 Your turn Walmart is ‘driving customers to my door’
92 Products 94 Quik-Link 95 Classifed
68 Tire plant capacities Union has lost some leverage Cover illustration by George Booth Modern Tire Dealer is a proud member of: TRIB
TIRE RETREAD & REPAIR INFORMATION BUREAU
Member An Industry Association
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Editorial
Adapt and conquer Obamacare, tire labeling and tire registration
T
here are three major issues you will have employees is more expensive than it is for hardto deal with as tire dealers in 2016 and beworking employees. yond. Te frst is Obamacare. Te second Before tire labeling can go into efect, a national is tire labeling. And the third is tire registration. tire fuel efciency consumer information program Te good news? Tere are still plenty of details for replacement tires has to be established. to be worked out in all three, which means there Although the National Highway Trafc Safety is hope that any unreasonable or unmanageable Administration published a “fnal” rule in 2010 aspects of the laws will be fxed or disregarded. Te specifying the test procedures needed to rate time lag also will give you plenty of time to adapt. tire performance, there have been delays in Te bad news? Politics can get in the way of By Bob Ulrich its implementation. Te comment period on logic. Each law has its merits, but when it comes how this information will be made available to to small business, the government doesn’t always believe consumers ends on March 30th of this year. in compromise. Mandatory tire registration at the point-of-sale became Nick Mitchell, senior vice president of research for law when the president signed a fve-year highway bill in Northcoast Research Holdings LLC, echoed that thought December. However, a study to examine the feasibility when asked to describe what President Barack Obama’s of requiring tire manufacturers to include electronic legacy would be. identifcation information on every tire, and ensuring all “President Obama protects tire manufacturers and manufacturers use a streamlined format for that informaunions with tarifs, (and) burdens consumers and small tion, needs to be completed frst. In other words, there is businesses (i.e., tire dealers) with the cost.” no timetable for enforcement of the law. Obamacare, also known as the Afordable Care Act, is As with many regulations in transition, the wait for the already up and running. Once a law is entrenched in society, ball to drop can be frustrating. Just remember, history it is hard to repeal. So don’t count on it being overturned. emphatically tells us you can adapt to anything. ■ Over time, Congress hopefully will improve Obamacare and eliminate the loopholes unfairly detrimental to you. If you have any question or comments, please email me at According to one dealer, the coverage for underachieving bob.ulrich@bobit.com.
From April 1973: The U.S. Department of Transportation unveils its Uniform Quality Tire Grading proposal.
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MTD January 2016
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Online
Pep Boys’ 800-plus stores were purchased by Icahn Enterprises LP for more than $1 billion.
The battle to buy Pep Boys grabs readers’ attention
Website: www.moderntiredealer.com
It’s easy to see from the list of the top 10 news items for last month on Modern Tire Dealer’s website, www.moderntiredealer.com, that the struggle for ownership of the Pep Boys - Manny Moe & Jack between Bridgestone Retail Operations LLC and Icahn Enterprises LP was of great interest. Six of the top 10 were news items on the back-and-forth battle for ownership of the company that was eventually won by Icahn for a price of $18.50 per share. Here are the top 10 news items for the last month.
Editor: Robert J. Ulrich, ext. 11 Bob.Ulrich@bobit.com
1. Falken Tire Corp. will change its name as part of a major realignment 2. President signs highway bill — so what’s next for tire registration? 3. Battle of the billionaires: Bridgestone matches Icahn’s bid for Pep Boys 4. Pep Boys may terminate its deal with Bridgestone 5. TIA: Bill requiring tire registration will pass “overwhelmingly” 6. Not so fast, Bridgestone, there’s another bid for Pep Boys 7. Icahn tops Bridgestone, again, and increases bid for Pep Boys 8. Blogger thinks Bridgestone-Pep Boys merger is a done deal 9. Icahn vs. Halle: When billionaires collide, the numbers don’t always add up 10. ATD names its new CEO, a food industry veteran
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Trending hot topics are now grouped together in one location to make it easy for you to read all about it! Recent topics have included “Pep Boys” — the struggle for acquisition of Pep Boys - Manny, Moe & Jack between Icahn Enterprises L.P. and Bridgestone Americas Inc. — and “SEMA Show” (news from the Specialty Equipment Market Association convention). Find the hot topics in the middle column of our homepage. Click on the subject bar and you will fnd all the news items the MTD editors have written on that subject. Be sure to hit the “Load More” bar at the bottom of the search page, if available, for full historical coverage.
Total access — totally free www.moderntiredealer.com
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MODERN TIRE DEALER (ISSN 00268496) (CDN IPM #40013413) (USPS #369-170) is published monthly by Bobit Business Media, 3520 Challenger St., Torrance, California 90503-1640. Periodicals postage paid at Torrance, CA 90503-9998 and additional mailing offces. POSTMASTER: Send address changes to MODERN TIRE DEALER, P.O. Box 1068, Skokie, IL 60076-8068. Please allow 6 to 8 weeks for address changes to take effect. Subscriptions in the U.S. and its possessions, $65; Canadian, $99; Int’l surface mail, $99; Int’l airmail, $198. Single copies, $10, except the January Facts Issue, $30. Address all subscription correspondence to MODERN TIRE DEALER, P.O. Box 1068, Skokie, IL 60076-8068. Please allow 6 to 8 weeks to receive your frst issue. Please address Editorial and Advertising correspondence to MODERN TIRE DEALER, 3515 Massillon Road, Suite 350, Uniontown, OH 44685-6217. The contents of this publication may not be reproduced either in whole or in part without consent of Bobit Business Media. All statements made, although based on information believed to be reliable and accurate, cannot be guaranteed and no fault or liability can be accepted for error or omission. For your information: We sometimes make our subscriber information (i.e. fax, e-mail or mailing address) available to carefully screened organizations whose products and services may be of interest to you. If you prefer not to have your information made available, please write MODERN TIRE DEALER, P.O. Box 1068, Skokie, IL 60076-8068.
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MTD January 2016
Quik-Link: 800-687-1557 ext. 11103
News/views
No timeline for tire registration Two years? Four years? The effective date is anyone’s guess Tire registration is the law of the land, again, but if in case there are any issues,” says Jim Mayfeld, tire dealers are looking for a defnitive rule book on executive vice president of marketing and sales for the issue, they’re going to discover lawmakers left Kumho Tire USA Inc. “This will help to increase the them empty handed. number of tires that get registered.” The “Tire Effciency, Safety, and Registration Act That number is one of many registration-related of 2015,” or TESR Act, covers only seven pages points of contention between the RMA and Tire of the 1,301-page federal highway bill approved by Industry Association (TIA). In December 2014 the Congress and signed by the president in December RMA said fewer than 20% of all tires are registered. 2015. And while the legislation comes with deadA special investigation report by the National lines for the U.S. Secretary of Transportation to Transportation Safety Board in October 2015 cited establish fuel effciency and wet traction minimum a Michelin study of independent tire dealers from performance standards (two years from the date 2010-2013 that indicated less than 2% of purof enactment, or Dec. 4, 2017), the law doesn’t chased tires were being registered. Roy Littlefeld, contain a deadline for tire registration. TIA’s executive vice president, says the numbers Dan Zielinksi, senior vice president of public affairs don’t add up. for the Rubber Manufacturers Association (RMA), “We have polled the top 50 retailers in the country says it will be up to the National Highway Traffc and they are registering tires 100%. The company Safety Administration (NHTSA) to set the timeline. stores are registering 100%. Automobile dealers are The RMA, which lobbied in favor of mandatory tire registering 100%. When you put all that together, the registration and the creation of minimum perfornumbers to me come out more like 85%.” mance standards, didn’t request a deadline for the Nick Mitchell, Modern Tire Dealer columnist and registration portion of the law. Zielinksi says NHTSA industry analyst, doesn’t think improvements to tire has expressed some concern over the 24-month registration will come quickly. timeline to create tire performance standards. “Tire registration is a great idea in theory; however, “Those will probably happen frst, and then we’ll getting a template in place that everyone can agree get a sense from NHTSA of what they need to move with is going to take some time. The sooner the forward (on tire registration),” Zielinksi says. “It’s better for the sake of consumers, but my bet is you always nice to have a timetable, but things can get won’t see any real progress on this front until at done without them, too.” least 2020.” — Joy Kopcha In the meantime, tire dealers are left to interpret the fewer than 200 words lawmakers used to regulate tire registration. In a nutshell, the TESR Act requires independent tire dealers and distributors to provide the name and address of consumers, along with tire identifcation information, to manufacturers. And it must provide that information electronically, securely, and at no cost to tire buyers. “I think it’s everyone’s goal that a much larger percentage of new tires be registered so we have the ability to contact consumers From March 1976: The idea of tire registration via a postcard was conceived.
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MTD January 2016
Quik-Link: 800-687-1557 ext. 11104
News/views
bites
Garage Gurus expands Federal-Mogul Motorparts Inc. is adding courses, training center locations and technician incentives to its Garage Gurus training network for motor vehicle professionals this month. Expo features recycling The first-ever annual Tire Recycling World exhibit will be part of the North American Tire and Retread Expo set for April 19-21, 2016, at the Ernest N. Morial Convention Center in New Orleans, La. Carlstar has all-terrain radial Carlstar Group LLC calls its new Versa Trail ATR the first all-purpose radial tire for side-by-sides, utility vehicles and all-terrain vehicles. It will be part of the Carlisle brand. Cooper wins awards Four Cooper Tire & Rubber Co. tires have earned 2015 Good Design Awards. They are the Discoverer STT Pro and Discoverer SRX sold in the U.S., and Discoverer UTS and Weather Master Ice 100 sold in China. TIA offers CTS training The Tire Industry Association (TIA) will hold 2016 Certified Commercial Tire Service (CTS) instructor training and certification classes in Baltimore, Md., and Denver, Colo. Big O Tires expands TBC Corp. subsidiary Big O Tires LLC has opened its 41st store in Utah. The store in Vernal is owned and operated by Kenny and Charlynne Wondra and their son, Travis. The Wondras also own a store in Craig, Colo. Pirelli tests guayule tire Pirelli & Cie SpA is testing an ultra-high performance tire made from the guayule plant on a track and says its next step is to create winter tires from the plant. Hankook extends OE fitments Hankook will supply an additional 20 original equipment truck tires, including its e-Cube Max and Smart Flex for the Mercedes-Benz Actros and Atego, in the European market.
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Pep Boys says no to Bridgestone Bridgestone Americas Inc. and Icahn Enterprises Holdings LP both wanted The Pep Boys – Manny, Moe & Jack. The bidding ended when Bridgestone declined to counter Icahn’s latest offer, which was $1.50 more per share than the previous bid. “Bridgestone Retail Operations LLC, a wholly-owned subsidiary of Bridgestone, will not present a counter offer to acquire The Pep Boys – Manny, Moe & Jack, in response to the most recent proposal from Icahn Enterprises LP of $18.50 per share,” said Bridgestone in an offcial statement. If no other company makes an offer, Icahn will buy Pep Boys and its 800-plus stores for just over $1 billion. That’s close to $165 million Icahn says Pep Boys’ more than Bridgestone’s original offer. retail automotive parts However, Pep Boys will likely be forced to pay segment presented an “excellent synergistic a $39.5 million termination fee to Bridgestone acquisition opportunity” when it accepts Icahn Enterprises’ offer. for its Auto Plus division. Bridgestone and Pep Boys announced a merger agreement on Oct. 26, 2015. The initial offer from Bridgestone was $15 per share. Bridgestone’s takeover bid turned into a battle for control on Dec. 4, when Icahn offered $15.50 per share.
Falken takes on Sumitomo name On Jan. 1, 2016, Falken Tire Corp. was no more. In its place is a new company: Sumitomo Rubber North America Inc. Richard Smallwood, formerly CEO and president of Falken Tire Corp., is now CEO and president of Sumitomo Rubber North America. According to Falken, the dissolution of the alliance between Sumitomo Rubber Industries Ltd. (SRI) — Falken’s parent company — and Goodyear Tire & Rubber Co. led to not only the name change, but also a realignment of SRI’s North America business units. The realignment is part of a long-term strategy designed to “further strengthen (the company’s) competitive position in North America.” Step 1: The frst step is the name change. Step 2: The second step, which is expected to occur by the end of March 2016, will be the change in name of Goodyear Dunlop Tire North America Ltd. to Sumitomo Rubber USA LLC (SRUSA). At that same time, responsibility for sales of both Dunlop light vehicle tires to Japanese OEMs and Dunlop motorcycle tires will transfer from Goodyear Dunlop/ SRUSA to Sumitomo Rubber North America (SRNA). Under the new corporate structure, SRNA will operate three separate sales divisions. 1. Dunlop Motorcycle Tire, located in Tonawanda, N.Y., will be responsible for Dunlop motorcycle sales to both the original equipment and replacement markets. 2. Falken Tire, located in Rancho Cucamonga, Calif., will be responsible for replacement sales of Falken, Ohtsu and private branded products for the light vehicle and commercial markets. 3. SRNA OE Sales, located in Detroit, Mich., will be responsible for Dunlop light vehicle tires for Japanese OEMs, and Falken OE tire sales for all North America OE customers.
MTD January 2016
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News/views
bites
Denso releases catalog Denso Products and Services Americas Inc. has released its first engine management catalog featuring 1,119 part numbers covering more than 42,500 models of cars and light trucks on the road. National ad campaign begins ITW Global Brands has launched a national advertising campaign with a 30-second commercial featuring the new Rain-X Latitude Water Repellency wiper blades and Rain-X Quantum wiper blades. Firestone will be OE Bridgestone Americas Inc.’s Firestone brand Destination LE2 tire in sizes P245/75R16 and P265/65R17 will be original equipment on select models of the 2016 Toyota Tacoma. Mitas wins award Mitas a.s. was named AGCO Corp.’s Supplier of the Year 2015 in the engineering and innovation category during AGCO´s supplier day for the Europe, Africa and Middle East region. ZC Rubber adds TBR line Zhongce Rubber Group Co. Ltd.’s (ZC Rubber) factory in Thailand has produced the first truck bus radial (TBR) tire in a new TBR product line. Michelin sponsors race Michelin North America Inc.’s BFGoodrich brand will be the presenting sponsor of the Polaris RZR Mint 400 desert race March 9-12, 2016, in Las Vegas. R.O. Writer links with Transtar TBC Corp. subsidiary R.O. Writer’s shop management software now connects to Transtar Industries Inc.’s online ordering system for transmission and drivetrain-related products. New flotation tire Alliance Tire Group (ATG) has released a tire using VF technology (very high flexion) for tanks, trailers, special equipment and other machinery in the agriculture segment that is consistently used in fields and travels to and from fields.
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TBC’s Midas subsidiary is adding franchisees and growing sales TBC Corp.’s Midas International Corp. subsidiary has recruited 23 franchisees in the past six months and achieved 27 consecutive months of comparable store sales increases. TBC says the multi-national brand, which started out as a muffer specialist in the mid-1950s and became the frst nationwide brake-service provider in the 1970s, is now a multi-service car-care provider with over 2,000 shops in 13 countries. With a major focus on tires in recent years, Midas is exceeding growth targets by opening new stores with three different constituents: entrepreneurs that are new to the auto industry; independent automotive/tire stores that convert to Midas; and existing franchisees that are opening up additional locations and building new ones.
Blackburn OEM Wheel Solutions expands Blackburn OEM Wheel Solutions Inc. is starting the new year in a larger home. The location provides more space for the company’s corporate offces Torrey Blackburn says the company’s purchase and warehouse as well of a larger headquarters and warehouse will as additional shipping improve customer service. and receiving docks. The company remains in Macedonia, Ohio, where it was founded in 1983. “Purchasing this facility enables us to meet the needs of our growing staff and improve our internal effciencies,” says Torrey Blackburn, Blackburn’s co-owner.
Toyo restructures its operations in the U.S. A major reorganization at Toyo Tire & Rubber Co. has resulted in a new leader at Toyo Tire U.S.A. Corp. And the name is a familiar one. Tomoshige “Tomo” Mizutani is now chairman and CEO of both Toyo Tire U.S.A. and Nitto Tire U.S.A. Inc. Tomoshige “Tomo” Toyo also promoted Roy Bromfeld, who gave up Mizutani took over his chief operating offcer duties and took over as as chairman and president of Toyo Tire U.S.A., replacing Mizutani. CEO of both Toyo Tire U.S.A. and Also, as of Jan. 1 director Iori Suzuki gave up Nitto Tire U.S.A. his position as senior vice president and general Inc. on Jan. 1. counsel for Toyo Tire Holdings of America Inc. and took on the responsibilities of president, replacing Mizutani. Suzuki also was named a corporate offcer.
MTD January 2016
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News/views
bites
Worldpac signs agreement An agreement between Autologic Diagnostics Inc. and Worldpac Inc. will provide Autologic Assist diagnostics support to Worldpac’s North American customers. Tire Recappers adds line Tire Recappers of Nashville Inc. has added a line of winter tires called CM&S 2 to its collection of tire retreads. Pre-Q tread gets EPA approval Pre-Q Galgo Corp. has received Environmental Protection Agency (EPA) SmartWay verification for its Super Single Wide Trailer (STW) tread design for 445/50R22.5 and 455/55R22.5 tire sizes. TIA endorses app The Tire Industry Association (TIA) has endorsed the checXchange mobile app from Money Transfer Systems Inc. for use by its U.S.based association members.
There’s good news and bad news when it comes to the latest 2015 tire shipment projections from the Rubber Manufacturers Association (RMA). The good news: Replacement passenger tire shipments are expected to exceed what the RMA predicted a year ago. But if the RMA’s latest fgures hold, about 1.8 million fewer replacement passenger tires will be shipped in 2015 than in 2014. That’s a .9% decrease. Modern Tire Dealer looked back at the RMA’s predictions over the past year. All numbers are in millions and fgures are rounded. Replacement passenger tires
2014 fnal
Dec. 2014
April 2015
Aug. 2015
Dec. 2015
206.5
204.1
205.3
206.8
204.7
And here’s a look at the RMA’s latest projections for each segment. OE passenger OE light truck OE truck
2014 fnal 47.8 4.6 5.7
2015 forecast 50.0 4.4 6.2
% change 4.7 -6.3 9.1
Replacement passenger Replacement light truck Replacement truck
206.5 28.7 17.4
204.7 28.9 18.0
-0.9 0.7 3.0
Continental donates to refugees Continental AG donated 100,000 euros to the Welthungerhilfe aid organization for Syrian refugees.
Total shipments
310.7
312.1
0.4
25 years for Yokohama plant Yokohama Tire Corp.’s plant in Salem,Va., has celebrated its 25th anniversary and produced its 80 millionth tire. The plant is a zero landfill operation and is ISO 14001 Environment System-certified.
The Tire Pros network of franchised tire retailers has surpassed 700 stores. Tire Pros reached the milestone with the signing of Same Day Auto Repair Inc., which goes to market as Same Day Tire and Auto Repair. The fve-store chain Tire Pros executives celebrate 700 stores (from left): serves the greater Bob Bittner, director of store support; Wes StephenTulsa, Okla., market. son, vice president of operations; B. Quick Chadwick, director of marketing; and Dan Brown, president. American Tire Distributor Inc.’s franchise program ended 2015 with 702 outlets representing more than 500 owners. Tire Pros had a net gain of 65 stores in 2015. Tire Pros President Dan Brown expects the network’s growth to continue. “In 2015, 36% of our new location growth came from multi-store regional dealers who seek deeper operational and marketing support and broader association with like-minded tire retailers. Our fve newest stores are great examples of this.” Same Day Tire and Auto Repair owners Danny and Tina Smith joined the program in late December.
ALI accredits TÜV Rheinland The Automotive Lift Institute (ALI) has accredited TÜV Rheinland AG, a global provider of independent testing, inspection, and certification services based in Germany. Latest TireMaster released ASA Automotive Systems Inc. introduced the latest versions of TireMaster software at its 18th annual InfoExpo Conference. Bosch creates PSA Robert Bosch LLC and the Humane Society of the United States have created “Stop the Roadkill,” a public service announcement (PSA) that encourages drivers to improve visibility on the road by changing wiper blades regularly.
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Passenger tire shipments drop slightly in 2015, says the RMA
Tire Pros: 700 stores and counting!
MTD January 2016
Quik-Link: 800-687-1557 ext. 11107
News/views
dates
February 17-20 Tire Industry Association Off-the-Road Tire Conference 2016, Omni La Costa Resort & Spa, Carlsbad, Calif. (800) 876-8372 (301) 430-7280 www.tireindustry.org March 8-10 Tyrexpo Africa 2016, Sandton Convention Centre, Johannesburg, South Africa www.tyrexposeries.com March 16-18 23rd annual European Tyre Recycling Association (ETRA) European Tyre Recycling Conference, NH du Grand Sablon, Brussels, Belgium +32 2 734 37 27 or ETRA@wanadoo.fr April 19-21 North American Tire and Retread Expo, Ernest N. Morial Convention Center, New Orleans, La. (786) 293-5186 www.usatireexpo.com May 24-27 Reifen International Trade Fair, Essen, Germany www.reifen-messe.de June 24-25 Alabama Tire Dealers Association Annual Convention, Peridido Beach Resort, Orange Beach, Ala. (256) 616-3587 www.alatiredealers.com July 12-14 Latin American & Caribbean Tyre Expo, ATLAPA Convention Center, Panama City, Panama (786) 293-5186 www.latintyreexpo.com July 15-17 Georgia Tire Dealers & Retreaders Association Annual Conference, The Westin Jekyll Island, Jekyll Island, Ga. (770) 947-2323 www.gtdra.com
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Family-owned Industrial Tire of CNY is a Unitread retreader and its plant has a capacity of more than 25,000 retreads a year.
Marangoni adds two dealers The Marangoni Tread North America dealer network has two new members: Quality Tire & Service LLC of Munford, Tenn., and Industrial Tire of CNY LLC. Quality Tire & Service will offer Marangoni’s signature brand Ringtread to the greater Memphis area. The company has been serving the west Tennessee area since 1996. Quality Tire & Service sells, services and repairs new and retread commercial tires and offers 24/7 commercial on-site tire service and feet checks. The company’s retread plant has a capacity of more than 35,000 retreads per year. In addition to its commercial outlet, the company has a retail store offering passenger tire sales and automotive services. Industrial Tire of CNY has joined the Marangoni network as a Unitread independent retreader. Located in Syracuse, N.Y., the company is family owned and operated. Owner Dennis Beaudette founded the company more than a decade ago. He says it will continue to operate in the family for another generation as his two sons, DJ and Marty, are following in his footsteps. Industrial Tire of CNY operates a retread plant with a capacity of more than 25,000 retreads a year. Industrial Tire of CNY also offers commercial new and retread tires, road service, mounting and demounting, balancing, rim reconditioning, and semi-truck aluminum wheel polishing.
Bauer Built opens new location Bauer Built Inc. has opened an outlet in Bismarck, N.D. The state of North Dakota is under-served in the commercial tire business, according to Tad Bauer, the company’s president. “We’ve outgrown the ability to serve these customers effectively from our Fargo location. By opening in Bismarck, we can deliver products and services critical to this market.” Bauer Built has been in business 71 years servicing the Midwest with tires and expanded light mechanical services. With the addition of the Bismarck location, Bauer Built now has 37 outlets, seven Michelin Retread Technology plants, and four wheel-refnishing operations. The company also operates a bulk petroleum business out of its headquarters in Durand, Wis. Bauer Built is No. 9 on MTD’s list of the top 25 commercial dealers in the U.S. ■
MTD January 2016
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feature
‘Will we see a recession?’ Analyst and MTD columnist Nick Mitchell chose those fve words as his forecast for 2016. He also looked back on all that shook the industry in 2015 By Joy Kopcha
R
aw material prices dropped so signifcantly in 2015 that the one thing everyone expected to happen during the year never materialized. Tire prices didn’t go up. In June when the U.S. Department of Commerce fnalized tarifs on consumer tires manufactured in China, tire dealers and industry watchers considered it “a mater of time” until all passenger and light truck tire prices increased. But the price hikes never materialized, and industry analyst Nick Mitchell doesn’t expect raw material prices to rebound in 2016. Look for them to drop even lower, Mitchell says. Modern Tire Dealer asked Mitchell, senior vice president and research analyst at Northcoast Research Holdings LLC, to talk about the highs and lows of 2015, as well as what’s ahead in the new year. He names the tire manufacturer to watch, addresses whether the 2016 presidential election will have any efect on the tire industry, and covers which segment is the most likely subject of the next tarif investigation. MTD also asked Mitchell to pick fve words to describe 2015: “perpetually falling raw material prices.” MTD: What are tire dealers saying about the state of their businesses? What are they expecting in 2016? Mitchell: Dealers are saying business is solid, but not exceptional. Volume growth moderated in November and December due to unseasonably warm temperatures in the Great Lakes, Mid-Atlantic, and Northeast. Sentiment among the dealers is defnitely upbeat, albeit not quite as optimistic as the tone at this time last year, as the participants are more divided over the likely strength in 2016. Specifcally, one cohort is expressing optimism that an expanding car parc, including an uptick in the number of cars entering the frst replacement cycle, low gasoline prices, and an improving economy will buoy volumes next year. Tis group expects to see a 2% to 3% increase in sell-out volumes, with some beneft accruing from the release of pent-up demand. Meanwhile, the rest of the dealers we speak with anticipate that sell-out trends will track in the range of fat to up 2%, as they expect less of a windfall from deferred tire purchases arriving in 2016, as well as a more modest tailwind from lower gas prices, especially amidst growing signs that the consumers in markets dependent on the oil and gas industry are starting to retrench in the wake of ongoing weakness in the price of oil. Tying these views together, we think it is prudent to project that domestic volumes will increase in the low-single digit range next year, which is consistent with the assumptions in our models.
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The 2016 presidential election might lead the evening news, but Mitchell doesn’t expect it to alter consumer purchasing or affect the tire industry.
MTD: How would you sum up the tire industry in 2015? Where is the industry headed in 2016? Mitchell: Tis year can be summarized as a fairly solid year for the industry, with replacement passenger and light truck sell-out volumes running up 1% to 2% through the middle of November. Te higher prices that many expected to see in the wake of the new tarifs on light vehicle tires imported from China never showed up; however, a precipitous drop in raw material prices relative to the prior year more than made up for the lack of pricing power, and helped improve proft trends.
MTD: What’s the biggest inventory-related story of the year? Who’s got it and who doesn’t? And what opportunity, or problem, does that present for 2016? Mitchell: Overall inventory seems fairly well controlled. Dealers were able to work down the pre-buy product from
MTD January 2016
2014 without any problem despite the “pricing power story” never really geting of the ground. Tat said, given the warm temperatures and the lack of snowfall across the Great Lakes, Northeast, and Mid-Atlantic regions in the fourth quarter of 2015, we expect channel inventory of snow tires will be higher than ideal coming out of the frst quarter of the year, which could present a minor obstacle to sell-in volumes in the frst half of 2016.
MTD: Afer the tarifs on passenger tires made in China were approved, most expectations were for prices to increase like they did in 2009 afer the previous tarifs were imposed. What happened? Mitchell: Despite the fact the U.S. Department of Commerce fnalized its anti-dumping and countervailing duties covering passenger and light truck tires produced in China in the middle of 2015, most players in the North American tire industry we spoke with noted they never saw a lasting beneft from the trade measures. In our opinion, the weakness in raw material prices was the primary culprit for the fact the initial increases to base prices on Tier 2 and Tier 3 products were rolled back or ofset with promotions, including more aggressive volume incentives. Tat said, we are surprised the pricing terms for product coming from Thailand, Indonesia and Vietnam are very aggressive. It sounds as if this phenomenon is being driven by Chinese suppliers still quoting prices that are on par with those seen prior to the implementation of the tarif.
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MTD: How much are tire dealers depending on tire sales for their botom line? Has there been a shif during 2015? Do you expect this to change in 2016? Mitchell: Tire sales are as relevant today to the botom line as they ever were. Te category remains a key trafc and proft driver and is still the best category to forge relationships with customers. Service has become more important over the years, but the proft diference between a well-run dealer and an average dealer lies in how well the tire portion of the sales mix and inventory portfolio are managed. MTD: What’s happening with tire production in China? Mitchell: Tire production continues to expand in China despite the new protective trade measures in the U.S. However, we have heard some chater about banks foreclosing on small manufacturers as credit tightened. We expect overall tire production in the country will expand by 5% plus in 2016. MTD: Raw material prices have been low in 2015. When should dealers expect those prices to rise again? Mitchell: Predicating raw material prices is tough, to say the least. Tat said, we think the basket of key raw material prices will be fat to down low-single digits in 2016, driven by the weakness in oil and natural rubber prices. MTD: Oil prices have decreased throughout the year, and that afects raw material costs as well as consumer habits. Who’s benefting more, tire manufacturers or consumers?
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Industry analysis Mitchell: Te lower oil prices are a win-win for all parties; however, consumers are reaping the bulk of the benefts at the pumps as tire prices have been fairly sticky.
MTD: What’s the forecast for tire wholesalers? Mitchell: Tire wholesalers expect the market to grow 1% to 3% in 2016, and that we will see more consolidation in this segment of the industry.
Te proft diference between a well-run dealer and an average dealer lies in how well the tire portion of the sales mix and inventory portfolio are managed. MTD: Do you foresee any shifs among the Tier 2 and Tier 3 manufacturers? Mitchell: We expect the mix to shif up to Tier 1 and Tier 2 brands at the expense of the Tier 3 players. We anticipate there will be some consolidation in the Tier 3 bucket, especially in China and other parts of southeast Asia. We expect the mix at retail to shif up to Tier 1 and Tier 2 brands at the expense of
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the Tier 3 players, as the combination of the improving labor market, low gas prices, and product innovation should cause some consumers to trade up. We anticipate there will be some consolidation in the Tier 3 bucket, especially in China and other parts of southeast Asia as margins in these regions are pressured from supply outpacing demand in the wake of new tarifs on passenger and light truck tires in the U.S. MTD: Who would you label a “manufacturer to watch� in 2016? Mitchell: Falken Tire Corp. is defnitely the manufacturer to watch in 2016 and 2017. With the Goodyear/Sumitomo Rubber global business alliance dissolved, we anticipate Falken will be much more aggressive in the market, especially as it relates to product innovation and dealer relationships.
MTD: Goodyear started off 2015 with a bang with its announcement it would start selling tires on goodyear.com. Other manufacturers are following their lead. How much of a game changer is this, and what can independent tire dealers do? Mitchell: Honestly, more noise has been made on this topic than it deserves. At the end of the day, less than 5% of all tire transactions are completely made online without the consumer calling or visiting a store while researching the available options. More importantly, the manufacturers will always need channel partners to mount and balance the tires, and those are very important elements of the value proposition that dealers should be able to monetize.
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Industry analysis The billion-dollar battle for Pep Boys The 2015 award for best drama in the tire industry goes to Icahn Enterprises LP, the victor in a month-long, back-andforth bidding war for Pep Boys – Manny, Moe & Jack against Bridgestone Retail Operations LLC. Tire industry analyst and Modern Tire Dealer columnist Nick Mitchell liked the initial terms from the vantage point of Pep Boys shareholders, “as this has been an undervalued asset and poorly managed business for quite some time.” Mitchell says Bridgestone’s loss likely is a win for the tire industry.
“Personally, I do not think manufacturers should own and operate retail assets unless captive distribution points are the only venues that their product is carried in. Historically, manufacturers have not been good at running stores for a variety of different reasons, and their desire to do so only creates channel conficts,” Mitchell says. “I expect Bridgestone will step back from the deal scene for a period of time due to a dearth of other acquisition opportunities.”
MTD: What’s the biggest story of the year in the commercial tire side? Mitchell: Te biggest story on this front has to be the fact that Pirelli & Cie SpA was acquired by China National Chemical Corp. (ChemChina). Te deal creates the fourth largest commercial tire business in the world with roughly 12 million units of capacity. Integration is the hardest part of any merger, and this seems like it will be a tricky one to pull of without a hiccup in light of the fact it requires bringing together two very diferent cultures.
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As for billionaire investor Carl Icahn, chairman of Icahn Enterprises, acquiring Pep Boys and merging it with Auto Plus, the sixth-largest parts distributor in the U.S., still won’t make him one of the power players, Mitchell says. “The combined chain would only move up one slot, and still rank behind the four major powerhouses, AutoZone, Advance Auto Parts, O’Reilly Auto Parts and NAPA,” Mitchell says. He expects Icahn Enterprises will divest Pep Boys’ service bays and tire wholesale operations.
MTD: How much are tire dealers depending on feet work to maintain, or grow their businesses? Mitchell: Fleet work is a very important segment of the market. It is typically a lower margin business but the size and predictability of the volume trends make it atractive. It should continue to be an area of focus going forward.
MTD: With so many tire plants under construction in the U.S., in addition to extra production and faster fll rates, what are the other benefts?
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Industry analysis Mitchell: Te greatest benefts besides the ones listed are: supply chain optimization via greater use of a near-sourcing production strategy (i.e. shorter lead times), and improved product mix (new plants only support high-value-added machinery).
MTD: Which segment of the tire industry will see the most growth in 2016? Mitchell: We expect to see the best volumes in the OE light truck category, as the relentless drop in retail gasoline prices should boost demand for pickups. Meanwhile, we expect the worst trends to be seen in the OTR and agricultural categories. MTD: How’s the auto service repair business? How will the economy afect those profts? Mitchell: Te service business is good, and we expect this to remain the case in 2016, assuming a slowdown in China and falling oil prices do not pull the U.S. into a recession.
MTD: What are your predictions for the do-it-for-me (DIFM) and do-it-yourself channels for 2016? How have those channels performed in 2015? Mitchell: The DIFM market was red hot through the first three quarters of 2015 on the heels of a very strong performance in 2014. We expect the data will ultimately show trends moderated in the fourth quarter in light of the unseasonably warm weather across the Great Lakes, Northeast and Mid-Atlantic regions. I think this segment of the market
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will grow 3% to 5% in 2016, assuming the U.S. economy does not slip into a recession.
MTD: Are consumers more confdent in the economy? How is that relating to their tire purchases and auto repairs? Mitchell: Notwithstanding the recent weakness in the stock market and retail sales, consumers seem to be fairly upbeat and healthy from an economic standpoint, and this is helping fundamentals across the tire and auto service in the form of stronger volumes, less deferral activity, more proactive maintenance, and a richer sales mix (i.e. consumers are trading up).
MTD: With the tarifs on passenger tires now in place until at least 2020, what are the chances tarifs will be leveraged against truck tires? Mitchell: It is tough to say, and speculating on such maters is never fun. Tat said, the International Trade Commission voted unanimously in early 2014 to retain the antidumping and countervailing duties that were levied against Chinese of-the-road tires in response to a 2008 judgment; and similar measures were fnalized against passenger and light truck tires imported from China. As such, I would not be surprised if the next area of focus is on the TBR market. China has the ability to produce over 120 million radial truck tires, so it is clearly a force that needs to be monitored. MTD: Tanks for your insights, Nick. â–
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MTD January 2016
Your marketplace
Demand trends are holding strong despite lack of harsh winter weather
A
ccording to the results of our dealer Dealers noted volume trends were strong for survey, demand for replacement tires replacement tire sales increased in November. Indeed, from a According to our dealer survey, consumer volume standpoint the dealers reported they sold demand for replacement tires increased in Novem0.6% more tires in November on a year-over-year ber. As stated, the dealers in our survey reported basis, following a 0.1% increase in October and a they sold 0.6% more tires on a year-over-year 0.6% increase in September. We are encouraged basis, following a 0.1% increase in October and by the fact that demand trends are holding strong, a 0.6% increase in September. Trends continued although they are down slightly from what we positive in the truck category as the dealers who saw at the peak of summer’s heat, which is likely By Nick Mitchell responded to the survey reported volumes increased due to a lack of harsh winter weather and a tough 3.9% afer a 0.8% increase in October and a 1.6% comparison from 2014. decrease in September. Lastly, the survey respondents In light of the recent strength in demand trends, we indicated volumes were up 6.3% in the retread business continue to believe the abundance of pent-up demand afer decreasing 1.8% in October. should lead to decent volume growth in 2016, despite the fact that 2014 and 2015 provide some tough comparisons. Dealer reported tire costs were mixed In fact, demand has increased on a year-over-year basis for Te tire dealers who responded to our survey noted 20 of the past 21 months, according to the dealers surveyed. manufacturer pricing on branded tires increased, while Furthermore, most dealers stated they anticipate these prices on value tires decreased in November. In fact, the sales trends to improve throughout the frst three months respondents noted manufacturer pricing on value tires of this year. decreased 0.1% during November, while the price of branded Until next time, keep the tires rolling out the door. tires increased 0.2%. While we were initially surprised at hearing about any prices declining during our recent trip Monthly survey to the Specialty Equipment Market Association (SEMA) A number of independent tire dealers were surveyed Show in November, this trend is consistent with commentary concerning current business trends. Except for tire prices from around the country that pricing has remained fat or and costs, the results of the November 2015 survey are declined despite the implementation of tarifs on Chinese compared with those of November 2014. import tires. Tis phenomenon is being partially aided by lower raw material prices as well.
How dealers view near-term business Dealers
JUL
AUG
SEP OCT(R)
Passenger tire Will improve Will worsen Will stay level
20% 0% 80%
50% 0% 50%
83% 0% 17%
0% 0% 100%
33% 0% 67%
66% 0% 44%
Truck tire Will improve Will worsen Will stay level
60% 0% 40%
50% 17% 33%
100% 0% 0%
17% 0% 83%
50% 0% 50%
57% 0% 43%
R-Revised
NOV(P) NOV(14)
P-Preliminary
Dealers believe sales trends may level of According to our survey results, 67% of passenger tire dealers believe business will stay about level, which is a marked decline from what we have seen in the past; however, much of this decline in optimism may be related to mild weather conditions relative to 2014. Te outlook for truck tire demand was slightly higher, as 50% of the truck tire dealers see business staying about the same and 50% saw business improving.
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Inventory levels were OK to high Of the dealers who responded to our survey, 67% indicated they had the appropriate amount of inventory in stock for demand (the same percentage as in October), and 33% indicated that inventory levels were too high. As for inventory levels among truck tire dealers, 60% reported they had the appropriate amount of inventory, 20% indicated inventory was too high, and 20% indicated inventory was too low.
Automotive repair sales rose in November Dealers indicated automotive repair sales trends improved once again in November. Specifcally, the dealers who responded to our survey indicated service sales, which accounted for 28% of the study participants’ total revenues, were up 4.5% on a year-over-year basis in November (compared to an increase of 8.7% in October) as a higher average ticket and strong trafc trends again benefted repair departments. â–
Nick Mitchell is senior vice president of research for Northcoast Research Holdings LLC based in Cleveland, Ohio. Mitchell covers a variety of subsectors of the automotive industry.
MTD January 2016
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Facts section: then and now
Happy 50th anniversary (to us!) Modern Tire Dealer’s Facts Issue celebrates the past and present
I
n 1966, Modern Tire Dealer published its frst “Facts Issue.” The highlight of our five-page Facts Section may have been the history of tire shipments, courtesy of the Rubber Manufacturers Assocation. Fify years later, our 2016 Facts Issue has 13 pages of 2015 industry statistics covering everything from tire shipments to North American plant capacities. Te highlight, however, is our market share data, which breaks down replacement and original equipment consumer tire brand shares (pages 52-56) and truck tire brand share (page 58). We even assign shares to the various distribution channels (page 66). Because this is our golden anniversary issue, we have added a special nine-page historical section that follows this introduction. And to tie the past and the present together, we
lead it of with a tribute to renowned cartoonist George Booth, who added humor and insight to our articles throughout four decades. In honor of the occasion, we asked him to draw the cover of this issue (I particularly like the chicken peeking out of the stack of tires). You will see samples of his MTD work not only in the special section, but also throughout our issue. Why? Because many of his cartoons are as relevant today as they were when they were frst drawn. Te importance of our annual issue cannot be overstated. As former Editor Lloyd Stoyer said in our silver anniversary issue, “in a period of rapid transformation, of globalization, acquisition and intense competition, the statistics and comparisons in our ‘Facts’ section take on even more signifcance.” Looks like nothing ever changes. — Bob Ulrich
2015 U.S. REPLACEMENT TIRE SALES (a $37.7 billion industry) In 2014, U.S. replacement tire sales totaled $38.3 billion.
Passenger $24.4 billion Truck $6.4 billion Light Truck $4.8 billion OTR $1.6 billion Farm $500 million
All fgures in the special 23-page Facts Section are Modern Tire Dealer fgures unless otherwise noted.
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MTD January 2016
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Facts section: then and now
Historical and hysterical: our cartoonist, George Booth By Lori L. Mavrigian
W
hether you’re guiltily gufawing at an episode of ‘South Park’ or quietly giggling at the latest New Yorker cartoon, laughing does you good. Laughter is a great form of stress relief, and that’s no joke,” says the Mayo Clinic. Laughter increases the endorphins that are released by your brain, activates and relieves your stress response and soothes tension, according to the health organization. So we hope you get a chuckle out of the cartoon on our cover commemorating the 50th anniversary of our Facts Issue. It is appropriate that we turned to cartoonist George Booth to create this cover. Booth is famous for the cover illustrations he did for Te New Yorker magazine. However, he was hired in 1959 as corporate art director for Bill Brothers in New York City, the company that owned MTD in those days. He worked for us untilil
George Booth gained fame illustrating the covers of The New Yorker magazine. His cartoons often feature befuddled men, crazed cats and fat dogs.
1968, lef to freelance full-time and sold his frst cartoon to Te New Yorker in 1969. (Want a good laugh? Check out his books, among them “About Dogs,” “Tink Good Toughts about a Pussycat” and “Omnibooth: Te Best of George Booth.”) His freelance work for Modern Tire Dealer continued over the years and included covers and inside art to illustrate the important topics of the day such as tire labeling, tire grading, tire registration, Occupational Safety and Health Administration regulations and so on. “I loved working for MTD,” Booth told us. “It is a terrifc company, and I was grateful for the experience.” You will see some of his earlier cartoons reprinted on the following pages and to throughout the issue. thr All ofer a litle stress relief from the heavy issues confronting those in the tire industry. It just goes to show you, it doesn’t mater if it’s 1966 or 2016, laughter is still the best medicine! ■
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MTD January 2016
From April 1978: Dealers go to court over Michelin franchise cancellations In early 1978, dealers sued Michelin claiming federal anti-trust violations when the tire maker canceled contracts with them. Dealers sought millions in damages citing violations of the Sherman Act, the Clayton Act and franchising statutes. The tire dealers claimed they had invested millions in the promotion and establishment of goodwill toward Michelin and its tires. Dealers felt Michelin was “trying to eliminate the middle man with the establishment of more company stores.” At the time, Michelin did not comment on the lawsuits. Differences must have been ironed out, as a check on the dealerships involved (which are still in business) show them selling Michelin tires today. From August 1975: Grade labeling update: industry steps up battle This August 1975 Booth cartoon illustrates the mindset of the tire manufacturers concerning the complexity of proposed quality gradings which would measure tire tread wear, traction and temperature resistance. The gradings were set up to “enable consumers to make informed choices in tire purchases,” said the National Highway Traffc Safety Administration (NHTSA). Tire manufacturers fought hard to prevent the government from implementing tire grade labeling, saying it would cause the industry “irreparable fnancial injury.” Despite the uproar, legislation passed, and a look at today’s tire ads fnds tire makers frequently use exceptional quality gradings to sell their tires. From February 1972: ARA launches surprise attack — No retread standards for now! The American Retreaders Association (ARA) was in court to oppose Standard 117 of the Department of Transportation’s proposed retread tire safety standard. The ARA was not concerned that retreads posed any safety problems, but that the “government-sponsored tests show there is no correlation between the results of the laboratory tests proposed in Standard 117 and the actual performance of tires on the road.” Voluntary testing is still going on for retreads — this time around to verify them for the Environmental Protection Agency’s SmartWay program.
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Facts section: then and now
(Above) From January 1972: 1972 should be a real ground gainer! Industry leaders predicted record-breaking tire shipments and in many cases, record-breaking capital expenditures for 1972. Goodyear Tire & Rubber Co. was forecasting a 5% increase in passenger tire shipments and a 6% increase in truck and bus tires. The company planned to spend $300 million on capital improvements. Russell DeYoung, the company’s chairman, was concerned about imports which “will exceed exports by about 6 million.” Sound familiar? Executives from Firestone Tire & Rubber Co. and BFGoodrich Tire expected a banner year, too. Estimates for all types of pneumatic tires ranged from 212.3 million units to 237 million units. Compare this with 2015’s 251.5 million units shipped (see page 46). (Above) From July 1969: RMA proposes foolproof tire ID system! Due to “government squawking” about poor tire recall results, the Rubber Manufacturers Association (RMA) pulled the wraps off a new tire identifcation system aimed at supplementing tire identifcation and defect notifcation. An ID program was proposed that uses an alpha-numerical code molded into the sidewall to indicate the week of production, the manufacturer, the plant in which the tire was produced, and the tire size and type. “This, coupled with a computerized storage of records, should supply ample information to enable an almost foolproof recall program,” MTD observed. The industry is still grappling with the best way to handle tire recalls. The “Tire Effciency, Safety, and Registration Act of 2015” recently made tire registration mandatory once again. See “No timeline for tire registration” on page 8. (Left) From June 1959: From Tires TBA Merchandising to Modern Tire Dealer! Although Booth’s frst cartoon appeared in our magazine the month he was hired by our company, April 1959, his frst cover illustration was in June 1959 when the publication changed its name from Tires TBA Merchandising to Modern Tire Dealer (the magazine for the TBA dealer and retreader). MTD was being produced on Third Avenue in New York City at the time, later moving to what was referred to as the “Rubber Capital of the World,” Akron, Ohio.
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MTD January 2016
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Facts section: then and now
(Above and right) From May 1972: Health, safety and your dealership! Regulations issued by the Labor Department’s Occupational Safety and Health Administration (OSHA) called the Williams-Steiger Occupational Safety and Health Act of 1970 took effect in April 1971. The National Tire Dealers and Retreaders Association (NTDRA), which later became the Tire Industry Association (TIA), put together a guide and held seminars to help dealers comply and prevent fnes or a business shutdown. The NTDRA urged dealers to become thoroughly acquainted with the act and resulting regulations of OSHA, establish a program of safety and health practices for their business, make sure that corrective action was taken to assure employees follow job safety rules, and conduct periodic safety inspections on their own. Regulations covered such things as the proper use of tire safety cages, having adequate fre extinguishers, proper electrical wiring, logging injuries on the correct OSHA form and properly marked exits. “OSHA regulations are not guidelines or recommended practices, they are the law,” Kevin Rohlwing, TIA’s senior vice president of training, wrote in our October 2015 issue in the article “Guilty until proven innocent.” From October 1972: Akron makers among last to know — Tire grade labeling issuance near The Department of Transportation (DOT) issued its frst notice of proposed rule making on tire grade labeling in September 1971. “Two months later at a discussion meeting, the proposals were universally assailed by the manufacturers, dealers and consumer advocates. Last May, DOT fnally retracted the proposal and announced it would try again with a ‘modifed version,’“ MTD reported. When fnally issued, tire dealers were to post explanations of the grading system in their showrooms. Similarly, information is now being posted explaining “green tire” technology. ■
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MTD January 2016
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Facts section: then and now
Retail tire dealership profle 1972 vs. 2015 1972 Percentage single store dealers Percentage tires vs automotive service Average number of brands carried Number of technicians per shop Average price of a brake job Number of alignment jobs per month Percentage selling custom wheels Average passenger tire price, median Most popular size in inventory Biggest non-dealer competitor
47% 76% 1 9* 5 2* $56 26 117 51 6% $31 91*
Saratoga Steel-Belted polyester tire from Saratoga Tire Co. There was also a Saratoga Glass-Belted version.
8 25-14 bias-ply Service stations
* Source: NTDRA
$743,000 to $1.9 million Benchmark: In 1979, the average retail tire dealership had gross sales of $743,000. In 2015, it was $1.9 million.
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MTD January 2016
T
he infuence of the independent tire dealer on the tire purchase never seems to change, which is why the “70/30 Rule” is a generally acceptable principle in our industry. It states that from start to fnish, the dealer determines the tire brand the customer buys at least 70% of the time. Te list of sources verifying the validity of the rule is extensive, beginning with Modern Tire Dealer’s own surveys. J.D. Power and Associates, Goodyear Tire & Rubber Co., Cooper Tire & Rubber Co. and many others have, at one time or another, announced similar fndings. Where did the rule originate? It might have been the National Automobile and Tire Survey by Look magazine in 1960. ■
Toyo Celsius from Toyo Tires U.S.A. Corp. There is also a Toyo Celsius CUV version.
2015 Percentage single store dealers Percentage tires vs automotive service Average number of brands carried Number of technicians per shop Average price of a brake job Number of alignment jobs per month Percentage selling custom wheels Average passenger tire price Most popular size in inventory Biggest non-dealer competitor
60% 50% 15 4 50 $287 44 60 85 9% $119 31 215/55R17 Mass merchandisers
Benchmark: Excluding payroll as a cost of sales, the average gross proft for a retail tire dealer ranges from...
45% to 48% www.moderntiredealer.com
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Facts section: then and now
How auto service changed the business of selling tires By Ann Neal
Bias to radial changeover
R
e m e m b e r w h e n yo u charged $10.78 in labor, on average, for an alignment? If you don’t, you may have a customer or two who does. Te year was 1974 and that particular fee is just one of the automotive service-related metrics preserved in the earliest editions of MTD’s Facts Issue. Measures of automotive service appeared only occasionally in the Facts Issue between 1972 and 1991. As longer wearing radial tires replaced bias tires, auto service became a bigger part of every independent dealer’s business. Te 1978 Facts Issue edition reported that 42.8% of dealers planned to expand their automotive services oferings that year. In just 10 years, dealers would nearly double their sales from auto-
( Its infuence on tire dealer automotive service business) % Earnings from auto service 50
% Sales from auto service 50 40
40 30
30
20
20
10
10
0
1980
1990
Dealer total sales volumes 1997 % total sales
2014 % total sales
35 30 25 20 15 10 5 0
40
0-$499,999
$500,000 to $999,000 $1 million to $5 million More than $5 million
0
1985
1990
motive services (see bias to radial changeover chart). In 1992, automotive service categories tracking the number of jobs performed per month, proft margins, and average price per ticket were published for the frst time. Average number of bays per outlet and technician compensation began to be tracked regularly in 1992 as well. Jump to 2016. Te latest MTD research shows mounting and balancing service represents $4.8 billion of all independent tire dealer sales, followed by brake systems service ($4.2 billion), and chassis and suspension work ($3.3 billion). Other major service categories are alignments ($1.8 billion), shocks and struts ($1.8 billion), oil and lubrication service ($1.6 billion) and batery and electrical service ($1.3 billion). Service for air conditioning, bearing and seals,
MTD January 2016
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Facts section: then and now Automotive services fnancial profle Service Air conditioning Alignment Batteries/electrical Bearings/seals Brakes Chassis/suspension Chemicals Cooling systems Electronic diagnosis Engine repair/diagnostic/tune-ups Exhaust systems Ignition and spark Mounting and balancing Oil and lubrication Shocks/struts Tire pressure monitoring systems Visibility (wipers)
% ofering service 63% 88% 91% 95% 95% 91% 77% 80% 70% 71% 53% 74% 98% 91% 98% 88% 86%
average ticket/job $367.30 $96.54 $155.08 $264.83 $287.44 $329.32 $114.43 $172.14 $84.11 $301.11 $295.00 $183.94 $64.50 $39.18 $427.57 $93.87 $26.98
60% Tire dealers with one location
Service bays per outlet % of dealers having 5% 9% 11% 6% 9% 15% 3% 18% 2% 7% 2% 1% 0% 1% 2% 9%
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Number of bays 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15+
Technicians per outlet
% of dealers having 11% 17% 20% 21% 12% 4% 2% 2% 1% 1% 2% 2% 0% 2% 0% 3%
Number of technicians 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15+
number of jobs/month 19 60 27 15 44 32 22 14 21 17 8 10 220 129 11 26 31
proft margin 57% 68% 35% 48% 53% 51% 49% 48% 60% 63% 53% 63% 62% 35% 45% 41% 40%
7 5
Average number of service bays per outlet
Average number of technicians per outlet
and engine repair and diagnostics services are responsible for $1.5 billion, $1.3 billion, and $1.2 billion in sales, respectively. Tire pressure monitoring system (TPMS) service is a $747 million business for dealers. When sales from other service work (chemicals, cooling system, electronic diagnosis, exhaust system, ignition and spark plug, wipers) are included, the total amount of auto service work performed by independent tire dealers tops $26.6 billion annually. Dealers report margins of 68% for alignments, making it the most proftable service category. Te least proftable categories are bateries and electrical and oil and lubrication, both with margins of 35%. Average sales and earnings from automotive service for independent tire dealerships have remained relatively constant
Average wages for technicians 60,000 50,000 40,000 30,000 20,000 10,000 0
Highest level
Mid-level
Entry-level
ASE Master tech
MTD January 2016
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Facts section: then and now since the 1990s. Te latest MTD research shows automotive service sales, on average, generate 45% of total sales and 44% of total earnings. In 2006, the fgures were 47% for sales and
44% for earnings. In 1996, 42% of total sales at an average independent tire dealership came from automotive service, while 43% of earnings came from automotive service. ■
TPMS service growth (Light vehicles built after Sept. 1, 2007, are equipped with TPMS)
Percentage of dealers servicing TPMS 100 80 60
45% 44% Tire dealers’ total profts from automotive service
40 20 0
Tire dealers’ total sales from automotive service
2006
2007
2008
2014
Percentage of tire dealers with percentage of ASE-certifed technicians
Why dealers choose suppliers (by percentage)
25% of dealers have from 91% to 100%
Pricing
24% of dealers have from 51% to 90%
Good service
51% of dealers have less than 50%
Stock availability Location
How technicians are compensated
Warranties Quality
Hourly: 42%
Brand names
Salary and commission: 32%
Knowledgeable counter people
Commission only: 13%
Reputation 0
44
20
40
60
80
100
Salary only: 13%
MTD January 2016
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Facts section: shipments
Tire shipments
The Great Depression
World War II
Korean Confict
Te ups and downs from 1929 to 2015
D
emand for replacement tires in the U.S. was steady throughout most of 2015 (last February doesn’t count). However, retailers and wholesalers entered the year with healthy inventories, the result of trying to bypass the tariffs being levied on Chinese consumer tires. Add to that an abnormally mild winter, and a 1% decrease in replacement passenger tire sales year-over-year is not unexpected (see Chart 1). In contrast, strong SUV and CUV sales were a big reason original equipment shipments rose nearly 4%. Te 48.1 million OE passenger tire shipments were the most since 2006. Te Rubber Manufacturers Association forecasts OE shipments will reach 50 million units. Light truck tire shipments were fat at the replacement level and down at the OE level. “OE shipments should increase 1% to 2% in 2016, with light truck tire volumes outpacing passenger due to low fuel costs causing a mix shif to the former,” says Nick Mitchell, senior vice president of research for Northcoast Research Holdings LLC. “Replacement volumes will likely increase 1% to 3%, with the light truck segment outperforming, but only by a more modest margin.” Chart 1 Service trailer (ST) tires are U.S. UNITS SHIPPED not included in either Mod2011-2015 (in millions; imports ern Tire Dealer’s or the RMA’s included) domestic passenger or light PASSENGER TIRES truck tire shipment numbers. Tey also are exempt from the Year Replacement OE tarifs on Chinese tires. 2015 204.5 48.1 An estimated 2.4 million 2014 206.6 46.3 replacement ST tires are shipped annually (about 12 2013 201.6 44.0 million trailers are registered). 2012 192.0 40.5 ST pricing generally ranges 2011 196.5 36.0 from around $18 (Chinese imports) to $130 (Goodyear), LIGHT TRUCK (LT) TIRES and sizes from 13 inches to 16 2015 29.0 4.6 inches. 2014 28.8 4.8 The market is relatively steady, with 800,000 new trail2013 28.3 4.4 ers coming into the market 2012 28.3 4.2 every year. However, since 2011 28.6 4.1 RVs are expected to increase in number over at least the next MEDIUM/HEAVY year, the number of trailers TRUCK TIRES that go with RVs will probably 2015 18.0 6.3 increase in number. 2014 17.3 5.8 Te manufacturer’s warranty seems to be about six years 2013 15.7 5.0 (there is no mileage warranty), 2012 16.0 5.3 which matches the average 2011 17.0 4.9 replacement cycle of an ST tire.
46
1929
1932
1938
1942
1946
1952
TOTAL Historical shipment trends Replacement and OE passenger tire shipment trends over the last 85 years difer because the factors on which they are based difer. Replacement shipments are more cumulative because our population continues to grow, resulting in more vehicle registrations. In 2013, there were 256 million registered motor vehicles. More than half of them were automobiles — not including pickup trucks. OE tire shipments, in contrast, are based solely on yearly vehicle production. With that said, historical events ofen afect trending for both in the same way (see Chart 2). During World War II,
MTD January 2016
Chart 2
U.S. PASSENGER TIRE SHIPMENTS 1929-2015 Arab Oil Embargo
300 The Great Recession
Black Monday
250
200
150
100
50
0 1970
1973
1981
REPLACEMENT production of all tires fell dramatically because of a severe rubber shortage. Te U.S. government rationed tires to ensure there was enough rubber for military and vital civilian purposes. Te natural rubber shortage did have a positive lasting efect on our industry: It accelerated eforts to develop synthetic rubber. When external forces raise demand for rubber, as they did during the Korean Confict in the early 1950s and the Arab Oil Embargo in 1973-74, tire prices naturally rise, which can lead to a decrease in shipments. Te oil embargo also fed into a recession which lasted into 1975. Trending seems to indicate the tire industry, especially the
www.moderntiredealer.com
2000
1987
2008
2015
OE replacement segment, weathers recessions well. At the height of the Great Recession in 2009, replacement passenger tire shipments dropped only 11%. And while vehicle owners held of buying tires, they still needed to keep up with automotive services. At the same time, new vehicle sales fell dramatically, and OE shipments decreased 51% as a result. Both segments were afected negatively by the 1979 oil crisis, which was caused by decreased oil output in the wake of the Iranian Revolution. During the peak of the recession that followed, the nationwide unemployment rate was 10.8%, the highest since the Great Depression.
47
Facts section: shipments Chart 4
Chinese tire tarifs, then and now From Sept. 26, 2009, to Sept. 26, 2012, consumer tire imports from China were saddled with extraordinary tarifs. Shipments from China decreased considerably (see Chart 3) and pricing on low-cost radials increased dramatically. New tire tarifs, retroactively applied more than a year ago and signifcantly higher than 35%, are having an even greater efect on shipments from China. Pricing, however, has not been afected this time around. China accounts for close to 44% of the consumer tires produced globally, says David Shaw, CEO and head of research for Tire Industry Research. Tat will steadily increase to more than 46% in 2018. ■
WORLD LEADERS IN NEW TIRE SALES (fscal year 2015; in billions of U.S. dollars1) Tire company
2015
2014
Bridgestone Corp.
$27.1
$29.2
Groupe Michelin
$22.0
$24.4
Goodyear Tire & Rubber Co.
$16.0
$17.6
Continental AG
$11.4
$13.0
Pirelli & Cie SpA
$7.0
$8.0
Sumitomo Rubber Industries Ltd.
$6.1
$6.9
Hankook Tire Co.
$5.7
$6.4
Yokohama Rubber Co.
$4.2
$4.7
Cheng Shin Rubber Ind. Co. Ltd.3
$3.8
$4.2
Cooper Tire & Rubber Co.
$2.9
$3.4
Toyo Tire & Rubber Co. Ltd.
$2.6
$2.9
Kumho Tire Co. Inc.2
$2.3
$3.2
2
Chart 3
U.S. CONSUMER TIRE IMPORTS FROM CHINA (in millions of units) Year
Units
Yr./yr. change
2015
30.2
-50.0%
U.S./CANADIAN LEADERS IN NEW TIRE SALES
2014
60.5
+17.9%
(fscal year 2015; in billions of U.S. dollars1)
2013
51.3
+57.8%
Tire company
2012
32.5
+25.0%
2011
26.0
- 16.1%
2010
31.0
- 27.9%
2009
43.0
-7.5%
2008
46.5
2007
40.5
2006
27.0
2005 2004 2003
2015
2014
Bridgestone Americas Inc.
$8.1
$8.8
Goodyear Tire & Rubber Co.
$7.2
$7.4
Michelin North America Inc.
$6.6
$7.3
Continental Tire the Americs LLC
$2.6
$2.9
+14.8%
Cooper Tire & Rubber Co.
$2.2
$2.5
+50.0%
Toyo Tire Holdings of America Inc.
$1.2
$1.4
+28.0%
Hankook Tire America Corp.
$1.2
$1.3
21.0
+44.0%
Yokohama Tire Corp.
$1.2
$1.3
14.6
+36.0%
Sumitomo Rubber Industries Ltd.4
$.8
$.9
10.7
+32.0%
Pirelli Tire North America Inc.
$.56
$.64
Kumho Tire U.S.A. Inc.
$.5
$.7
Source: U.S. government, MTD fgures
From July 1972: Akron tire dealers offered free radial tire tryouts to customers. Radials represented only 7% of the replacement passenger tire market in 1972.
48
1 The average exchange rates between foreign currencies and the U.S. dollar difered from 2014 to 2015 as follows: European euro, up 19.5%; Japanese yen, up 14.4%; Korean won, up 7.5%; Taiwan dollar, up 4.6%. 2 Yokohama Rubber Co. and Kumho Tire Co. Ltd. signed a Memorandum of Understanding on Nov. 29, 2013. As part of the strategic alliance, the companies will share resources to “jointly pursue research and development of tire related technologies to compete with the Big 3,” according to Kumho. 3 The Cheng Shin Rubber USA Inc. subsidiary does business as Maxxis International. 4 Sumitomo Corp. of America is run independently of Sumitomo Rubber Industries.
MTD January 2016
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Facts section: market share
Tire brand market share Goodyear remains a strong No. 1
F
or as long as Modern Tire Dealer has been tracking domestic passenger tire brand share, the Goodyear brand has been number one by a wide margin. When we added a light truck tire brand share chart, Goodyear again was the clear leader. Te percentages fuctuate a litle from time to time, but in general they have remained steady. In 1972, for example, the Goodyear brand accounted for 13% of the replacement passenger tire market. In 2015, it again came in at 13% (see Chart 6). What has changed are the other brand positions. Second-place Firestone held a 9.5% share in 1972; it climbed to 10.5% in 1999, but following the 6.5 million Firestone tire recall in 2000, it dropped to 7.5%. Forty-three years ago, Sears was third on the list with 8.5% of the market. Atlas was fourth at 4.5%. Neither brand has as much as 1% of the market today. Brands like Wards, Penney’s, Armstrong, Gulf, K-mart, Mobil and Western Auto are no more. Te Michelin brand represented 1.5% of the market then. It is now the second most popular passenger tire brand with a share of 9.5%. Bridgestone did not even account for 0.5% of the market in 1972; today, it is third with an 8% share. However, as a company, Bridgestone Americas Inc. accounts for the greatest share of not only the replacement passenger tire market, but also the consumer (passenger and light truck) tire market. Its three main brands represent 38.1 million tires, ahead of Michelin North America Inc. (37.9 million) and Goodyear Tire & Rubber Co. (36.2 million). Te three companies combined account for 48% of the replacement consumer tire market. “Domestically, we expect all three will remain extremely disciplined on the pricing front, and we anticipate additional investments will be made on the e-commerce front,” says Nick Mitchell, senior vice president of research for Northcoast Research Holdings LLC. “We anticipate Bridgestone will Chart 5
CONSUMER TIRE MARKET SHARE BREAKDOWN BY BRAND CATEGORY (based on 233.5 million units)
Imports 19.3% Private 9.0% Associate 7.0% Major 64.7%
Chart 6
2015 U.S. REPLACEMENT CONSUMER TIRE BRAND SHARES PASSENGER TIRES (based on 204.5 million units) Brand
% of total
LIGHT TRUCK TIRES (based on 29.0 million units) Brand Goodyear
% of total
Goodyear
13.0%
Michelin
9.5%
BFGoodrich
12.0% 8.5%
Bridgestone
8.0%
Bridgestone
7.5%
Firestone
7.5%
Michelin
7.5%
Cooper
5.5%
Firestone
7.0%
BFGoodrich
5.0%
Cooper
6.5%
Hankook
4.0%
General
5.0%
Continental
4.0%
Hankook
4.0%
Yokohama
4.0%
Multi-Mile
4.0%
Falken
3.5%
Toyo
4.0%
General
3.0%
Yokohama
4.0%
Pirelli
3.0%
Kumho
2.5%
Toyo
3.0%
Pirelli
2.5%
Kumho
2.5%
Dunlop
2.0%
Multi-Mile
2.5%
Hercules
2.0%
Nexen
2.5%
Mastercraft
2.0%
Primewell
2.0%
Uniroyal
2.0%
Sumitomo
2.0%
Continental
1.5%
Dunlop
1.5%
Cordovan
1.5%
GT Radial
1.5%
Kelly
1.5%
Hercules
1.5%
Maxxis
1.5%
Mastercraft
1.5%
Nexen
1.5%
Nitto
1.5%
Big O
1.0%
Uniroyal
1.5%
Delta
1.0%
Big O
1.0%
Eldorado
1.0%
Cordovan
1.0%
Falken
1.0%
Delta
1.0%
GT Radial
1.0%
Fuzion
1.0%
Others
5.5%
Kelly
1.0%
Sailun
1.0%
Sigma
1.0%
Others
3.0%
Brands must have at least 1% of the passenger or light truck tire market to be listed at 1%.
52
MTD January 2016
Quik-Link: 800-687-1557 ext. 11125
Facts section: market share continue to get more aggressive with its retail assets, including sharper prices at its Firestone Complete Auto Care centers. We anticipate Goodyear will improve flls rates by importing more product from its foreign plants. “Overall, we expect the group to post a low-single digit increase in replacement volumes, led by strong trends in the HVA (high value-added) category.” In 2015, Tier 1 and Tier 2 brands gained market share at the expense of value brands. Tier 1 tires are defned as the major tire companies’ premium brands. Tier 2 tires are defned as upper- and middle-market brands.
Original equipment market While domestic replacement consumer tire shipments were down by 2 million units, original equipment shipments in the U.S. were up 3.1% (passenger tire units were up 3.8%). Domestic light vehicle production trended the same way: It increased 3.4%, to 12.1 million vehicles, in 2015 vs. 2014. LMC Automotive Ltd. forecasts a 2.7% increase in North American production in 2016, with additional increases every year through at least 2022. LMC cites added capacity (a new Volvo plant in the U.S., new Toyota and Volkswagen plants in Mexico) as one of the reasons for its positive outlook.
Chart 7
2015 ORIGINAL EQUIPMENT BRAND SHARES (U.S./Canadian light vehicles, excluding imports) BMW
CHRYSLER/FIAT (FCA) Goodyear
53%
Pirelli
30%
Continental
35%
Michelin
15%
Bridgestone
24%
Michelin
30%
Firestone
7%
Continental
22%
Goodyear
15%
BFGoodrich
5%
Dunlop
20%
BFGoodrich
8%
Continental
5%
Michelin
4%
Toyo
6%
Bridgestone
4%
Bridgestone
3%
Pirelli
3%
Michelin
42%
Dunlop
2%
General
2%
Goodyear
32%
General
1%
Kumho
2%
Bridgestone
17%
Nexen
2%
Continental
3%
Bridgestone
67%
Yokohama
2%
Firestone
3%
Continental
30%
Hankook
2%
Goodyear
Yokohama
1%
FORD
HONDA
SUBARU
3% TESLA
Michelin
23%
Goodyear
21%
Michelin
49%
Continental
19%
Hankook
39%
Goodyear
49%
BFGoodrich
10%
Kumho
32%
Pirelli
Pirelli
9%
Nexen
15%
General
8%
Continental
14%
Hankook
7%
Bridgestone
2%
Continental
Toyo
1%
Pirelli
GENERAL MOTORS
54
NISSAN
HYUNDAI / KIA
2% TOYOTA
Bridgestone
33%
Michelin
24%
29%
Goodyear
13%
26%
BFGoodrich
8%
Dunlop
15%
Dunlop
7%
MERCEDES-BENZ
Goodyear
39%
Bridgestone
11%
Firestone
4%
Michelin
20%
Michelin
10%
Toyo
4%
Bridgestone
17%
Goodyear
9%
General
3%
Firestone
13%
Continental
2%
Yokohama
2%
MITSUBISHI
Continental
6%
Nexen
50%
Hankook
3%
Toyo
50%
General
2%
VOLKSWAGEN Continental
53%
Hankook
32%
Bridgestone
15%
MTD January 2016
Quik-Link: 800-687-1557 ext. 11126
Facts section: market share Chart 9
U.S./CANADIAN OE CONSUMER TIRE BRAND SHARES (excluding imported vehicles)
Hankook (Dynapro HT), Bridgestone Americas (Firestone Destination LE2) and Goodyear (Wrangler All-Terrain Adventure) are supplying select models of the 2016 Toyota Tacoma with tires.
General Motors Corp. remained the vehicle market share leader, but it no longer dominates its domestic or transplanted foreign competitors. In 2005, GM makes and models represented 31% of the market, followed by Ford Motor Co. with 22.2%. DaimlerChrysler, now FCA USA LLC, was third at 17.3%, Toyota Motor Sales U.S.A. Inc. was fourth at 10.9%, and American Honda Motor Co. was ffh at 9.3%. In 2015, the same fve players remain in the same order. However, the gap between them has narrowed.
Brand
2015
2014
Goodyear
26.1%
25.6%
Michelin
20.8%
20.7%
Bridgestone
12.7%
12.7%
Continental
11.2%
11.0%
Hankook
5.4%
5.1%
Firestone
4.6%
4.8%
BFGoodrich
4.2%
4.3%
Pirelli
3.7%
3.5%
Kumho
3.0%
2.9%
General
2.6%
2.8%
Dunlop
1.8%
2.1%
Nexen
1.8%
1.6%
Toyo
1.5%
1.4%
Others
0.6%
1.1%
Chart 10
2015 BRANDS LISTED BY THE MTD 100
U.S./Canadian light vehicle production market share GM 18.7% Ford 18.4% Chrysler 14.7% Toyota 13.4% Honda 11.6% Hyundai/Kia 8.7% Nissan 6.5% BMW 2.8% Mercedes 5.2%
(Total outlets: 5,804) Rank by No. of dealers
More than one in four light vehicles, based on U.S. and Canadian production, rolled of the assembly lines with either Goodyear or Dunlop tires on them (see Chart 9). Michelin and BFGoodrich combined for 25% of the OE brand market, followed by Bridgestone and Firestone with 17.3% — roughly one in every six vehicles. Continental Tire the Americas LLC, with its Continental and General brands, accounted for nearly 14% of the market. ■
1. Michelin
81/4,752
2. BFGoodrich
72/4,448
3. Goodyear
68/4,507
4. Continental
63/3,807
5. Bridgestone
60/4,263
6. Firestone
53/2,689
7. Yokohama
52/3,803
8. General
50/3,317
9. Cooper
46/3,467
In 1968, fve brands accounted for 100% of Ford Motor Co.’s original equipment market share: Firestone (47%), Goodyear (27%), BFGoodrich (12%), General (7%) and Uniroyal (7%). In 2015, 10 brands supplied Ford with OE tires.
10. Hankook
43/3,606
10. Uniroyal
43/2,190
12. Dunlop
42/3,724
Brand
Chart 8
FORD OE MARKET SHARE: FIVE BRANDS, SIX DECADES
Goodyear
1975 26.0%
1985 22.5%
1995 28.0%
2005
2015
13. Kelly
41/2,091
27.0%
21.0%
14. Pirelli
33/3,900 29/2,257
Firestone
39.0%
39.5%
30.0%
0.0%
0.0%
15. Toyo
Uniroyal
10.0%
6.0%
4.0%
1.0%
0.0%
16. Kumho
27/2,551
BFGoodrich
10.0%
0.0%
0.5%
5.0%
10.0%
17. Falken
26/3,166
General
10.0%
10.5%
16.5%
10.0%
8.0%
18. Fuzion
21/825
Others
5.0%
21.5%
21.0%
57.0%
63.0%
19. Nexen
20/1,452
20. Nitto
17/2,119
Goodyear was the OE market leader in 1968 at 31%.
56
Dealers/ outlets
MTD January 2016
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Facts section: commercial
Commercial tire market New truck tires were plentiful, but not as proftable
D
emand for new truck tires was high in 2015, and independent tire dealers delivered. Compared to 2014, replacement shipments were up 4%, to 18 million units. In addition, imports from China increased 14.6%, to a record high of 9.4 million units (see Chart 12). Unfortunately, proftability sufered because of those very imports. Te price of a new Chinese truck tire kept dropping as the year went on. Sofening demand in the second half of 2015 only exacerbated the problem. How bad did it get? Even with the Federal Excise Tax included, new Chinese truck tires were selling for less than the cost to retread a tire. Retreaders were asking for their own tarif treatment. Overall, the average cost of a new truck tire dropped nearly 7%, from $381.50 to $355.55. According to David Shaw, CEO and head of research for Tire Industry Research, China has the capacity to produce 150 million truck and bus tires annually. “Tere is capacity in China to make every single truck tire that the world needs,� he says.
Chart 12
U.S. TRUCK TIRE IMPORTS FROM CHINA (in millions of units) Year
Units
Yr./yr. change
2015
9.4
+14.6%
2014
8.2
+30.1%
2013
6.3
+0.1%
2012
6.3
+13.5%
2011
5.5
+37.5%
Chart 13 Chart 11
2000-2015 TRUCK TIRE REPLACEMENT MARKET BREAKDOWN (Before 2009, the number of retreaded truck tires produced last topped new truck tire shipments in 2004.)
20
15
10
5
0
1997 2000 2003 2006 2009 2012 2015
(based on 18.0 million units) Bridgestone
17.5%
Michelin
17.5%
Goodyear
12.0%
Yokohama
9.5%
Firestone
8.0%
Continental
5.0%
Double Coin
4.0%
Hankook
3.5%
General
3.0%
Hercules
2.5%
Toyo
2.5%
BFGoodrich
2.0%
Dynatrac
2.0%
Roadmaster
2.0%
Sailun
2.0%
Dunlop
1.5%
Gladiator
1.0%
Kelly
1.0%
Kumho
1.0%
Retreaded truck tires
New truck tires
Sumitomo
1.0%
(Shipments in millions)
(Shipments in millions)
Others
5.0%
In 2015, the average price of a retreaded truck tire was $232.43. The average price of a new truck tire was $355.55.
58
2015 U.S. REPLACEMENT MEDIUM/HEAVY TRUCK TIRE BRAND SHARES
Brands must have at least 1% of the market to be listed at 1%.
MTD January 2016
Quik-Link: 800-687-1557 ext. 11128
Facts section: commercial Although too much of the capacity is bias-ply, that is changing, he said. China also is adding truck tire capacity. Retreaded truck tire shipments were down nearly 4%, but still a healthy 48 million units. Tey accounted for $3.4 billion in sales compared to $3.6 billion last year. Despite the stif competition from China, retread prices decreased only 2.1%, from an average of $237.48 to $232.43. Te drop in the number of retreaded truck tires almost wiped out the gain in new truck tire shipments. Combined, they totaled 32.8 million units versus 32.7 million units the previous year (see Chart 11 on page 58). From 1998 through 2003, the number of retreaded truck tires outpaced new truck tire shipments every year. In the last 12 years, truck tires have led the way every year but one: 2009.
Farm tire market share Te Firestone brand is the domestic market leader when it comes to radial rear farm tires. It accounts for 40% of original equipment shipments in the U.S. (see Chart 15) and 32.5% of replacement shipments. At the OE level, the Goodyear brand, produced and marketed by Titan Tire Corp., is second with 33% of the market, followed by Michelin at 14%. At the replacement level, BKT has 20.5% of the market, followed by Michelin at 17.5%. Titan leads the way with 35% of the OE bias rear farm tire market. BKT is the replacement segment leader at 40%. ■ Chart 15
2015 U.S. OE FARM TIRE BRAND SHARES RADIAL REAR (based on 210,000 units)
Chart 14
2015 U.S. MARKET SHARE, RETREADED TRUCK TIRES (based on 14.8 million units)
Bridgestone (Bandag) 42.5% Goodyear 24.0% Michelin 24.0%
Firestone
40.0%
Goodyear
33.0%
Michelin
14.0%
Titan
5.0%
BKT
3.0%
Trelleborg
2.0%
Mitas
1.0%
Others
2.0%
Total
Marangoni 5.0% Continental 2.0% Others 2.5%
100.0%
BIAS REAR (based on 326,000 units) Titan
35.0%
Firestone
30.0%
Goodyear
25.0%
Alliance
6.0%
BKT
1.0%
Trelleborg
1.0%
Others
2.0%
Total
100.0%
SMALL FARM (based on 350,000 units) Goodyear
32.5%
Titan
20.5%
Firestone
15.0%
Carlisle
12.0%
BKT
7.0%
Alliance
6.5%
American Farmer
2.0%
Trelleborg
1.5%
Mitas
1.0%
Others From April 1974: Tire shows have featured retreaded tire “beauty contests” for years. The latest was at the 2015 North American Tire & Retread Expo.
60
Total
2.0% 100.0%
MTD January 2016
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Facts section: prices and sizes
Tire pricing and sizes MTD breaks down 50 years of popularity
I
n 1966, when 13-, 14- and 15-inch sizes were commonplace at the replacement level, two of the most popular tire sizes were 6.95x14 and 7.35x14. Te 6.95x14 was original equipment on vehicles like the Chevy Chevelle, Ford Fairlane and the Slant 6 Pontiac Tempest; the 7.35x14 was standard on the Dodge Coronet, Plymouth Belvedere and the V-8 Tempest. Te tires cost an average of $31.53 and $32.70, respectively. Were those prices high or low in their era compared to today’s pricing? To fnd out, we frst took the infation rate over the last 50 years into consideration. 1966 pricing $31.53 (6.95x14) $32.70 (7.35x14)
2015 pricing $230.96 $239.53
radial, 60-series counterparts, courtesy of “Te Old Timers Tire Guide” from Tire Guides Inc. (www.tireguides.com):
6.95x14 = 215/60R14
7.35x14 = 235/60R14
Te average advertised price for a 215/60R14 tire in 2015 was comparatively more than $100 lower — $124.04, according to Tire Intelligence LLC. Te average price for a 235/60R14 tire was $122.26. Chart 16
2015 AVERAGE ADVERTISED TIRE PRICES (in the U.S.) Major brand
Low-cost
Overall
205/55R16
$136.17
$77.02
$123.57
215/55R17
$152.84
$89.30
$137.41
1920 tire pricing
215/60R16
$126.43
$78.23
$112.82
235/75R15
$125.03
$90.66
$113.53
Goodyear Tire & Rubber Co. introduced the frst allseason tire, the Tiempo, in 1977. However, it was advertising “all-weather tread casings” in 1920. Its size 30x3 clincher-style fabric all-weather tire cost $19.70 without the tube in 1920. Taking the infation rate into consideration, that same tire would cost $233.78 today.
275/65R18
$216.08
$146.62
$202.67
LT225/75R16
$181.00
$122.18
$165.50
LT245/75R16
$193.85
$134.72
$179.33
LT245/75R17
$210.60
$156.42
$199.09
31x10.50R15
$173.84
$130.56
$164.05
Ten we converted those bias-ply sizes to their modern-day
Size
Source: Tire Intelligence LLC, www.tire-intelligence.com
From March 1974: Dealers believed the third round of price hikes in four months was a refection of the U.S. economy.
62
MTD January 2016
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Facts section: prices and sizes Chart 17
MOST POPULAR DOMESTIC OE PASSENGER AND LT TIRE SIZES 2014 OE P-metric/metric
2014 OE light truck (LT)
Size
% of total
Size
% of total
P215/55R17
5.0%
LT245/75R17
21.7%
P215/60R16
3.4%
LT245/75R16
12.0%
215/55R17
2.7%
LT225/75R16
11.4%
P265/70R17
2.7%
LT265/70R18
10.3%
2013 OE P-metric/metric
2013 OE light truck (LT)
Size
% of total
Size
% of total
P215/55R17
6.1%
LT245/75R17
21.9%
P265/70R17
4.0%
LT245/75R16
14.0%
P275/55R20
3.2%
LT225/75R16
11.3%
P275/65R18
3.1%
LT265/70R17
8.9%
2012 OE P-metric/metric
2012 OE light truck (LT)
Size
% of total
Size
% of total
P215/55R17
6.1%
LT245/75R17
22.1%
P265/70R17
4.4%
LT245/75R16
14.7%
P215/60R16
3.8%
LT225/75R16
11.1%
P275/65R18
3.4%
LT265/70R18
8.1%
Source for Charts 16-18: Rubber Manufacturers Association
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Te most popular sizes in 2015 are...
Chart 18
TOP U.S. PASSENGER TIRE SIZES, 2015
For the fourth year in a Replacement OE row, size P215/55R17 is the most popular OE size. 215/55R17 205/55R16 Tat may continue over the 225/65R17 215/60R16 next three or four years; 215/60R16 195/65R13 it has multiple 2016 OE ftments (Chrysler 300, Fiat 500X, Hyundai Sonata, Honda Accord and HR-V) and strong past ftments (Volkswagen Beetle and Passat, Kia Soul, Honda Accord, and Chevy Cruze and Volt). It also ranks as a popular replacement size, (ninth in 2014) and is expected to rise up the Top 10 list as the OE tires need to be replaced. Advertised pricing breakdown, 215/55R17 Speed Major LCR Diference V-rated $156.46 $92.10 70.0% H-rated $151.02 $99.70 51.4% T-rated $139.04 $105.74 31.5%
Overall $141.24 $144.96 $132.78
Source: Tire Intelligence LLC
Te top 10 OE passenger tire sizes represented 28.9% of the market in 2014, compared to 36.3% in 2011, according to the Rubber Manufacturers Association. Te top 10 replacement sizes accounted for 23.2% of the shipments in 2014, compared to 22.5% in each of the previous three years. â–
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MTD January 2016
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Facts section: distribution/inventory
Distribution channels Without wholesalers, no dealer can handle 600 sizes
T
here were 348 radial passenger tire sizes in the Chart 19 U.S. in 2015, according to the Tire & Rim As- NEW P-METRIC AND LT TIRE SIZES/SKUS IN 2016 sociation. Tat doesn’t take into account all of P215/45R16 LL P225/55R19 XL P245/50R20 XL the European metric sizes or speed ratings, or even the P295/25R19 SL P235/40R19 SL three-peak mountain snowfake symbol. So potential P305/35R20 SL SKUs could be at least 10 times that. 35x11.50R18LT LRE 35x11.50R20LT LRE 37x11.50R20LT LRE Add in 248 radial and bias LT sizes, and the need 38x13.50R22LT LRE LT215/80R16 LRD LT285/65R17 LRE for wholesale tire dealers becomes clear. Te average LT255/70R16 LRE LT305/40R22 LRE/F independent tire dealer buys from fve wholesale dis- LT225/65R17 LRD tributors. Te largest in North America is American Tire Source: Tire & Rim Association Distributors Inc., which has 138 servicing distribution centers (115 in the U.S. and 23 in Canada) Chart 20 and three mixing centers. CONSUMER TIRE DISTRIBUTION CHANNEL MARKET SHARE Here is the breakdown of passenger (based on retail sales) tire sizes by rim diameter, ranging from P145/80R12 to P275/25R26: 39.0% 12-inch: 1 15-inch: 56 18-inch: 65 21-inch: 2 24-inch: 6
13-inch:13 16-inch: 57 19-inch: 25 22-inch: 7 26-inch: 1
14-inch: 26 17-inch: 58 20-inch: 29 23-inch: 2
Independent tire dealers
60.5% 29.0%
Mass merchandisers
13.0% 0.0%
Te 15- through 18-inch sizes account for nearly 68% of all passenger tire sizes. Radial light truck tire sizes range from LT175/75R14 to LT335/35R26. Tere are also three 85-series sizes. Radials account for 95% of all LT sizes; that includes 68 fotation sizes. Tere was no size atrition in the industry last year, so the 15 new consumer sizes you might see in your dealership this year (see Chart 19) brings the total number of sizes to 611.
Warehouse clubs
2.0%
Auto dealerships
8.0% 10.0%
Tire companyowned stores
7.5% 20.0%
Miscellaneous outlets
Tire dealers dominate distribution Had Pep Boys-Manny, Moe & Jack been purchased by Bridgestone Americas Inc., tire company-owned stores would have increased their tire distribution market share by two percentage points at the expense of mass merchandisers. Instead, the percentages remained the same as last year. With 60.5% of the market, independent tire dealers sell more consumer tires to the end user than any other distribution channel. It has been that way for a long time, although the gap between frst and second place wasn’t as dramatic in 1975, when tire dealers accounted for 39% of market (see Chart 20). In 1922, when tire dealers were almost the only game in town, their market share was 98%! When you take wholesaling into account, independent tire
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9.0%
2.0%
0
10
20
1976 percentage
30
40
50
60
70
80
2015 percentage
dealers have an even greater share, because they are the main suppliers to franchised auto dealers (think Dealer Tire LLC), mufer shops and service stations.
Consumer tire distribution channel market share Initial channel Independent dealers Co.-owned stores Miscellaneous
2015 78.0% 8.0% 14.0%
1995 68.5% 9.5% 22.0%
“Miscellaneous” for the chart above includes mass merchandisers, warehouse clubs, car dealers, auto parts chains, mufer shops and oil companies. ■
MTD January 2016
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Facts section: plant capacities
Union has lost some leverage
Y
early tire capacity, not production, in North America totaled 310.1 million tires at 59 plants as of Jan. 1, 2016. Tat’s up 0.7% compared to 2015, when capacity was 307.9 million tires. (Te total does not include race or aviation tires.) In the United States, annual capacity increased one-half percent, to 249.5 million units. Tat was a year-over-year increase of 1.4 million tires. Canadian tire plant capacity decreased 2.8%, to 25.3 million tires a year, the third year in a row it has decreased. In contrast, Mexican plant capacity increased 4.4%, to 35.2 million tires annually; since 2002, it has increased 156%. In the next two years, another three consumer tire plants are expected to come on-line in North America, which will bring the total number to 62. Only fve years ago, there were 51 plants. Hankook Tire America Corp. will begin producing tires in Clarksville, Tenn., later this year, while Goodyear Tire & Rubber Co. will open its plant in
Plant closings (2001-2011) Since 2000, 10 consumer tire plants in the U.S. have been closed. Goodyear: Union City, Tenn. (2011), Tyler, Texas (2008), and Huntsville, Ala. (2003). Continental: Charlotte, N.C. (2006), and Mayfeld, Ky. (2005). Michelin: Opelika, Ala. (2009), and Reno, Nev. (2002). Bridgestone: Oklahoma City, Okla. (2006). Cooper Tire: Albany, Ga. (2009). Pirelli: Hanford, Calif. (2001). The plants produced an estimated 263,000 passenger and light truck tires a day.
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Chart 21 NORTH AMERICAN PLANT CAPACITIES as of Jan. 1, 2016 (in thousands of units) PasLight senger truck Truck Others Plant location/ Nonper per per per Year constructed union ISO QS day: day: day: day: Bridgestone Americas Inc. Aiken, S.C., 2013 x 0.0 0.0 0.0 0.03 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 Wilson City, N.C., 1974 x x x 32.0 2.0 0.0 0.0 Aiken, 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: 80.8 22.8 15.2 4.89 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 5.4 1.1 0.0 0.0 Mount Vernon, Ill., 1973 x x x 29.0 4.0 8.0 0.0 Total: 34.4 5.1 8.0 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. 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 64.0 0.0 0.0 0.0 Topeka, Kan., 1945 x x 0.0 0.5 5.5 0.1 Medicine Hat, Alberta, 1960 x x 0.0 0.0 0.0 13.0 Napanee, Ontario, 1990 x x x 19.0 0.0 0.0 0.0 Total: 128.0 22.5 16.5 15.1 GTY (General/Yokohama) Mount Vernon, Ill., 1988 x x x 0.0 0.0 3.9 0.0 Hankook Tire America Corp. Clarksville, Tenn., 2016 x 0.0 0.0 0.0 0.0 Kumho Tire Co. Inc. Macon, Ga., 2015 x 0.01 0.0 0.0 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 1.1 4.1 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 Greenville, S.C. (Tweel), 2014 x 0.0 0.0 0.0 0.07 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
Total 0.03 6.2 9.0 0.29 4.57 34.0 29.7 16.5 8.0 15.4 123.69 26.0 15.0 41.0 6.5 41.0 47.5 23.0 32.0 42.0 97.0 13.0 41.0 26.0 64.0 6.1 13.0 19.0 182.1 3.9 0.0 0.01 44.0 5.2 30.5 28.0 7.0 0.07 24.0 0.1
MTD January 2016
Passenger per day: 0.0 0.0 23.0
Light truck per day: 0.0 0.0 7.0
Truck Plant location/ Nonper Year constructed union ISO QS day: Spartanburg, S.C., 1978 x x 7.0 Starr, S.C., 2013 x 0.0 Tuscaloosa, Ala., 1945 x 0.0 Bridgewater, Nova Scotia, Canada, 1973 x x 11.0 3.0 0.0 New Glasgow, Nova Scotia, 1971 x x 2.0 0.0 0.0 Waterville, Nova Scotia, 1982 x x 0.0 0.0 0.0 Queretaro, Mexico x 6.0 0.0 0.0 Total: 158.6 32.1 7.0 Pirelli Tire North America Inc. Rome, Ga., (MIRS), 2002 x x 1.2 0.5 0.0 Guanajuato, Mexico, 2011 x 4.2 1.3 0.0 Total: 5.4 1.8 0.0 Specialty Tires of America Inc. Indiana, Pa., 1915 x 0.92 0.18 0.05 Unicoi, Tenn., 1997 x 0.3 0.5 0.05 Total: 1.22 0.68 0.1 Sumitomo Rubber Noth America Inc. Buffalo, N.Y., 1923 x 3.2 2.1 2.3 Titan Tire Corp. Bryan, Ohio, 1967 x x 0.0 0.0 0.0 Des Moines, Iowa, 1943 x 0.0 0.0 0.0 Freeport, Ill., 1964 x x 0.0 0.0 0.0 Total: 0.0 0.0 0.0 Toyo Tire North America Manufacturing Inc. White, Ga., 2005 x x 8.8 8.8 0.0 Trelleborg Wheel Systems Spartanburg, S.C., 2015 x 0.0 0.0 0.0 Charles City, Iowa, 2012 0.0 0.0 0.0 Total: 0.0 0.0 0.0 Yokohama Tire Corp. West Point, Miss., 2015 x x x 0.0 0.0 1.0 Salem, Va., 1968 25.7 1.1 0.0 Total: 25.7 1.1 1.0 Grupo Carso/Euzkadi (Continental AG) San Luis Potosi, Mexico 15.0 5.0 0.0 JK Tyre & Industries (formerly CIA Hulera Tornel) Mexico City, Mexico 0.0 1.0 1.0 Tultitlan, Mexico 7.0 1.5 0.5 Tacuba, Mexico 8.0 2.5 0.0 Total: 15.0 5.0 1.5 Corporacion de Occidente SA de CV (Cooper Tire) Guadalajara, Mexico, 2005 x x x 10.0 7.2 2.8 U.S. totals: Canadian totals: Mexican totals: TOTAL:
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448.63 41.3 69.2 559.13
105.08 10.2 22.9 138.18
54.0 0.0 4.3 58.3
Others per day: 0.0 0.01 0.0
Total 7.0 0.01 30.0
0.0
14.0
0.0 5.0 0.0 5.18
2.0 5.0 6.0 202.88
0.0 0.0 0.0
1.7 5.5 7.2
2.35 .25 2.6
3.5 1.1 4.6
5.0
12.6
0.33 11.25 8.1 19.68
0.33 11.25 8.1 19.68
0.0
17.6
0.03 0.5 0.53
0.03 0.5 0.53
0.0 0.0 0.0
1.0 26.8 27.8
0.0
20.0
0.14 0.0 0.0 0.14
2.14 9.0 10.5 21.64
0.0
20.0
75.98 18.0 .14 94.12
683.69 69.5 96.54 849.73
San Luis Potosi, Mexico, in mid-2017. Giti Tire (USA) Ltd.’s manufacturing facility in Chester County, S.C., also is expected to be producing tires in 2017. Of the 59 tire plants in operation, 34 of them, or 57.6%, are non-union. Of the 62 plants in North America in 1976, nearly all of them were unionized. Forty years ago, the former Firestone Tire & Rubber Co. owned 11 manufacturing facilities in the U.S., more than any other tire company (Goodyear controlled seven plants, while its Kelly-Springfeld subsidiary ran four). However, that number slowly dwindled following a 140-day industry strike by the United Rubber Workers (now part of the United Steelworkers) in 1976. By 1987, Firestone was producing tires in only fve domestic plants. During a strike of Firestone workers in 1988, a union representative atempted to foster strength among union workers by crediting the ’76 strike with closing six Firestone plants. The ’88 strike only lasted seven days. Tat same year, Bridgestone Corp. purchased Firestone. Since 1999, Bridgestone has opened three plants in North America, two in the U.S. (both in Aiken, S.C.) and one in Mexico. None of them are unionized. Bridgestone plans to increase the capacity at its non-union Wilson, N.C., plant by 3,000 tires a day by 2018 as part of a $164 million investment. ■ Trelleborg closed its industrial tire plant in Hartville, Ohio, in 2009. Yokohama Tire Corp. is already producing more tires in West Point, Miss., than it receives from its GTY joint venture with Continental Tire. Toyo took its name out of the General-Toyo-Yokohama collaboration in 2011. Cooper Tire & Rubber Co. has a 58% stake in its joint venture plant in Guadalajara, Mexico. In 2006, Canada produced 118,500 tires a day.
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feature
Te future of Discount Tire CEO Michael Zuieback says he sees no need to fx a 56-year-old company that isn’t broken By Bob Ulrich
W
hen he joined Discount Tire in 2001 as assistant vice president of strategic planning, Michael Zuieback focused on “capturing the values of the company,” as he puts it. Some might say he was over-qualifed, having served as treasurer of the Asia Pacifc region for Johnson Controls Inc.; senior manager of foreign exchange and international fnance for Sara Lee Corp.; and credit analyst at First American Bank. Founder and Chairman Bruce Halle had been trying to convince his stepson to join the business for years, but to no avail. Eventually he relented, choosing to greatly reduce a wicked travel schedule in order to spend more time with his family. As the new century was beginning, he felt it was time to see what he could accomplish at the close to 450-store retail chain based in Scotsdale, Ariz. Since then, he has continued to move the company forward,
frst as president, then as CEO. In an exclusive interview, Modern Tire Dealer sat down with Zuieback and Halle late last year to discuss their vision for Reinalt-Tomas Corp., which does business as Discount Tire. With more than 900 stores and 18,000 employees, Discount Tire ranks No. 1 on the Modern Tire Dealer 100 list of independent tire store chains in the U.S. Although both were careful not to reveal any specifc plans for Discount Tire in the future (“for competitive reasons,” said Halle), they seemed happy to address everything else asked of them. In doing so, they indirectly gave us a litle bit of insight into how they do business. As Zuieback said, “We stick to our own kniting.”
MTD: Does your company operate under a fve-year plan or 10-year plan? Or do you set your goals on a year-to-year basis? Zuieback: We look at the three-to-fve-year time horizon, and have some goals based around that. But as Bruce has said for years, it’s a good thing to deviate from those plans as things happen. Halle: You need a plan. If you don’t have a plan you’re not going any place. But again, it’s adjusted as we go. MTD: Have the tariffs on Chinese consumer tire imports had an efect on your business? Zuieback: Our people have been very proactive on that issue. A lot of our suppliers have moved out of those areas and are producing in other places today. It hasn’t been a big issue for us.
CEO Michael Zuieback personally gave some of the Discount Tire employees rides at the Las Vegas Motor Speedway prior to the Pit Crew Challenge, a yearly event hosted by Chairman Bruce Halle. Zuieback races in various spec Porsche series.
72
MTD: How would you describe current tire pricing? Zuieback: I think everybody is in a defationary market, with commodity prices dropping across the industry. Certainly that always makes it more of a challenge in a defationary market. But we’ve been able to manage on that, stay ahead of the curve. Tat’s always something you’d rather not have, but I think we’re probably bottoming out, and it won’t be long
MTD January 2016
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Discount Tire and we’ll start to see some raw material prices start to pick back up, and infation start to show itself a bit. Halle: Pricing is quite cyclical. Te industry has been that way forever.
MTD: Would you say our industry is somewhat recession proof? Halle: I think so. People still have to use tires in a recession, although we don’t do as well in recessionary periods as we do in up periods.
MTD: Is sports marketing an integral part of your marketing strategy? In the past, you’ve sponsored the Arizona Diamondbacks and the Phoenix Suns, and you are a Team Penske sponsor for NASCAR’s XFinity and Sprint Cup Series. Zuieback: NASCAR is the main focus. Beyond that we don’t really do a lot of sports advertising. Baseball and basketball was a fringe thing. (To see how Discount Tire partnered with the Suns in 2013, check out the “Road Trip with the Suns” television commercial at www.youtube.com/watch?v=ltVPDTa0ytQ.) Halle: Te NASCAR sponsorships are great for us because NASCAR has fans, both men and women, all over the country where we have stores. When we have a race car outside the store, everybody stops to look at it. Parents put the kids in it and take pictures. It’s a great atraction, and we think the marketing cost is reasonable. Zuieback: It relates and is relevant to our business.
hasn’t been, and make it clearer for everybody. We’re working on that constantly.
MTD: Do you have goals as to how many stores you’d like to open? Zuieback: If you look at our past five years or so, and continue down that road, I’d say between 30 and 50 stores a year. It has been working well for us.
MTD: Has the volatility in the real estate market died down as we’ve fought our way out of the recession? Halle: It’s starting to pick up around the country. For a while it was sof and we were able to buy land a litle cheaper. But it’s coming back up now. Most of the places we look at are geting close to where it was a few years ago before the downturn. MTD: Do you still personally check out every site, Bruce? Halle: Yes. MTD: How about you, Michael? I would think with your fnancial background, you would be heavily involved in business development with Bruce. Michael: I used to go on all of the trips, but now with my other responsibilities, I don’t have the opportunity to do that as much. We sit in on real estate meetings together and review that information, but he’s been doing it very well for 55 years, so what am I going to add? Not a lot. I sit there and learn. MTD: Given your size, do you bring outside consultants in on a regular basis to take a look at how you are running your company? Zuieback: No. We’ve never brought in a consultant for the operational side of the business. Halle: We’ve been successful all these years without outside counsel. So why do we need it? Let me put it another way. Years ago when we were a much younger company, and had 10 or 15 stores, no capital and were on the brink of being in business or not, no outside people were running in to advise me and help me. But afer you get big and successful, they all want to.
Vice Chairman and former CEO Gary Van Brunt (right) was on hand to watch Zuieback give hot laps.
MTD: Looking at your overall marketing budget, does your NASCAR sponsorship represent the biggest chunk? Zuieback: No. Te biggest expense is probably the Internet space, like most companies today. Te Googles of the world have it fgured out. Halle: If you look at all the diferent media, we advertise through a lot of them. MTD: How is Discount Tire dealing with social media? Zuieback: We embraced the Internet many years ago, and were early adopters in the social media space as well. You experiment with it, learn a bit, fnd out that one’s not so good, but this one’s good. You fnd your way through it. Everything is always over-hyped. Halle: We keep trying to take our message somewhere it
74
MTD: Does anything that happens in the tire industry surprise either of you? Halle: It doesn’t surprise us, but it’s interesting to see how the vendors are trying to get online now and go directly to consumers. Tat’s not a big surprise, it’s just happening and it will continue.
MTD: But that makes them competitors of yours. Halle: Yes, it sure does. Zuieback: It changes some of the dialogue from time to time. MTD: Is there anything you want to add about your goals at Discount Tire, Michael? Zuieback: Te gist of it is Discount Tire has been a very successful privately held company. We are going to stay the course. I have been blessed to be a part of the family and to help carry that on for all our wonderful people across our company. Tis is my responsibility. ■
MTD January 2016
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Focus on industry
More of-highway tires to come New plant in India will double BKT’s capacity By Bob Ulrich
‘Looking ahead is always our constant goal. A company that is unable to look at its own future with courage is like a person who is unable to dream.’ Arvind Poddar, chairman, BKT
I
n 2010, Balkrishna Industries Ltd., BKT for short, was a $300 million Indian tire manufacturer. Its of-highway products, including OTR and agricultural tires, were produced in three plants in India. Te tires were not exported on a global basis. But the Poddar family was made up of visionaries. In an executive line that extends from late founder Mahabirprasad Poddar to Arvind Poddar to Rajiv Poddar, the company’s mantra always has been “to be the best.” So the decision was made to build a fourth plant at a cost greater than the company’s annual sales. A move like that can either make or break a company. Five years and $500 million later, the Poddars’ faith in their company paid of in a big way. In December, close to 600 dealers, suppliers and journalists were invited to visit BKT’s
Arvind Poddar linked the past with the present at BKT’s “Game Changer Conference” in December. He held up a photo of his late father, company founder Mahabirprasad Poddar, as other BKT associates, including his son, Rajiv (standing to his right), looked on.
fourth plant, a state-of-the-art, energy-efcient of-highway tire plant in Bhuj, India. BKT began manufacturing tires in 1987. But in 2004, the company began producing radial agricultural tires, “a segment that still today represents the company’s main product segment, thanks to an extremely comprehensive range of products and solutions for the most varied and specifc user needs,” said Arvind Poddar, chairman and managing director. (BKT owns 32% of the replacement rear farm tire market in the U.S., according to Modern Tire Dealer statistics. It also has begun to supply both radial and bias rear farm tires to OEMs in the states.) OTR tire production began in 2008 with bias tires. All-steel radial tire production, “an essential strategic move to strengthen BKT’s leadership in the of-highway tire market,” according to Poddar, soon followed. BKT manufactures OTR tire sizes ranging from 17.5 inches to 49 inches; Poddar said the company will add 51-inch OTR tires to its product portfolio this year. “BKT’s rapid and continuous development has been possible thanks to the substantial investments made in infrastructure,” Poddar said during a press conference held at the company’s At full capacity, the Bhuj plant will be able to match production at the other three headquarters in Mumbai, India. “Even plants combined. It is not unrealistic to think BKT also will double its sales revthe most brilliant ideas need to gain enue from $700 million to well over $1 billion in two or three years.
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MTD January 2016
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Focus on industry a solid foundation to be brought to life — in other words, people and technology.” Te investments have gone beyond the company’s national borders, he continued. BKT has opened four overseas ofces: one in Europe, two in the U.S. and one in Canada. BKT products are sold in more than 130 countries worldwide. “So, what is BKT’s dream?” said Poddar. “What is BKT’s vision? Te answer is: to achieve the leadership in the ofhighway tire market worldwide.”
sive industrial complex,” said Rajiv. “Yet it is more than just a prestigious entity for production, research and testing. Bhuj is a small town ofering manifold social and leisure facilities for those who work in our company and their families.” In the “township area,” there are 406 fats for employees’ families and 90 rooms for university students who have opted to work with BKT. Tere are also jogging trails, a large recreation center for indoor and outdoor activities, a medical center and a mall. Te Bhuj plant also has its own fre station, with seven frefghting trucks and two ambulances.
‘Te path has been paved’
‘Always believe in your dreams, because if you don’t, you’ll not have hope.’ Mahatma Gandhi, Indian political leader and pacifst
For its curing presses, BKT uses state-of-the-art tire loaders that can handle large diameter tires. BKT manufactures its own tire molds, which shortens the time to market.
Building the plant
‘When we dream alone it is only a dream, but when many dream together it is the beginning of a new reality.’ Rajiv Poddar, joint managing director, paraphrasing Austrian artist and architect Friedensreich Hundertwasser Te city of Bhuj, strategically located near the Kandla Port in India, was chosen as the site for the new $375 million plant. BKT also was able to secure a 312-acre parcel of land to accommodate the plant, an R&D center, test tracks, large tire warehouses and employee housing. Te land was essentially a desert, not only populated by herds of bears, bufaloes and foxes, but also known for its seismic activity and high winds. Preparing the plant for an earthquake measuring 9.0 on the Richter Scale and reinforcing the roofops help explain some of the cost overruns. “Showing great commitment and dedication, everything was created out of nothing,” said Rajiv Poddar, joint managing director. When the new plant reaches full capacity in 2017, it will be able to produce 150,000 metric tons of of-highway tires annually. BKT’s other three plants produce 150,000 metric tons combined. “Looking at fgures and dimensions, Bhuj is a very impres-
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More than 7,000 people are employed at BKT. Tey produce more than 2,400 SKUs of farm, OTR, industrial, ATV and lawn and garden tires. Tose numbers will increase as the Bhuj plant ramps up. It already is running at 46% capacity. “Without ever losing sight of BKT’s fundamental values such as the care for our people, the care for the environment, and the care for our customers, Bhuj has enabled us to play a completely new game from the perspective of exponential growth and aiming at global leadership — even if we are just at the initial moves and the results are just a litle gleam,” said Rajiv Poddar. “Te path has been paved, and soon, this gleam will shine bright unveiling the results. What remains to be done is to follow in the footsteps of our founder.” ■
Bhuj by the numbers Here is a breakdown of Balkrishna Industries Ltd.’s new off-highway tire plant in Bhuj, India. Plant cost. . . . . . . . . . . . . . . . . . . . $500 million Total acres . . . . . . . . . . . . . . . . . . . 312 Central area, plant . . . . . . . . . . . . more than 72 acres Outdoor track . . . . . . . . . . . . . . . . 25 acres Township area . . . . . . . . . . . . . . . more than 15 acres Plant build-up area . . . . . . . . . . . 3.5 million meters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11.5 million feet) Raw material storage area . . . . . . . . 20,000 square meters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (215,278 square feet) R&D center (when completed) . . 25,000 square feet Daily present capacity . . . . . . . . 120-150 metric tons Daily full capacity (2017) . . . . . . . 325 metric tons Tire warehousing capacity . . . . . 25,000 metric tons BKT also has off-highway tire plants in Aurangabad, Bhiwadi and Chopanki, India. Some 2,400 SKUs are produced at the four plants.
MTD January 2016
Quik-Link: 800-687-1557 ext. 11138
Focus on industry
Kumho adds capacity for LT tires New tires, factory, marketing and branding signal a ‘new era’ in North America By Ann Neal
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verything from tires to marketing will be new for Kumho Tire USA Inc. in 2016. Te company previewed the coming year at its annual dealer meeting in Castries, St. Lucia, Dec. 2-5, 2015. Te Ecsta PS91 will be Kumho’s fagship ultra-high performance tire in the United States, according to Jim Mayfeld, executive vice president of marketing and sales. Te PS91 will debut in 49 sizes in 18- to 21-inch rim diameters with a Y speed rating and no mileage warranty. Te Ecsta PS31, a value-priced summer UHP tire, will be ofered in 49 sizes in 14- to 18-inch rim diameters, V and W speed ratings and no mileage warranty. Te Crugen HT51, an all-season light truck/SUV product, will be available in 39 sizes, 15- to 20-inch rim diameters and R, S and T speed ratings. Te mileage warranty has not yet been decided. Kumho’s Ecsta V720, an ultra-high performance tire that is original equipment on the ffh generation Dodge Viper, will be available in 17 sizes in 15- to 19-inch rim diameters, V, W and Y speed ratings and no mileage warranty.
Beter product launches Mayfeld said the rollout of the four tires will be smoother than last year’s launch of six tires. “Introducing six new product lines in a very short period of time created some challenges for our customers as they transitioned from one product to another. We learned in 2015 how to do it more efectively and efciently.” Mayfeld said Kumho has opportunities in every segment of the market. In particular, the company sees potential for substantial growth in its light truck tire portfolio.
More capacity for LT tires Kumho’s frst factory in the U.S. begins production this month. Original equipment and replacement tires will be produced at the Macon, Ga., plant, which will have annual capacity for 4 million tires. Some of the tires produced at Kumho’s factories in Korea and Vietnam will come to Macon. “In Vietnam, we’ve expanded our capacity to make light truck tires. We’re also doing some transitioning in our Korean factory to make more large rim diameter passenger tires. So the combination will allow us to get a richer mix of product. We’re very excited about the additional capacity for light truck tires for the U.S. market,” said Mayfeld. Kumho recently moved its headquarters from California to Atlanta. Te Atlanta ofce places corporate staf near the new factory and a distribution center in nearby McDonough, Ga.
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“We will have a premium product and a price point product you can take to market as a summer tire,” Jim Mayfeld, executive vice president of marketing and sales, told dealers at Kumho’s annual meeting.
Improving dealers’ margins Kumho’s initiatives include repositioning the price point of its products. Part of that efort involves rolling more of Kumho’s discount structure into the tire’s invoice price. “We’ll still have support dollars available, but we think it’s essential that we get more on invoice to help us move forward and grow the business,” said Mayfeld. Shaun Fitzgerald, wholesale general manager for Flynn’s Tire Wholesale, a division of Flynn’s Tire Group, said the change will help. “Puting more money into the invoice cost rather than back-end tiered growth programs is positive for us. It’s nice to know what your cost is going to be as opposed to not knowing what you will earn.”
NBA strategy evolves Kumho atributes a 16.5% increase in brand awareness from 2013 to 2015 to its professional basketball sponsorship. Te company began a three-year agreement with the NBA and the NBA Development League in 2014. Up to now, the sponsorship has been a national branding campaign. In 2016, Kumho expects to add individual team sponsorships in two or three local markets that will create retail promotion opportunities for dealers.
New era begins Kumho CEO and President Harry Choi said the new tires, factory, headquarters and marketing give the company the right to use the term “new era.” Te company is even rolling out a brand identity built around a new slogan: Kumho Tire Beter, All-Ways. “We challenged ourselves to reinvent our organization and our brand in North America,” said Choi. “Tis new era gives us a chance to start fresh and to build a beter company and be a beter partner and beter friend to our customers.” ■
MTD January 2016
Quik-Link: 800-687-1557 ext. 11139
Counter intelligence
A simple technique to compete with the big boys Casting a little doubt has its advantages
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very tire dealer in America competes tires from someone who can’t, at least, check against strong, established, online tire your alignment and perform an alignment if you providers. Most independent tire dealers need one?” When a customer is shopping for also compete with the largest independent “tires tires, these large competitors never recommend only” retailer in the country, and many compete alignment services in their tire quotes because of directly with Sam’s, Costco and other membership their obvious disadvantage in doing so. warehouse clubs. Te aforementioned competitors do well with I’m going to show you how to cast a litle doubt their business models. But are they servicing the with your customer during your sales presentadriving public to the fullest extent? Yes, they can tion, which will cause the customer to pause and By Wayne Williams recommend a local shop, but the best deal for the consider your point and your advantage. Before customer is the complete, convenient, one-stop, I discuss this powerful tip, I’d like to frame my comments full-service tire sale which includes, at the very least, an with a litle story from my past experience. alignment check, and certainly a reset to spec, if necessary. It’s funny how early training afects both early and longterm results. Because I worked at Parnelli Jones for 22-plus Doubt-casting questions years and condemning the competition was prohibited, Here are a few doubt-casting questions I would be asking I’ve never fallen into that unprofessional habit. However, if I were quoting and selling tires every day: over the years I’ve found it helpful to cast a litle doubt from time to time. When I use a litle doubt in a sales “Why would you ever buy tires from someone who can’t presentation, I do so to cause the listener or customer to check and re-set your alignment?” pause a moment and think about what I’m saying or suggesting. I’m usually trying to make a point, to enhance an “Te tire quote you received from ‘Mr. Online Big Guy,’ advantage that would beneft the customer if they bought did that include a free alignment inspection?” from me rather than the competitor. At Parnelli Jones, we had an all-encompassing tire war- “Does Sam’s Club ofer a free alignment check with their ranty (Parnelli’s Promise) even before it became popular tires?” to do so. I would alert the customer that a competitor did not ofer such coverage, and as a result, if their tire became Knowing independent tire dealers like I do, I know unserviceable due to blah-blah-blah, then they might not you can come up with some very creative ways to cast a enjoy all the benefts we ofered. Casting this doubt caused litle doubt. customers to pause and consider my point. Because the Te most important point is, it’s a disservice to sell a Parnelli Promise was full of benefts for the customer, the customer a set of expensive tires and not consider their simple explanation and com- alignment needs. Te biggest beneft is, most customers parison was usually enough to understand at some level that properly aligned tires are cause the customer to pause going to last longer, and tires that are not properly aligned and consider, and then make will begin to self-destruct immediately. I’ve used this line the correct buying decision. a thousand times when selling alignments, “Tires don’t heal. Once an irregular wear patern starts, it never gets A promising service beter. Let’s do the alignment today.” Tere is no Parnelli Promise What I’m saying is, I’d cast a litle doubt with the customer today, but any independent for their own beneft before rolling over on a tire sale. You tire dealer who ofers align- need every customer and tire sale you can get; you need ment services has a real oppor- happy customers who drive away with a complete deal, tunity they may not be using and your competitors aren’t going to say a word about your to their best advantage. Most membership/warehouse advantage. You need to show your customers that you are clubs do not ofer convenient one-stop alignment services, still their best choice for the best overall deal. ■ and neither do online e-tailers, nor America’s largest independent brick-and-mortar retailer. And they’re very Wayne Williams is president of ExSell Marketing Inc., a successful. However, if you have to compete against them, “counter intelligence” frm based in La Habra, Calif. He can you might try asking customers, “Why would you ever buy be reached at exsellmkting@gmail.com.
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MTD January 2016
TPMS
2011-13 Chrysler 200 Two systems are available: a base system and a premium model SUBJECT VEHICLE: Chrysler 200, model years 2011-13. RELEARN PROCEDURE? Yes. SPECIAL TOOLS NEEDED? A TPMRKE analyzer, special tool 9936, may be used with a scan tool. Te tire pressure monitoring system (TPMS) monitors air pressure in the four road tires (excludes spare). Pressure in the spare tire is not monitored. Tere are two tire pressure monitoring systems available, a base system and a premium system. Te base system does not specify how many tires are low or where they are located. Te premium system does so. Te base TPMS consists of tire pressure monitoring sensors atached to each road wheel through the valve stem mounting hole, a central receiver module wireless control module (WCM), and an indicator lamp. Te premium TPMS consists of tire pressure monitoring sensors atached to each road wheel through the valve stem mounting hole, a wireless control module (WCM), three wheel sensor transponders located in three of the four wheel wells, an electronic display, and an indicator lamp. Upon detection of a warning or fault condition, the WCM will send a request to the module that controls the indicator lamp (and the text display if equipped with the premium system) via the vehicle bus system to illuminate or flash the indicator lamp. Also, upon detection of a warning or fault condition, the electronic display will send a request to sound the “chime.� Te WCM will store all warning and fault conditions, placard pressure values and low-pressure threshold values (lamp ON and OFF) in memory that can be accessed through diagnostic communication. If new sensors are introduced to the vehicle, the data stored for the sensor being replaced will be deleted. Te WCM will store all wheel sensor IDs and locations and faults in memory that can be accessed through diagnostic communication. All other data values transmited from each active wheel sensor (not the spare tire) shall be stored in the
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Figure 1: Identifying the tire pressure sensor components (one of two).
WCM memory. Afer a sensor has been replaced, the WCM automatically learns and stores the sensor IDs while driving continuously above 15 mph (24 km/h) for 10 minutes. Te learning sequence will initiate when the vehicle has been stopped for more than 20 minutes.
immediately check air pressure of all tires and adjust to the specifed pressure. Afer adjusting air pressure, allow approximately two minutes for the warning indicators to turn of.
Warning indicators If the TPMS detects that the tire pressure in any road tire is going low, the TPMS will continuously illuminate an indicator lamp. Te premium TPMS system can display text messages and a tire pressure graphic display on the information cluster. If a low pressure condition is detected, in addition to a chime and indicator lamp turning ON, a graphic display of the pressure value(s) with the low tire(s) fashing will appear in the electronic vehicle information center (EVIC). Te light will remain on until tire pressure is properly set. Afer adjusting air pressure in a tire, allow approximately two minutes for the warning indicators to turn of. If a system fault is detected, the indicator lamp will fash on/of for 75 seconds, then remain on solid. See appropriate manufacturer service information.
Reset procedures NOTE: If a tire pressure sensor has been replaced, the tire pressure sensors must be retrained. When the tire pressure warning light illuminates and warning message appears, Quik-Link: 800-687-1557 ext. 11140
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TPMS be trained, see appropriate manufacturer service information. NOTE: A new sensor ID can also be programmed directly into the WCM by using a TPM-RKE analyzer in conjunction with a scan tool. Once the new sensor ID has been programmed, the TPM-RKE analyzer can be used to update the TPMS by activating the sensor.
Demounting/mounting procedures
Figure 2: Identifying tire pressure sensor components.
Tire pressure sensor retraining Te WCM automatically learns and stores the sensor’s ID while driving afer a sensor has been replaced. Tere is no formal retraining procedure necessary. Te WCM automatically learns and stores the sensor IDs while driving within 10 minutes continuously above 15 mph (24 km/h) afer a sensor has been replaced. Te learning sequence will initiate when the vehicle has been stopped for more than 20 minutes. If a sensor cannot
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CAUTION: Te TPMS has been optimized for the original equipment tires and wheels. TPMS pressures have been established for the tire size equipped on the vehicle. Undesirable system operation or sensor damage may result when using replacement equipment that is not of the same size, type or style. Afermarket wheels can cause sensor damage. Do not use afermarket tire sealants or balance beads if the vehicle is equipped with TPMS, as damage to the sensors may result. NOTE: If tires require leak-testing, a water test may be used to check for a leak around the sensor, as long as any water at the valve core is removed when the procedure is completed. Water can be expelled from the core area by pushing in on the core for several seconds, allowing escaping air to drive out any moisture. Reinfate the tire as necessary. Install the original valve stem cap.
Tire pressure sensor IMPORTANT: Te domestic TPMS operates on a 315 MHz radio frequency. Te 315 MHz sensors can be easily identifed by a white outline oval (black center) insignia on the sensor
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MTD January 2016
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TPMS body. Te export TPMS operates on CAUTION: Do not atempt to a 433 MHz radio frequency. Te 433 install a tire pressure sensor in an MHz sensors can be easily identifed afermarket wheel. (Tis could cause by either a solid white oval insignia on sealing and system performance the body or a solid white oval insignia issues.) Always use tire pressure with 433 printed in the center. Te sensors in the original style factory sensors are identical except for the oval wheels only. insignia. Te 433 MHz sensors can If afermarket wheels are installed, either have a black or grey sensor body. and therefore do not contain tire Although 315 MHz and 433 MHz pressure sensors, the system will not sensors are identical in size and shape, function properly and the driver will they are not interchangeable. Always be continuously notifed of a system make sure the correct sensor is being malfunction. used. CAUTION: Afer inspecting or NOTE: Sensors may be identifed by Figure 3: Demounting the tire with the tool. adjusting the tire pressure always valve stem cap color. From the factory, reinstall the valve stem cap. This 315 MHz sensors have a gray valve stem cap while 433 MHz will prevent moisture and dirt from entering the valve stem, sensors have a black valve stem cap. Otherwise, once mounted which could damage the tire pressure sensor. inside a tire and wheel assembly you are not able to visually CAUTION: Te valve stem used on this vehicle is made tell the diference between a 315 MHz and 433 MHz sensor. of aluminum and the core is nickel-plated brass. Te original At that point, the TPM-RKE analyzer, special tool 9936, with valve stem core must be reinstalled and not substituted with the scan tool may be used to identify the sensor frequency a valve stem core made of a diferent material. Tis is required or the tire can be demounted allowing visual inspection of to prevent corrosion in the valve stem caused by the diferent the sensor body. metals. CAUTION: Te cap used on this valve stem contains an CAUTION: Do not reuse the sensor-to-wheel grommet. O-ring seal to prevent contamination and moisture from Always make sure to use a new grommet when installing a entering the valve stem. Retain this valve stem cap for reuse. tire pressure sensor and use caution to properly torque the Do not substitute a regular valve stem cap in its place. sensor nut.
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MTD January 2016
Removal
2) Insert the sensor through the wheel as shown keeping pressure against the rear of the metal valve stem. Te poted side of sensor is to be positioned toward the wheel. Do not atempt to mount the sensor otherwise, or damage may occur. Install the sensor nut (with pressed-in washer) by hand (see Figure 4). NOTE: Before tightening the sensor • When breaking the tire bead loose from nut, push downward on the sensor the wheel rim, avoid using the bead housing in an atempt to make it fush breaker in the area of the sensor. Tat with the interior contour of the wheel. includes both front and rear beads of 3) Using a thin-walled socket, install the the tire (see Figure 3). sensor nut. While holding the sensor in • When preparing to demount the tire Figure 5: Mounting the tire using position, tighten the sensor nut to 71 from the wheel, carefully insert the rotating wheel machine. in.-lbs. (8 N.m). mounting/demounting tool 280 degrees CAUTION: Over-torquing the sensor from the valve stem +/- 10 degrees, then proceed to demount nut by as litle as 106 in.-lbs. (12 N.m) may result in sensor the tire from the wheel. Use this process on both the upper separation from the valve stem. Under this condition, the and lower tire beads. sensor may still function; however, the condition should be corrected immediately. 3) Using a thin-walled socket, remove the special nut retain- 4) Mount the tire on the wheel following the tire changer ing the sensor to the wheel. While removing the nut, hold manufacturer’s instructions, paying special atention to the pressure against the rear of the metal valve stem to keep the following to avoid damaging the tire pressure sensor: valve stem from pushing rearward, which could damage the antenna strap (see Figure. 2). • Rotating wheel tire changers: Once the wheel is mounted to 4) Remove the sensor from the wheel (see Figure 4). the changer, position the sensor valve stem approximately 280 degrees from the head of the changer in a clockwise NOTE: Before reinstalling an existing tire pressure sensor, replace the seal and metal washer at the base of the valve stem to ensure proper sealing (see Figure 1).
1) Remove the tire and wheel assembly from the vehicle. 2) Demount the tire from the wheel following the tire changer manufacturer’s instructions while paying special atention to the following to avoid damaging the pressure sensor:
1) Wipe the area clean around the sensor/valve stem mounting hole in the wheel. Make sure the surface of the wheel is not damaged. CAUTION: To avoid damaging the sensor antenna strap, hold pressure against the rear of the metal valve stem while the sensor is inserted through the wheel mounting hole and the nut is installed (see Figures 2 and 4).
Figure 4: Removing and installing the tire pressure sensor.
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Nominations are now open! MODERN TIRE DEALER’S
24th ANNUAL
Send us your prospective MTD Tire Dealer of the Year...
NOW is the time to act! You’ll fnd the nomination form on our website: http://www.moderntiredealer.com/ tiredealeroftheyear/nomination I nominate for Modern Tire Dealer’s Tire Dealer of the Year: Name ____________________________________________ Phone____________________ Dealership ________________ _________________________________________________ Address ___________________________________________ City ____________________________________ State _____ Zip Code ________________ Nominated by: Name ____________________________________________ Phone_____________________________________________ Relationship with nominee _____________________________ I believe this dealer should be considered because: ___________ _________________________________________________ _________________________________________________ _________________________________________________ _________________________________________________ _________________________________________________ _________________________________________________ _________________________________________________ _________________________________________________ Mail to: Modern Tire Dealer of the Year, 3515 Massillon Road, Suite 350, Uniontown, OH 44685. Deadline for entries is May 20, 2016.
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here is no higher honor a tire dealer can receive than joining the prestigious list of winners of Modern Tire Dealer’s Tire Dealer of the Year award. In addition to the industry recognition, the MTD Tire Dealer of the Year’s favorite charity will receive a minimum of $1,000 from MTD. Te winner will also be featured on the cover of our September issue and spotlighted in a feature article. In selecting MTD ’s Tire Dealer of the Year, judges will consider fve elements: 1. Business Success 2. Marketing Skills 3. Management Skills 4. Industry Knowledge 5. Community Involvement Any independent tire dealer, except our previous winners, is eligible for the competition. Content of nominations, not entry embellishments, will determine the winner, so keep entries factual and simple. Support material may be included, but is not mandatory. To immediately nominate a dealer, log onto www.moderntiredealer.com and fill out our online nomination form. For more information, contact MTD Editor Bob Ulrich at bob.ulrich@bobit.com.
“This is truly a great honor.” Ricky Benton, Black’s Tire Service Inc.
TPMS direction before rotating the wheel (also in a clockwise direction) to mount the tire. Use this procedure on both the upper and lower tire beads (see Figure 5). • Rotating tool tire changers: Position the wheel on the changer so that the sensor valve stem is approximately 210 degrees from the head of the changer in a clockwise direction from
the mounting end of the tool (see Figure 6). Make sure the sensor is clear of the lower bead breaker area to avoid damaging the sensor when the breaker rises. Rotate the tool in a counterclockwise direction to mount the tire. Use this procedure on both the upper and lower tire beads. 5) Adjust air pressure to specifcation.
Figure 6: Mounting the tire using a rotating tool machine.
Make sure the original style valve stem cap is securely installed to keep moisture out of the sensor. Install the wheel and tire assembly on the vehicle. 6) Once the vehicle has remained stationary for more than 20 minutes, drive the vehicle for a minimum of 10 minutes while maintaining a continuous speed above 15 mph (24 km/h). During this time, the system will learn the new sensor ID code and will clear any DTCs automatically. If a sensor cannot be trained, see appropriate manufacturer service information. ■ TORQUE SPECIFICATIONS Component Wheel nut Tire pressure sensor nut*
Ft.-lbs. (N.m) 140 (190) In.-lbs. (N.m) 71 (8)
* Over-torquing the sensor nut by as litle as 106 in.-lbs. (12 N.m) may result in sensor separation from the valve stem. Under this condition, the sensor may still function; however, the condition should be corrected immediately.
Information for this column comes fom Mitchell 1’s “Tire Pressure Monitoring Systems Guide” for domestic and import vehicles. Headquartered in Poway, Calif., Mitchell 1 has provided quality repair information solutions to the automotive industry for more than 80 years. For more information, visit www.mitchell1.com. And for archived TPMS articles, visit www.moderntiredealer.com.
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MTD January 2016
Quik-Link: 800-687-1557 ext. 11146
Products Hunter’s new Auto34S has space-saving design
In-vehicle infotainment systems tester from OTC
The new Auto34S tire changer from Hunter Engineering features a spacesaving, functional design and an air powered, pushbutton control that operates all diameter functions from a single point. The ergonomic Auto34S has a memory button that saves the tire diameter setting and returns the mount head to the same spot until reset. Hunter says an improved press head allows for better grip on all tires, especially extreme low profle tires. A lighter quick clamp improves clamping ease. An integrated wheel lift eases the service of large assemblies, reducing operator fatigue and risk of damage. HUNTER ENGINEERING CO. Quik-Link: (800) 687-1557, ext. 11170 www.mtdquiklink.com/11170
Nexen unveils the UHP all-season N7000 Plus Nexen Tire America has introduced the N7000 Plus, an ultra-high performance all-season tire which is an improved version of the N7000. Nexen says the N7000 Plus maintains the road performance of its predecessor, but has an improved UTQG of 560 versus the previous 360. The new UTQG gives the tire a 50,000 tread wear mileage warranty without sacrifcing performance. The N7000 Plus was recently ranked by a leading performance magazine as a top performer in the category, according to Nexen. The N7000 Plus is available in 29 sizes. NEXEN TIRE AMERICA INC. Quik-Link: (800) 687-1557, ext. 11171 www.mtdquiklink.com/11171
New MultiFit wheel balance weight from Perfect Equipment Wegmann automotive USA’s Perfect Equipment brand has released Perfect MultiFit, a line of zinc clip-on wheel balance weights that can downsize inventories to two clip styles: one weight for most steel rims and one weight for most alloy rims. The company says the Perfect MultiFit allows businesses to signifcantly reduce stock while keeping SKU complexity to a minimum, making installation, logistics and storage quicker and more effcient. The Perfect MultiFit features 22 part numbers with just two weight series: Type 84U uncoated zinc weight for most steel rims and Type 63 coated zinc weight for most alloy rims. WEGMANN AUTOMOTIVE USA INC. Quik-Link: (800) 687-1557, ext. 11172 www.mtdquiklink.com/11172
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OTC, a Bosch Automotive Service Solutions brand, has released the Multimedia Interface Tester (MIT) to help diagnose vehicle communication issues on Ford, GM and Hyundai vehicles. The MIT sends a clean signal to a vehicle’s Bluetooth or auxiliary connection to confrm whether or not the vehicle is communicating properly. The device works by connecting via Bluetooth or 3.5 mm auxiliary jack and providing an audible confrmation of connection and test. The device updates though a USB connection and more OEs will be added as coverage becomes available. BOSCH AUTOMOTIVE SERVICE SOLUTIONS Quik-Link: (800) 687-1557, ext. 11173 www.mtdquiklink.com/11173
Purolator launches premium oil flter line Mann+Hummel Purolator Filters has launched PurolatorBoss,a line of premium oil filters designed to optimize engine performance. Available through commercial and retail distribution channels in the U.S. and Canada in the frst quarter of 2016, the new PurolatorBoss oil filter supports maximum engine protection for conventional, synthetic and semi-synthetic blend motor oils across a wide range of viscosities. The company says it is an ideal match for synthetic oils, where it can provide up to 15,000 miles of engine protection. PurolatorBoss uses exclusive SmartFusion Technology, which features 100% synthetic media supported by fully integrated, reinforced polymer mesh. MANN+HUMMEL PUROLATOR FILTERS LLC Quik-Link: (800) 687-1557, ext. 11174 www.mtdquiklink.com/11174
ACDelco introduces GM OE transfer cases Nine General Motors original equipment (OE) new transfer cases for GM full-size pickup trucks are now available to the independent aftermarket through ACDelco. The transfer cases cover Chevrolet Silverado and GMC Sierra trucks model years 2007-1999. They are all-new, not remanufactured, says ACDelco. One of many benefts of the new transfer cases is a simpler “plug and play” installation system that saves time and money. There is no programming required during installation, no specifc tooling requirements and no extra work, according to the company. ACDELCO
MTD January 2016
Quik-Link: 800-687-1557 ext. 11147
To request free product information by phone, call 800-687-1557, enter the extension number listed below, and you will be immediately transferred to the company you want to talk with — it takes only seconds. To request information online, log on to www. mtdquiklink.com/ plus the corresponding Quik-Link number. You’re just a click away from receiving free information on the new products that interest you. Advertiser 31 Incorporated ACDelco ADVICS North America Inc. Aftermarket Auto Parts Alliance Inc. American Omni Trading Company Apollo Vredestein Tires Inc. ASA Automotive Systems Inc. Atturo Tire Corporation Bartec USA Bartec USA Big O Tires BKT Tires USA Inc. Blackburn OEM Wheel Solutions Bridgestone Tire Camso Centric Parts Dealer Strategic Planning Inc. Falken Tire Corporation Federal-Mogul Motorparts Gaither Tool Company Inc. General Tire Giti Tire (USA) Ltd. Hankook Tire America Corporation Hercules Tires Horizon Tire Inc. Independent Tire Dealers Group JK Tyre & Industries Ltd. Kenda Tire USA Kumho Tire USA Inc. Mahle Aftermarket Inc. Marangoni Tread North America Inc. Maxxis International—USA Mighty Auto Parts Nexen Tire USA Nitto Tire U.S.A. Inc. North American Tire & Retread Expo Pirelli Tire North America Red Kap Reliable Int’l Exhibition Services Co. Ltd. SD International Sentury Tire Americas STEELMAN Select TPMS, by JS Products Synchrony Financial TBC Brands Tire Industry Association (TIA) Tire Pros Tire Rack Wholesale Toyo Tires Yokohama Tire Corporation ZC Rubber America Inc.
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Your turn
Walmart is ‘driving customers to my door’ Dear Editor, I can certainly sympathize with the Herchick family (per your editorial in the November 2015 issue of Modern Tire Dealer). Having only started eight years earlier, we can all look back at beter times. We, too, are in the same boat as the Herchicks — whereas they have auto service to supplement tire sales we have the retreading to help. Tere is no way we could survive at selling new tires only. I can only suggest something that I am sure they must be doing already, and that is maintain quality, friendly service and assistance. Tat alone creates a diference between your store and say, a Walmart or other chain. I cannot tell you how much help Walmart’s lousy service department has given us, driving customers to my door. And our county has fve of them! Dave Richards Jr., President Canton Bandag Co. Canton, Ohio
Question of the month Each month we ask members of our National Advisory Council (NAC) a question or questions on a current hot topic. Tis month we asked, “NASCAR, Major League Baseball, National Football League. Do you fnd tire companies’ involvement in sports marketing helpful? How do you tie in with their promotions? Is one sport beter than another in your area? Which one and why?” Here are some of their responses. 1. I do not fnd much direct feedback from my customers concerning tire companies’ involvement is sports. I cannot remember the last time a customer asked about an ad he or she saw while watching sports. Tat said, yes I believe advertising on sports broadcasts helps sell automotive service and tires. As for the sport, hockey is beter for the northern states and Canada, and golf is beter for the southern states. 2. I feel that the tire manufacturers’ involvement in sports marketing is good. A lot of people are passionate toward their sports teams and drivers. Te continual advertising in this feld helps people feel familiar with the product.
Hankook was put on the map with this kind of marketing. We support the manufacturers’ promotions and rebates that, in turn, support this kind of marketing. 3. I think NFL is the best in this area, followed by college football, then Major League Baseball. We try to mimic any promotions they may have running. 4. I don’t think tire manufacturers tie their promotions in very well to the feld! Tere are no POS displays in any of the retail outlets that tie their sports marketing together, nor do they do promotions or promote their activities to the street! I think it is a big waste of money unless it can be tied into a yearly event at the retail counter! 5. When Goodyear learns something on a NASCAR racetrack, invariably those lessons and technology are eventually rolled into consumer tires. With one of the most recognizable brands in the world, high visibility with NASCAR and many other sporting events with aerial coverage provided by the Goodyear blimp — we fnd our brand’s sports marketing very helpful in not only building the brand but by keeping our brand on the top of people’s minds.
What’s on your mind? We also asked our NAC what was on their mind. They responded with: I would love it if you did a story on Sandone Tire, in Scranton, Pa. In late August 2015, Sandone Tires’ warehouse caught on fre. Teir entire tire inventory was ruined. Pat Sandone and Mike Sandone are of retirement age. Tey had the perfect opportunity to retire from a successful career owning a tire business. I talked with them to give them my support in any way. Tey told me that they could not quit. Tey had a lot of employees and quiting was not an option. Tey could not turn their backs on the people who helped them build a successful tire business. Te Sandone brothers have made me proud. It is nice, in this day and age, to see people with such integrity and ethics in our industry. Jef Cohen, Co-owner Traction Wholesale Center Bensalem, Pa.
What’s still on my mind is the 1,000 year flood event earlier this year across the midlands of South Carolina. It has removed a substantial amount of disposable income from the marketplace. Consumer purchases of tires and services seem to be adversely afected. Tripp Lee, General Manager Frasier Tire Service Inc. Sumter, S.C.
Join Modern Tire Dealer’s National Advisory Council
Each month, Modern Tire Dealer is guided and infuenced by a select group of readers — members of our National Advisory Council. Tese members’ opinions are the heart of the monthly Your Marketplace column, compiled by industry analyst Nick Mitchell. If you’d like to join this prestigious group, please let us know. We’d love to hear from you. Contact Editor Bob Ulrich at Bob.Ulrich@bobit.com or call (330) 899-2200, ext. 11.
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