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Return to 'normal?'

Why our industry will move forward in 2021

How to maximize the value of your business Dealer completes 'the corona shift' Is your culture customer-centric?

Shipments, market share, pricing and more â€” MTDâ€™s Facts Issue drills down into the numbers January 2021 | Vol. 102, No. 1 | $30 | www.moderntiredealer.com

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The Industry’s Leading Publication January 2021, Volume 102, Number 1

20 Analyst John Healy discusses why the tire industry will move forward this year, in an MTD exclusive that starts on page 20.

DEPARTMENTS 4 Editorial Six questions answered as MTD peers into the future

6 moderntiredealer.com News and navigation tools for MTD’s website 8 Industry News Bridgestone pilots subscription platform: Consumers would pay monthly fee for tire, service work 18 Numbers That Count Relevant statistics from an industry in constant motion

30 Your Marketplace Tough times ahead? Why sell-out levels are trending negatively

56 DSP Insight Remember — it is all about people! Tips to help you build a customer-centric culture

62 Business Insight Start going ballistic: Don’t accept incomplete or missing vehicle inspection data

64 Mergers and Acquisitions The interplay between real estate and business value: Charge yourself fair market rent

66 Focus on Dealers Barnwell completes ‘corona shift’: Dealership gains momentum during pandemic

F E AT U R E S 20

A ‘return to normal?’

Analyst John Healy discusses tariffs, M&A, e-commerce, pricing, future mobility and why the domestic tire industry will move forward — not backward — in 2021

55TH ANNUAL FACTS SECTION

32 Sales, margins and shipments 34 Imports 36 Market share 38 Distribution 44 Tire sizing 46 Tire pricing 48 Commercial tires 50 Plant capacities 52 Automotive service 54 Mergers and acquisitions

Focus on Industry 68 Hercules unchained: New products, program features are on the way 70 ‘There’s no going back’: Goodyear says challenges will help dealers face the future

72 TPMS Kia Sportage — 2011-2019

78 Products 82 Ad index

Modern Tire Dealer is a proud member of:

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Editorial

‘Signs point to yes’

SIX QUESTIONS ANSWERED AS MTD PEERS INTO THE FUTURE By

Mike Manges

Question: Will mergers and acquisitions increase? Answer: “It is decidedly so.” Last year, there was no drop-off when it came to independent tire dealerships buying —or merging with — other tire dealerships, the latest big pairing being the union of Town Fair Tire Centers and Mavis Tire. (Combined, Town Fair and Mavis have more than 1,000 outlets.) Outside entities also continue to make in-roads into tire retailing, illustrated by the recent acquisition of McLea’s Tire & Automotive Centers, a five-store, independently owned dealership, by AAA Northern California, Nevada & Utah. However, an acquisition rivaling the magnitude of Meritage Group LP’s purchase of Les Schwab Tire Centers is unlikely to happen in 2021. (At that scale, you’re getting into some rarified air.) It also should be noted that alternate approaches, like joining franchise networks or enrolling in program groups, will continue to be attractive options for smaller dealerships that have ambitions to grow, but This tool should not be used for Question: Will the U.S. government levy tariffs sales forecasting! might lack certain resources. (On that note, it on consumer tires made in South Korea, will be interesting to track the roll-out of Tire Taiwan, Thailand and Vietnam? Discounters’ franchise program, which MTD first reported on Answer: “As I see it, yes.” Right before this issue of MTD went to last September.) press, the Department of Commerce announced preliminary determinations in the antidumping investigation of passenger and Question: Will e-commerce and other retail platforms edge out light truck tires exported from South Korea, Taiwan, Thailand and independent tire dealers as the preferred choice for tire buyers? Vietnam to the U.S. I have no doubt that tariffs will be applied to Answer: “Don’t count on it.” More customers than ever are shopthese tires. On top of that, it also looks like tariffs on Chinese-made ping for tires online. More are buying tires online. But I would consumer tires will remain in place indefinitely. guess that only a microscopic percentage of these customers have mounting and balancing machines in their home garages. (Magic Question: Will we see more price increases? 8-Ball, can you help with this one?) Tires have to be installed and serviced by people. And nothing beats the level of service that Answer: “It is certain.” A number of tire manufacturers have hiked tire prices during the last few months, citing a variety of reasons. you provide. Several tire manufacturers have described their (These things always happen in waves.) I have to think that while visions for future mobility infrastructures. Some have started to unspoken, the anticipation of the current tariff situation was one pilot new programs. But all of them understand that no move driver behind these decisions. Raw materials were another factor into the future will be possible without your buy-in and help. as natural rubber prices are expected to climb. And inventories are Your place is assured. tight right now. Last but not least, here’s my final question: “No matter what the Question: Will COVID-19 continue to cast a cloud over our industry? new year brings, will independent tire dealers continue to be the Answer: “Cannot predict now.” Ultimately, tire demand is a function preferred option for tire buyers?” of consumer confidence, which is still on shaky ground. The sucThe answer to that one is simple: “Signs point to yes” — as they cessful distribution and acceptance of COVID-19 vaccines should always have and always will. help alleviate public concern, and a sustained decline in infection On behalf of the MTD team, I hope 2021 turns out to be the best year in your company’s history! ■ rates will help, too. Business rebounded last summer, when stayat-home orders were relaxed and pent-up demand uncorked. But next time around, we need it to stick. If you have any questions or comments, please email me at mmanges@10missions.com. eaders of a certain age will remember the Magic 8-Ball, that strange, plastic toy that provided instant answers to those all-important questions (“Will I ace my math test?” “Will I win the lottery?” “Will the Browns ever make it to the Super Bowl?”). Granted, most of those answers were — and still are — somewhat cryptic, reinforcing my long-standing theory that nobody should seek advice from the Magic 8-Ball before making big decisions. Before you ask, “Where is he going with all of this?” I thought it would be fun to apply Magic 8-Ball-like answers to several tire industry-related questions that have been on my mind and could very well be on your mind, too. (Kids, don’t try this at home!) I also have added some commentary to back up my predictions.

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ModernTireDealer.com DIGITAL RESOURCES FOR THE INDEPENDENT TIRE DEALER

MTD website keeps you informed MTD’s website provides you with breaking news, feature articles, links to exclusive MTD research and blogs, new products and much more 24/7. Check it out today!

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eNewsletters Sign up now for Modern Tire Dealer eNewsletters. We’ll send you the latest news and most popular articles. Go to: www.moderntiredealer.com and scroll to The Modern Tire Dealer Newsletter is the Definitive Source for Tire Dealer Success.

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Recent moves by Point S in Ontario provide the group with a bigger presence in that province. It was one of the most well-read stories on www.moderntiredealer.com.

Charging forward despite COVID-19 Big manufacturers and big independent dealerships grabbed headlines and readers’ attention on www.moderntiredealer.com last month. From increased tire prices and the debut of new products and programs to more mergers and expansions, companies pushed forward despite the ongoing pandemic. Here are our top 10 news items: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Town Fair Tire and Mavis Tire Express to merge Goodyear thanks dealers for support during Trump boycott Bridgestone pilots subscription-based tire service platform Bridgestone recalls 1,923 tires Goodyear consumer tire prices are on their way up Goodyear unveils three all-terrain tires coming in 2021 Sumitomo’s New York plant produces its first OE tire Hercules will add products, build on dealer program in 2021 Barnwell House of Tires successfully completes ‘corona shift’ Point S expands in Ontario

HOME OFFICE 3515 Massillon Rd., Suite 350 Uniontown, OH 44685 (330) 899-2200, fax (330) 899-2209 Website: www.moderntiredealer.com PUBLISHER Greg Smith, ext. 2212 gsmith@10missions.com EDITORIAL Editor: Mike Manges, ext. 2213 mmanges@10missions.com Managing Editor: Lori L. Mavrigian, ext. 2216 lmavrigian@10missions.com Senior Editor & Digital Projects Editor: Joy Kopcha, ext. 2215 jkopcha@10missions.com PRODUCTION Art Director: Zach Pate Graphic Designer: Olivia Curti Production Artist: Lauren Coleman Production Manager: Karen Runion, ext. 2210 krunion@10missions.com SALES South and Texas: Greg Smith gsmith@10missions.com (330) 899-2200, ext. 2212 Midwest: Bob Marinez bmarinez@10missions.com (330) 899-2200, ext. 2217 West Coast: Marianne Dyal /The Dyal Company mdyal@10missions.com (706) 344-1388, mobile (619) 990-5536 Automotive Aftermarket: Dan Thornton dthornton@10missions.com (734) 676-9135, mobile (734) 626-4950 Reprint Sales: Karen Runion krunion@10missions.com (330) 899-2200, ext. 2210 CUSTOMER/SUBSCRIPTION SERVICE (800) 260-0562 subscriptions@moderntiredealer.com

EXECUTIVE OFFICE 10 Missions Media 571 Snelling Ave. N. St. Paul, MN 55104 (651) 224-6207 CORPORATE OFFICERS President: Jay DeWitt Vice President: Chris Messer Vice President, Content & Events: Bryce Evans

Modern Tire Dealer (ISSN: 0026-8496) is published monthly by 10 Missions Media, LLC, 571 Snelling Ave N, St. Paul, MN 55104-1804. Copyright © 2021 by 10 Missions Media, LLC. All rights reserved. Modern Tire Dealer content may not be photocopied, reproduced, or redistributed without the consent of the publisher. Periodicals postage paid at St Paul, MN and additional mailing offices. POSTMASTERS Send address changes to: Modern Tire Dealer, 571 Snelling Ave N, St. Paul, MN 55104.

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Industry News

Bridgestone pilots subscription platform

CONSUMERS WOULD PAY MONTHLY FEE FOR TIRE, SERVICE WORK

ould your customers pay a monthly fee for the delivery of tire and vehicle maintenance services? Bridgestone Americas Inc. is in the process of finding out. Since late-November, the company has been piloting what it calls a “subscriptionbased model” in Nashville, Tenn. In this interview, Riccardo Cichi, president and chief sales officer of Bridgestone’s Americas Tire Group, discusses the program and why he believes dealers will want to participate in it. He also provides deeper insight into the tiremaker’s future mobility strategy, which Bridgestone executives discussed during the company’s recent Consumer Tire Business Meeting. MTD: Can you elaborate on what Bridgestone’s new subscription-based model looks like, how it will work and when the company plans to roll it out? Cichi: In Europe, we developed a program called Mobox, which is a subscription model. You pay x amount and we take care of everything. We take care of the tires, we’ll rotate them, (perform) flat repairs — any issue you may have. So from there, we brought it back to the U.S. We’ll give (consumers) the option to pay a monthly fee for any maintenancerelated service. It could include tire rotation, it could be brakes, it could be oil changes, it could be emergency roadside assistance. This would be a service where we’d take care of everything and manage it through a subscription model. The concept is to give an option to the consumer as they want more service, especially now. We’re in the testing phase. We obviously want to see how the market reacts. But we are accelerating and trying to see the feedback and market data and everything that goes with that. We plan to launch in 2021. This is what we’re working on.

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MTD: Are you testing the concept at Bridgestone company-owned stores, tire dealerships or a combination of both? Cichi: We’ve started with Bridgestone stores and obviously want to work with our (dealer) partners. It’s important that we get feedback from everybody. We don’t want this in any way, shape or form to be viewed as competition (by our dealers). This is something that we can do together.

MTD: Many independent tire dealers have openly embraced new digital tools, including text-to-pay, online scheduling and beyond. Is this the right time for pursuing new models and platforms? Cichi: We can capitalize on this together. Service delivery is the critical piece of the value chain — where value creation occurs and customer relationships are built. Dealers will play a critical role. Bridgestone believes strongly in the need for physical locations “The independent MTD: So dealers will be part tire dealer will in the future of mobility. This is play a critical of the pilot, as well? how it all comes together. And role in delivering Cichi: Absolutely. That’s the way these important over time, we will be able to we have it set up in Europe and solutions,” says predict when service is needed that’s the way we want to set it Riccardo Cichi, and prescribe when actions will up here. We have to see what president and need to be taken. chief sales officer interest there is. Some dealers of Bridgestone’s Of course, there has to be a may already offer some of these Americas Tire need and there has to be a want services, so we don’t want to step Group. from the consumer, but we are on anybody’s foot. But this is convinced this is going to come. something we will be evaluating with Boston Consulting Group says that by our dealers. 2030, 50% of vehicles sold will be electric or hybrid. MTD: Can you describe some of the All of these technologies are coming other things that the company is doing together. And now it’s picking up speed. to move itself into the future mobility We’re going to be there with all of our ecosystem? customers. Cichi: We have a vision of a future where Dealers will play a fundamental role. mobility is going to be safer, more efficient, Dealers will be critical in everything we more sustainable and definitely more do. They are part of the team. We want to profitable. These are things we’re working co-create together and capitalize on these on in terms of mobility solutions as an opportunities. offering. It’s a bold vision that requires The independent tire dealer will play a collaboration with our strategic partners, critical role in delivering these important so we will continue to invest in our core tire solutions. business, while at the same time creating There are so many changes happening concurrently and I think COVID-19 has mobility solutions. The digital world has really accelerated. accelerated a lot of them. And more and Our core tire business still remains. We more things are coming into play. need to invest there — in technology and The world is changing and there’s no everything that goes with it. But there are turning back. At least that’s the way we see other sources of service that are coming it. The bottom line is, how can we capture our way. That’s what we see. this and how can we co-create value? MTD January 2021 1/12/21 10:28 AM

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Industry News

Bites Michelin to hike prices Michelin North America Inc. will increase prices on select Michelin and BFGoodrich brand passenger and light truck tires up to 5%, effective Feb. 1. Hikes may vary “across specific products within each brand portfolio,” say Michelin officials. Select commercial truck tires will be subject to price increases, as well.

More COVID-19 relief on way In late December, President Donald Trump signed the 2021 Consolidated Appropriations Act, which provides extra relief to small businesses, into law. The act features an extension of the Paycheck Protection Program, including a number of related amendments, plus several tire industry-specific items.

MFA to focus on Big O stores MFA Oil Co. has sold its eight Jiffy Lube stores in mid-Missouri to Allied Lube Group as a way to focus on its Big O Tires locations. The deal includes four locations in Columbia, two in Jefferson City, one in Fulton and one in Sedalia.

NTW adds Prinx truck tires National Tire Wholesale customers will have exclusive access to the Prinx brand of medium truck tires in North America. TBC Brands LLC says the Prinx lineup features seven tires.

Continental names leader Nikolai Setzer has taken over as executive board chairman of Continental AG, replacing Elmar Degenhart, who stepped down this past November due to health reasons.

VIP continues expansion VIP Tires & Service has moved into the Boston suburbs with the opening of a store in Brookline, Mass., its fifth location in the state. VIP bought and renovated the former Liner Tire store.

Nexen Roadian GTX is OE The Roadian GTX from Nexen Tire America Inc. has earned original equipment fitments on four model year 2021 CUVs: the Hyundai Tucson, Kia Sedona, Kia Sorento HEV and Mitsubishi Outlander. Nexen says the Roadian GTX, which was introduced in 2019, prioritizes durability and ride comfort, among other benefits.

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Town Fair Tire and Mavis Tire Express merge

wo giants in the retail tire industry — Town Fair Tire Centers Inc. and Mavis Tire Express Services Corp. — have announced plans to merge. Both will keep their existing management teams and brands, as well as their separate headquarters. “The combination of Town Fair and Mavis will unite two premier retail tire and service chains with a history of delivering the utmost customer satisfaction and the highest-quality service,” the companies said in a joint statement. The merger creates a powerhouse in the Northeast, where both of the companies are based, and where combined they operate hundreds of stores. Town Fair’s 100 stores are packed into six states: Connecticut, Massachusetts, Rhode Island, New Hampshire, Maine and Vermont. Mavis has grown into a network of 904 stores and is the nation’s second largest independent tire dealership. Its stores stretch from New York and New Jersey into the Southeast. Town Fair is the 14th largest independent tire dealer in the U.S. The Town Fair management team, led by Neil and Mike Mellen, will continue to manage all Town Fair locations from their East Haven, Conn., headquarters. David and Stephen Sorbaro and their management team will do the same for Mavis from their home office in Millwood, N.Y. Mellen said, “Since their founding, Town Fair and Mavis have solidified their positions as leading tire dealers based on our deep commitment to providing complete customer satisfaction and delivering the highest-quality service. Both companies share these values, which is why we are confident we are the right partners going forward.” David Sorbaro, co-CEO of Mavis, said, “Together, Town Fair and Mavis will realize a combined scale that better positions each of us to meet industry challenges and thrive in an ever-changing and competitive landscape.” Other tire dealers recently made expansion investments, including: Border Tire LLC: El Paso, Texas-based Border Tire LLC bought Southern Californiabased Canyon Tire Sales, a 40-year-old commercial tire dealership with five locations and one Michelin retread plant. “It has always been our goal to grow and make strategic acquisitions that expand our service footprint to our loyal customer base,” says David Shipp, vice president of Border Tire. “The synergy of the two companies coming together will greatly enhance our full service capabilities.” With the acquisition, Shipp says Border Tire becomes the largest Michelin retreader in California. Black’s Tire Service Inc: On Dec. 1, Black’s Tire Service Inc. acquired Burlington Tire Service Inc., a single-store tire dealership in Burlington, N.C., that serves both retail and commercial customers. Burlington Tire was founded in 1973 by Bill Anders, who is ready to “slow down” and semi-retire, but still plans to remain involved with the business. All 15 Burlington Tire employees were retained by Black’s Tire, which sees an opportunity to have Burlington Tire serve as a satellite wholesale location for other partner dealers in the region. Ryan Benton, who leads retail operations at Black’s Tire, says, “The Burlington Tire family... have been great customers, but more importantly, great friends.” AAA Northern California, Nevada & Utah: McLea’s Tire & Automotive Centers, a family-owned, five-store operation based in Santa Rosa, Calif., has been acquired by AAA Northern California, Nevada & Utah (AAA NCNU). Focus Investment Banking represented McLea’s Tire & Automotive Centers in the transaction. McLea’s Tire & Automotive Centers has served Sonoma County for over 40 years. Brothers Les and Rick McClea are retiring, though their sons — Darren, Brandon and Reece McLea — will continue in leadership roles at AAA NCNU. “Many companies have approached us over the years,” says Les McLea. “As lifelong AAA members and with over 20 years in the AAA Approved Auto Repair program, we know AAA Northern California will continue to put customers and community first.” MTD January 2021 1/12/21 10:28 AM

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Industry News

Bites Bridgestone recalls tires Bridgestone Americas Inc. and Bridgestone Canada are recalling 1,923 Firestone Destination LE3 and Bridgestone Ecopia H/L 422 Plus passenger and light truck tires. The tires may have been made with a small pinhole in their sidewalls, according to government officials.

Titan sells plant in Texas Titan International Inc. has sold a former tire manufacturing plant in Brownsville, Texas. Built in 1997, it sits on 108 acres. Titan ended tire production there in 2003. The factory was sold to a private commercial real estate firm.

LWG hits Colorado Springs Leeds West Groups has expanded into a new market, Colorado Springs, Colo., with the purchase of two Big O Tires stores. The acquisition gives Leeds West 18 stores in Colorado and 109 total, at press time.

Crawford will lead Tire Discounters franchise program

ire Discounters Inc. has hired industry veteran Dave Crawford to lead its recently unveiled franchise program, which will launch this year. As director of franchise development, Crawford will help “accelerate the company’s national growth by adding best-in-class franchise dealers” to complement Tire Discounters’ 135-plus locations, according to company officials. “Crawford, who has extensive retail experience, franchise and dealer relationships and a proven track record for growing franchise locations, will lead the charge to welcome family- Dave Crawford will lead Tire owned businesses that are looking to maintain a family legacy, Discounters’ new but are unable to make the financial commitment in today’s effort to create a franchise program competitive market.” MTD first reported on Tire Discounters’ plans to launch the for its dealership. franchise program this past September as part of its cover story about the dealership’s founder, Chip Wood, who was named the 2020 MTD Tire Dealer of the Year. The program will give participants access to Tire Discounters’ training, operations and communications systems and processes; marketing support, including store materials, mass media and promotions management; enhanced buying power; and more. “We are pleased to hire a legend in automotive service franchising,” says Jamie Ward, president and CEO of the Cincinnati, Ohio-based dealership.

More tiremakers increase prices

ourth quarter 2020 price hike announcements continued, with four more tiremakers implementing price increases. Sumitomo Rubber North America Inc. increased prices on Falken and Ohtsu passenger and light truck tires in the U.S. and Canada on Jan. 1. Eight percent was

the max for PLT tires. The company hiked commercial truck tire prices on Dec. 1 Goodyear Tire & Rubber Co.’s consumer tire prices rose on Dec. 1 by up to 5% for both the Goodyear and Dunlop brands. Bridgestone Americas Inc. didn’t specify the amount of its increase, but said the hike

affected passenger and light truck tires under the Bridgestone and Firestone brands. Pirelli Tire North America Inc. said its increases would vary by line and size and “are due to changing market conditions.” The increases apply to the company’s passenger and light truck tires.

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Industry News

Bites TIA cancels OTR event The Tire Industry Association has canceled its 2021 Off-the-Road Tire Conference, which was scheduled for Feb. 17-20, 2021 in Tucson, Ariz., due to concerns about the COVID-19 pandemic.

Han named CEO of Nexen Tire America

rian YoonSeok Han is the new CEO of Nexen Tire America Inc., replacing J.S. Kim, who served in the position since 2018 and has announced his retirement. In his new role, Han will oversee Nexen’s strategic direction and operations in the United States and Canada. He also will provide support “for the company’s North American original equipment sales and the company’s U.S.-based technical center in Richfield, Ohio.” In addition, Han will “provide direction on the company’s shortand long-term goals regarding operational and sales strategies.” After 15 years Nexen, Brian Han’s more than 25 years of tire industry experience includes with YoonSeok Han has 15 years with Nexen. He most recently served as Nexen Tire Corp.’s taken over as the company’s CEO in global marketing vice president. Prior to that, he spent six years as president of Nexen Tire North America. Italia, after working at the company’s home office through 2011. “On behalf of Nexen Tire America, I would like to thank Mr. Kim for his leadership and dedication to the company while serving as CEO and throughout his career with Nexen Tire,” says Han. “It is an honor to follow in his footsteps and I am very excited to build upon the company’s successes in the United States, while continuing to elevate the Nexen Tire brand to new heights across all of our industry verticals.”

Toyo Treadpass goes virtual Toyo Tire U.S.A. Corp. recently revamped its traditional in-person, SEMA Show Toyo Treadpass into a three-dimensional, virtual experience. complete with a dozen, one-ofa-kind vehicles making their world debut.

Tire Pros network grows The Tire Pros dealer network grew by more than 20 locations in more than a dozen states during 2020. States with new Tire Pros stores include Alabama, California, Georgia, Louisiana, Mississippi, Nevada, New Mexico, Ohio, Oregon, South Carolina, Tennessee, Texas and Utah.

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Industry News

Bites New D/C for ZC Rubber ZC Rubber America Inc. opened a new distribution center in December to serve the eastern U.S. The warehouse, located in Statesville, N.C., will serve as the distribution hub for Arisun truck tire customers and dealers in the region.

Crisis strengthens vision Alexis Garcin, chairman and president of Michelin North America Inc., says the COVID-19 pandemic has intensified the tiremaker’s focus on sustainable mobility and has “made our strategy even more relevant.”

Hankook OE on trucks Hankook Tire America Corp. is providing original equipment tires for the heavy-duty models of both the 2021 Chevrolet Silverado and GMC Sierra. Both trucks will be fitted with Hankook Dynapro MT2 tires in size LT275/70R18.

Pirelli adds to Elect range Pirelli & Cie SpA is developing versions of its Winter Sottozero 3, Scorpion Winter and P Zero Winter tires for its Elect range for electric and hybrid vehicles.

Tech extends e-commerce Tech Tire Repairs, a wholly-owned company of Technical Rubber Co., is expanding on the success of its U.S. e-commerce website with delivery now available to Canadian customers.

Winter tire use declines in Canada

inter tire use in Canada dropped in nearly every province in 2020, according to an annual survey commissioned by the Tire and Rubber Association of Canada. The use of winter tires has been mandated in Quebec since 2008, but other provinces offer an array of incentives for consumers to install and use winter tires. In the 2020 survey, responses were divided into one of six geographic areas. The provinces of Manitoba and Saskatchewan are combined into a single geography — and that was the only region that showed a slight increase in winter tire usage from 2019 to 2020. Here’s a look at the 2020 results compared to 2019:

GEOGRAPHY/PROVINCE

2020

2019

Atlantic Canada

84%

91%

Quebec

100%

Ontario

66%

69%

Manitoba/Saskatchewan

60%

59%

Alberta

59%

63%

British Columbia

60%

68%

National average

72%

75%

Skubish replaces Feasel Bridgestone Americas Inc. has named Ben Skubish the new general manager of its Bridgestone Affiliated Retailer Nationwide Network. He replaces Barry Feasel, who retired on Jan. 1 after a 40-year career.

Yokohama tire wins award The latest addition to Yokohama Tire Corp.’s Geolandar line, the Yokohama Geolandar CV G058, has been named a 2020 Good Design Award winner.

OTR pioneer Fletcher dies Bob Fletcher, who founded Cobre Tire in 1970, recently died at the age of 100. Under Fletcher’s leadership, Cobre grew into one of the largest OTR tire dealerships in North America.

16 02_MTD_News-Numbers.indd 16

The association says year-to-year variances are not uncommon due to the relatively small sample size, and it doesn’t believe the decline in winter tire use is significant. Excluding Quebec, where winter tires are required, 65% of Canadian drivers will use winter tires during the 2020-2021 season, the association says.

DOC says duties should be imposed on tires from South Korea, Taiwan, Thailand and Vietnam

he U.S. Department of Commerce (DOC) says it has “preliminarily determined that exporters” from South Korea, Taiwan, Thailand and Vietnam “have dumped” consumer tires into the United States at rates of 14.24% to 38.07% (South Korea), 52.42% to 98.44% (Taiwan), 13.25% to 22.21% (Thailand) and up to 22.3% for Vietnam. The DOC is scheduled to announce its final determinations on May 14, 2021, unless deadlines are extended. (See www.moderntiredealer.com for specific rates.) ■ MTD January 2021 1/13/21 10:27 AM

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1/5/2021 3:33:12 PM

NumbersThatCount

Relevant statistics from an industry in constant motion

1.6 ounces Amount of gas a car consumes every minute it idles. If a car is going to idle for more than 30 seconds, it is more fuel-efficient to turn it off and restart the car. A car consumes .5 ounces of gas on start-up. SOURCE: WWW.YEAHMOTOR.COM

$1,000,000

1914

The year the first electric traffic light was put into place on the corner of Euclid Avenue and East 105th Street in Cleveland, Ohio.

The amount of the largest speeding fine. It was given to a Swedish man who was driving at 180 miles per hour in Switzerland, where fines are proportional to income.

190 to 220 degrees Fahrenheit The temperature at which a car engine operates. SOURCE: WWW.YEAHMOTOR.COM

SOURCE: WWW.THEFACTFILE.ORG

SOURCE: WWW.FACTRETRIEVER.COM

1916

The year the Woods Vehicle Co. of Chicago invented a car that had both an internal combustion engine and an electric motor. It was called a hybrid. SOURCE: WWW.YEAHMOTOR.COM

359 million Number of gallons of gas consumed each day by passenger cars during a normal year. SOURCE: WWW.FACTRETRIEVER.COM

$1,300+

Average annual cost of car insurance in the U.S. according to Quadrant Information Services. The highest average annual cost for car insurance was $2,000 in Michigan. SOURCE: WWW.THEBALANCE.COM

460,476

Number of miles recorded in the longest driven journey as of April 2017. It was achieved by Emil and Liliana Schmid of Switzerland, who travelled across 186 countries in the same Toyota Land Cruiser in a journey that started in October 1984 and is still ongoing. SOURCE: GUINNESS WORLD RECORDS, WWW.GUINNESSWORLDRECORDS.COM

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MTD January 2021 1/12/21 10:29 AM

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Industry analysis “Being open with the right tires is a big part of the battle for business,” says tire industry analyst John Healy. “And independents largely were able to do that in 2020.”

A ‘return to normal?’

ANALYST JOHN HEALY DISCUSSES TARIFFS, M&A, E-COMMERCE, PRICING, FUTURE MOBILITY AND WHY THE DOMESTIC TIRE INDUSTRY WILL MOVE FORWARD — NOT BACKWARD — IN 2021 By

Mike Manges

s an analyst at Northcoast Research Holdings LLC, John Healy has a bird’s-eye view of the domestic tire industry. Healy, who also writes MTD’s monthly Your Marketplace column, calls 2020 “the most unpredictable and at the same time, the most surprising” year in recent memory. “It was not a terrible year to be in the retail tire business,” he says. Healy explains why — and looks ahead to 2021 — in this exclusive MTD interview. “From our perspective, 2021 will be all about managing a ‘return to normal.’ However, defining ‘normal’ is the difficult part.”

20 02_MTD_News-Numbers.indd 20

MTD: Many consumer tire dealers have told MTD that their business rebounded much more quickly than anticipated. From your perspective, what drove this? And did the rebound surprise you, as well? Healy: Being in the prediction business is not something that was easy in 2020 and expecting the tire industry — on the replacement side — to hold up as well as it has was unexpected. We view tire replacement demand as something that contains a high degree of variability due to weather, economic and miles drivenrelated factors. We estimate that the United States replacement market was down high single

digits this year, with summer activity levels for many dealers above year-ago levels, while not quite recovering from the demand destruction caused by the pandemic. That said, there are probably a number of reasons in hindsight that could be described as contributors, including changes in miles driven as consumers moved away from flying to more controlled environments, such as their own vehicles; increased money in the pockets of some consumers due to stimulus activity this summer; and some pent-up demand that was released, associated with deferred maintenance. Additionally, we note that Walmart idled its automotive centers for much of MTD January 2021 1/12/21 10:29 AM

the year, roughly mid-March through September, with the retail giant using this part of the store for health screenings, while also experiencing tight labor dynamics. Given this, we think this business needed to go elsewhere and likely created some demand lift for those who remained open to serve customers. Being open with the right tires is a big part of the battle for business. And independents largely were able to do that in 2020. MTD: During COVID-19, dealers have reported that many customers have flocked to lower-priced brands, a trend that has been validated by your own research. How long will this trend last? Healy: The movement to tier-two and tier-three manufacturers from a replacement market standpoint is not new and is something that probably is driven solely by one factor: price. We believe this value part of the market experienced abovemarket growth trends in 2020. We think consumers at times are reluctant to pay up for tires when replacement

w w w . M o d e r n T i r e D e a l e r. c o m 02_MTD_News-Numbers.indd 21

activity is needed. We also think the move toward SUVs and pickup trucks brings with it some additional surprises, as some customers are stunned at the bigger price for bigger tires compared to previous models of vehicles owned. As we look to 2021, there is potential for growth in the value category to see some abatement. We are of the view that if tariffs/duties are imposed on import units, we will see the price point of these units move higher, as distributors and retailers will pass along these increases to the consumer. This, by default, will narrow the pricing gap between value and tier-one brands and thus will potentially allow tier-one operators to recoup some share or pass along their own form of price hikes. From where we sit today, we think tier-one brands will look to push pricing higher and not aggressively play the share game. MTD: How long will it take for the North American tire market to return to 2019 levels?

Healy: We see the tire market in North America as the summation of four parts: original equipment, replacement, consumer and commercial. In any given year, each of these end markets may be benefiting or hurting from a number of factors. That said, as we look to 2021, itâ€™s hard for us to see how each of these markets are not in growth mode. Given this, we do not think it is unachievable for the industry to climb back to 2019 levels in 2021. We look for more consistent vehicle production and vehicle sales to be items that happen on both the consumer and commercial side of the market in 2021, which will help aid the tire industry. Additionally, the pending tariff situation could allow for share gains for U.S.manufactured units, as well. We think industry inventories are on the skinny side these days. But there could be a situation where if winter weather is severe enough, the first part of 2021 could see some further lift than the recovery/rebound we have seen in recent months.

21 1/12/21 10:29 AM

Industry analysis MTD: During 2021, the U.S. Department of Commerce is expected to announce its final ruling on tariffs imposed on consumer tire imports from South Korea, Taiwan, Thailand and Vietnam. If punitive tariffs are enacted, what will be the short-term and long-term impact on the U.S. market, including the impact on those companies that either manufacture or bring in tires from those four

countries? Will this force an eventual shift in manufacturing to other countries or zones? And how will tariffs impact tire dealers? Healy: The impact of tariffs and the ultimate beneficiaries are always complicated. That said, we see domestic manufacturers that produce in this region as winners. Given this, we think tariffs likely increase the cost of imported passenger and light

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‘If 2020 couldn’t derail the M&A train, we are not sure what will.’ truck tires and as such, give a level of cover for domestic manufacturers to pursue share gains or to push along price. We think the lean is toward price. Roughly 30% of the U.S. replacement market is sourced from Southeast Asia and we believe that there are limited paths for these tires to go elsewhere, which we believe creates a favorable window for domestic, in-region manufacturers. MTD: Despite the impact of COVID-19, it appears that merger and acquisition activities among independent tire dealerships did not slow down during 2020. The biggest acquisition last year, of course, was Meritage Group LP’s purchase of Les Schwab Tire Centers. Do you expect Meritage to make any substantive changes to Les Schwab’s operations? What are some of the complexities of an outside-the-industry entity purchasing and running such a large, well-established, multi-location property? Healy: We have long been admirers of the Les Schwab operation. It is hard to say that there have been many in the industry more successful than those who have worn that name badge. While the motivations of an acquirer are never fully known to us as outsiders, we would say major changes to the Les Schwab operation would be unwise. “Why change what is working?“is what we would ask Meritage. Additionally, (Schwab’s) go-to-market strategy from a branding/service standpoint has unique attributes that if altered, may have a long-term impact on the business. That said, all acquisitions bring about change and we — like everyone else — will watch with bated breath to see what unfolds for this great operator. MTD: Greenbriar Equity Group continues to acquire dealerships and auto store chains. Leeds West Groups continues to expand its footprint, primarily by buying Big O and Midas franchise locations. What should we expect to see from both companies in 2021? In addition, Monro has returned to the M&A game MTD January 2021 1/12/21 10:30 AM

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1/5/2021 3:35:40 PM

Industry analysis after a brief timeout. Do you expect Monro to make more acquisitions, and if so, when? Healy: If 2020 couldn’t derail the M&A train, we are not sure what will. As we look at 2021, the pace of M&A (will be) somewhat slower, but with some very high-profile deals occurring. We think private equity-backed outfits — as well as strategics, like Monro — still remain committed to getting bigger via acquisitions. With the durability of the business demonstrated last year, we see this as likely, causing some to believe that the time is right to make more deals in the space. As we look at the situation at Monro, we are of the view that the company remains committed to pursuing strategic M&A — especially on the West Coast — to complement the company’s initial inroads into that market. That said, we do think that the splashy, larger-type deals are likely off the table until a long-term answer for Monro’s CEO position is defined. Once this occurs, we imagine that there will be an incubation period for new leadership and the board to get on the same page for the long-term approach to M&A and growing the business. “When the transaction occurs, we think many — if not most — customers want the approval and viewpoint of a trained tire professional,” says Healy. “We have a long-term view that tires are sold and not bought.”

E r L o g o n to yo u o rta l O E M W h ee l P

24 02_MTD_News-Numbers.indd 24

To e r e ! wh y r ve Or Te xt Pic s to

MTD: 2020 was an interesting year for e-commerce. Michelin North America Inc. discontinued its e-commerce platform. Other providers, like SimpleTire LLC, have continued to invest in enhanced capabilities. More consumers, as a whole, are turning to online sellers, as many tiremakers have noted. What’s your take on the e-commerce channel as 2021 begins? Healy: It is hard to read into moves that companies made to de-emphasize investments in 2020. The pandemic made spending on many initiatives subjective for nearly all companies and we would not read into the curtailment of e-commerce offerings by any outfit as a long-term indicator of lack of fit or viability. We think the e-commerce situation for the tire industry is one that is somewhat of a work in progress. We think tire research — for example, how much to pay and consumer reviews — is an area that continues to garner traction and grow. That said, when the transaction occurs, we think many — if not most — customers want the approval and viewpoint of a trained tire professional. We have a long-term view that tires are sold and not bought. This nuance centers around our view that consumers ultimately want to make sure (they consult with) someone who knows how those tires will fit, how they respond and most importantly, their quality, prior to making the purchase decision. Outside of the actual purchase and research side of the tire-buying process, we think scheduling service online and via apps is an area where national and regional outfits are gaining traction. We think having an e-commerce service solution is of more importance than having an e-commerce tire buying offering. And we expect that this will be the case for some time. MTD: Several tire manufacturers implemented price hikes in 2019, followed by more as 2020 drew to a close. A number of tire manufacturers also implemented price increases on Jan. 1 and more are on the way in February. Will we see another wave of price increases in 2021? If so, what will drive this? MTD January 2021 1/12/21 10:30 AM

25_TIRECO_0121.indd 25

1/5/2021 3:35:18 PM

Industry analysis Healy: Tire pricing is and always will be something that is driven by input costs, just as much as the motivations of manufacturers and supply/demand. Will this change in 2021? Unlikely. We see an industry that had to idle production in the spring (of 2020), which has brought about a depletion of industry inventories.

We continue to hear from dealers that fill rates and supply are sub-optimal. Given this, along with the potential for tariffs, the industry is well-positioned for some pricing lift. Additionally, we think as demand goes, so will raw material prices. Given more steady production, it is likely that some key input costs will lift higher in 2021

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and tire manufacturers will see input cost inflation.

‘We continue to hear from dealers that fill rates and supply are sub-optimal.’ MTD: Tire company executives are placing greater emphasis on “future mobility” (autonomous vehicles, electric vehicles, etc.). But many of these vehicles aren’t due to hit the market for several more years. How should tire dealers approach this shift, considering the fact that EVs currently make up a relatively small part of the market? Healy: I see the move toward EVs as having larger ramifications on dealers who provide more traditional auto care service outside of tires. Changes to the engineering and functionality of the vehicle will bring about changes in traditional repair cycles, as well as what drives store traffic. (Gone, in some cases, will be oil changes as a traffic driver.) For many traditional tire dealers, we do not see EVs as having medium-term implications. That said, one could argue that with changes to EVs, there could be a level of awareness toward the maintenance of the vehicle that is different due to the vehicle being seen as more fragile or unpredictable to the customer, especially in the case of first-time EV owners. Given this, we could see higher attachment rates of OE fitments on vehicles as they enter the replacement cycle, thus causing dealers to stock up on higher-priced inventory, rather than value offerings, which have become popular in recent years. MTD: What will the incoming Biden administration mean for the domestic tire industry and tire dealers? Healy: With any change in administration, there will be significant changes to global trade, as well as how Americans feel about their financial future. Over the last four years, the Trump administration provided a good level of economic cover for the industry and brought about some protection from a trade standpoint. Going forward, we are not of the view that some of these benefits to the industry will change. During the Obama administration, there were policies that were pro-U.S. MTD January 2021 1/12/21 10:30 AM

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Industry analysis tire industry, from a duty standpoint on Chinese imports. And at this point, reading the economic tea leaves does not yet make us conclude that the backing the industry has received will dissipate. Regarding the impact of changes in the administration on underlying demand, we think that more cash in the consumer’s pocket helps tire demand.

So if Biden’s efforts can be accretive to the economic outlook, then we would expect positive things for the replacement and OE market. If not, things might not be as bright as they have been the last few years. As we look to 2021, we think the normalization of economic activity and the re-emergence of the American

consumer after the availability of the COVID-19 vaccine will be a bigger impact than what either administration could have on the industry. MTD What are the most critical things that independent tire dealers should prepare for as 2021 begins? What should they keep an eye on? Healy: From our perspective, 2021 will be all about managing a “return to normal.” However, defining “normal” is the difficult part. We do not expect a rebound in travel activity until the second half of 2021. Some in the forecasting business believe it may take two to three years for travel levels to return to pre-COVID-19 levels.

‘We do not expect a rebound in travel activity until the second half of 2021.’

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Additionally, the recent de-urbanization of some cities brings unknowns. Will people return to some major metro markets or will working from home/remotely be with us for a longer period? That’s still anyone’s guess. Given this, we think finding out what the new normal is should be the place where we start the planning process. Beyond this, reducing friction in terms of serving the customer is also key. A focus on a better in-store experience and e-commerce are areas of increased attention and focus by many large automotive players and we think tire dealers should not be excluded from this group. We see it as ver y unlikely that anything that took place in 2020 will cause the industry to go backwards in terms of progress. This means more appointments booked online, customers shopping for the best price and even in some cases, tires being delivered to the customer, with dealers serving as installation partners. Customers and the industry are changing and this change will only continue in 2021. While some may wonder if tires will be bought online in a major way, we remain reluctant to support that view. That said, we believe dealers need to have a strong online presence to book appointments and also give customers the ability to find them when they are in need of support. ■ MTD January 2021 1/12/21 10:31 AM

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Yo u r M a r k e t p l a c e

Tough times ahead?

WHY SELL-OUT LEVELS ARE TRENDING NEGATIVELY By

John Healy

ollowing recent trends, our latest conversations with dealers leave us with a view that retail sell-out trends are continuing to trend downward, showing decreases on a sequential basis since this past October. In November, sell-out trends also entered negative territory for the first time since June 2020 as surveyed dealers reported an average unit sales decrease of 3.6% versus November 2019 levels. The month marked the shift away from recovery to another dip in volume, although not as dramatic as the fall-off that occurred in March and April. Overall, our tire demand index is down 20% year-over-year. Our contacts attribute recent declines to a second wave of COVID-19, which has caused some state and local governments to bring back business restrictions. This ultimately impacts consumer behavior, including driving patterns, as well as the overall economic environment.

THE IMPACT OF SHUTDOWNS

With the recent demand declines prompted by additional spikes in COVID-19 infections, we looked at a number of data points to assess the health of automobile travel, which correlates to tire usage. In looking at state reopenings and subsequent pausings and closings in recent weeks, at press time we see that 31 states have reopened or are mostly open again, while 11 states have paused their reopenings. Eight states, which represent around

25% of the total U.S. population, are in cases around the country, the reality of the shutdown mode. long-term economic backdrop and changes in power at the federal government level. While there has been a recent increase of COVID-19 infections in many local We also note that as customers seem to areas within states, some governors appear have settled on looking for both value and hesitant to reintroduce sweeping economic performance, they are leaning heavily toward restrictions and are instead allowing county value. We believe this trend will continue in and municipal governments to impose their the near future. But when more confidence own restrictions. is instilled in consumers, a shift back to That being said, we expect to see further tier-one and tier-two brands could follow. curtailment of driving in the near term as We continue to be impressed by the COVID-19 cases remain at record levels. discipline that tier-one and tier-two manufacturers have shown in Turning to miles driven, there has their efforts to balance volume versus price, been a significant Our contacts attribute regression in recent but also recognize recent declines to a months. October saw the fact that several an average year-overtire manufacturers second wave of COVID-19. year decline of 9.1%, have elected to raise while November consumer tire prices brought an average year-over-year decline over the last couple of months. At the dealer and distributor level, we of 13.1%. In addition, Apple’s Mobility Trends also continue to be impressed by the tactical Report has indicated that the number of approach to inventory allocation that we people who are searching for driving direcare seeing. Essentially, downstream players tions has fallen, with month-by-month have been successfully directing orders in declines starting during the late-third quarter a way that capitalizes on pricing spreads in of 2020. the market.

TIER UPDATE

Our latest research shows that budgetconscious consumers continue to shift to the value tier. In fact, tier-three brands are enjoying the most growth at the moment, which is unsurprising due to persistent uncertainty due to the recent spike in COVID-19

Snapshot of Dealers’ PLT Tire Volumes (Year-Over-Year Change) Sep-19

Oct-19

Nov-19

Sep-20

Oct-20

Nov-20

Average

Increase

38%

50%

55%

57%

40%

44%

41%

Flat

38%

30%

15%

14%

30%

11%

29%

Decline

24%

20%

30%

29%

30%

45%

30%

Total

100%

SOURCE: NORTHCOAST RESEARCH ESTIMATES

30 02_MTD_News-Numbers.indd 30

NATURAL RUBBER REBOUND

Looking at raws, the basket of raw materials to make a standard replacement tire has fallen by 1.6% on a year-over-year basis. Holding current spot prices flat would yield a 2.1% year-over-year decrease in input costs needed to “build a tire.” Looking at each component individually, carbon black’s cost pressures continue to subside. Crude oil has experienced extreme cost pressures. Synthetic oil prices have trended downward, as well, but natural rubber prices have risen recently. ■ John Healy is a managing director and research analyst with Northcoast Research Holdings LLC, based in Cleveland, Ohio. Healy covers a variety of subsectors of the automotive industry.

MTD January 2021 1/12/21 10:31 AM

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2021 MTD Facts Issue

What a year! TIRE INDUSTRY SURVIVED A TOUGH 2020. NOW WHAT?

uch has been written about the devastating impact that the COVID-19 pandemic had on the world economy during the first half of 2020. Less has been written about what has happened since then, including a faster-than-anticipated economic recovery that kicked in during the summer months. According to the International Monetary Fund’s (IMF) most recent World Economic Outlook, commerce “normalized” at an above-expected rate this past summer, reaching an apex during the third quarter, with a bruised-but-unbowed global economy “climbing out from the depths to which it had plummeted during the ‘Great Lockdown’ in April.” The same trajectory played out in the U.S. and — as a microcosm within it — the domestic tire industry. Both tire manufacturers and tire dealers enjoyed a rebound in business during June, July, August and beyond, thanks to the release of pent-up demand driven by economic stimulus, the relaxation of strict stay-at-home orders, an uptick in vehicle miles driven and other, interdependent factors. Tire manufacturers, in particular, benefitted from this “restart” as units began to flow into the original equipment channel again, when vehicle manufacturers ramped up production following a significant draw-down. (More than 90% of vehicle manufacturers in the U.S. had suspended production by the end of the first quarter, according to reports. New vehicle sales bottomed out in April.) Various tire manufacturers’ third quarter financials reflected a resumption of positive momentum, as they continued to jockey for position on the global stage.

DEALERS ADAPTED TO CHANGE

As the tire and auto service industries remained “essential,” tire dealers, in particular, displayed a tremendous amount of resilience. Agile, quick-thinking dealers used the pandemic as an opportunity to introduce new services, including text-to-pay, online scheduling and vehicle pick-up and delivery, among others — many of which were so well-received by customers that they have become permanent offerings. As more consumers turned to e-commerce, many tire dealers also shored up their online presence, making it easier for in-market buyers to connect with them.

World Leaders in New Tire Sales (Fiscal year 2020; in billions of U.S. dollars)

Tire Company

2020

2019

Bridgestone Corp.

$22.6

$27.0

Michelin Group

$22.0

$25.6

Continental AG

$11.5

$12.9

Goodyear Tire & Rubber Co.

$10.2

$12.5

Sumitomo Rubber Industries Ltd.

$6.2

$7.0

Pirelli & Cie SpA

$4.8

$5.9

Hankook Tire Co.

$4.7

$5.9

Yokohama Rubber Co.

$4.1

$5.0

Zhongce Rubber Group Co. Ltd.

$4.1

$4.0

Cheng Shin Rubber Ind. Co. Ltd.*

$2.8

$3.5

Toyo Tire & Rubber Co. Ltd.

$2.8

$3.0

Giti Tire Pte. Ltd.

$2.6

$3.4

Cooper Tire & Rubber Co.

$2.5

$2.7

Kumho Tire Co. Inc.

$2.0

$2.1

*CHENG SHIN DOES BUSINESS AS MAXXIS INTERNATIONAL

Overall U.S. Replacement Tire Sales

(Total value of 2020 U.S. replacement tire market: $39.9 billion)

SEGMENT

2020

2019

Passenger

$25.6

$28.2

Light truck

$5.4

$5.7

Commercial truck

$6.7

$6.9

OTR

$1.7

$1.8

$.595

$.592

ALL FIGURES IN THIS SECTION ARE THE RESULT OF MTD RESEARCH, UNLESS OTHERWISE NOTED.

32 03_MTD_Facts.indd 32

MTD January 2021 1/13/21 10:39 AM

DID MARGINS HOLD?

Independent tire dealers fought hard to maintain their margins at a flat, year-over-year level during 2020. Average margins in the passenger retail, passenger wholesale, light truck retail and medium truck retread segments declined slightly from 2020 numbers â€” with retread margins shrinking the most. Meanwhile, commercial tire dealers were able to collect a little more for their wares.

U.S. Tire SaleS Average Margins Segment

2020

2019

Passenger (retail)

28.8%

30.0%

Passenger (wholesale)

12.6%

13.5%

Light truck (retail)

24.4%

25.3%

Medium truck (retail)

15.6%

15.4%

Retread (medium truck)

17.5%

20.0%

U.S. Light Truck Tire Shipments (in millions of units)

Year

Replacement

2020

30.4

5.0

2019

32.0

5.9

2018

31.1

5.6

2017

30.8

5.4

2016

31.4

4.9

2015

29.0

4.6

2014

28.8

4.8

2013

28.3

4.4

2012

28.3

4.2

2011

28.6

4.1

2010

28.0

3.5

U.S. Medium Truck Tire Shipments (in millions of units)

SHIPMENTS: NOT AS BAD AS EXPECTED

Given all that happened during 2020, itâ€™s no surprise that U.S. replacement passenger tire unit shipments were down for the year, dropping by around 9.% However, replacement light truck and medium/heavy truck tire unit shipment declines were not as pronounced, beating projections that were made during the first half of the year. (Replacement light truck tire shipments fell around 5%. Medium/heavy truck tire shipments dropped around 2%.)

U.S. Passenger Tire Shipments (in millions of units)

Year

Replacement

2020

18.5

4.5

2019

18.9

6.5

2018

21.0

6.2

2017

19.2

5.7

2016

18.4

5.3

2015

18.0

6.3

2014

17.3

5.8

Year

Replacement

2013

15.7

5.0

2020

202.6

36.2

2012

16.0

5.3

2019

222.7

45.1

2011

17.0

4.9

2018

217.0

47.0

2010

15.3

3.0

2017

209.3

46.0

2016

207.7

49.0

2015

205.9

49.0

2014

206.6

46.3

2013

201.6

44.0

2012

192.0

40.5

2011

196.5

36.0

2010

198.7

34.6

w w w . M o d e r n T i r e D e a l e r. c o m 03_MTD_Facts.indd 33

LOOKING AHEAD

There are a number of factors that could have a material impact on the domestic tire market in the new year. These include the distribution and effectiveness of newly introduced COVID-19 vaccines, which could boost consumer confidence; the recently passed Consolidated Appropriations Act, which includes an extension of the Paycheck Protection Program; the potential for tariffs applied to consumer tires made in South Korea, Taiwan, Thailand and Vietnam; and actions by the incoming Biden administration. Another development to watch is the continued bottleneck in transpacific container shipping, which is causing supply chain slowdowns and freight rate increases.

33 1/13/21 10:41 AM

Imports

Thailand once again tops list OF EXPORTERS TO U.S. BUT TARIFFS COULD IMPACT 2021 SHIPMENTS

ooking at passenger and overall consumer tire imports in 2020, Thailand once again shipped the most units to the United States, continuing a multi-year streak. But will this trend continue long-term? Much of that will depend on the result of the U.S. Department of Commerce’s (DOC) ongoing investigation of tire manufacturers and exporters from South Korea, Taiwan, Thailand and Vietnam. Right before press time, the DOC said it had “preliminarily determined that exporters” from those countries “have dumped” consumer tires into the U.S. Of the four countries mentioned above that are presently on the docket, only two showed gains during the past year. Vietnam increased its passenger tire exports to the U.S. by 6% and also boosted its overall U.S. consumer tire exports by 8.2%. Meanwhile, Taiwan’s passenger tire exports to the U.S. increased 1.1% and its overall consumer tire exports to the U.S. grew by 5.4%. Thailand’s passenger tire exports to the U.S. dropped by 6.4%. Its overall consumer tire exports fell 5.1%. South Korea’s passenger and overall consumer tire exports to the U.S. declined by 20.9% and 19.2%, respectively. Which exporting country gained the most ground during 2020? Malaysia, which significantly boosted its number of passenger tire shipments to the U.S. at 2.5 million units. By comparison, China exported around 2.2 million passenger tire units to the U.S. in 2020, according to MTD research. Consumer tire shipments to the U.S. from China peaked at 60.5 million units during 2014.

2020 U.S. Consumer Tire Imports

2020 U.S. Passenger Tire Imports

2020 U.S. MEDIUM Truck Tire Imports

(in millions of units)

Country

2020

2019

% CHANGE

Thailand

42.7

45.0

-5.1%

South Korea

15.5

19.2

-19.2%

Mexico

15.2

15.9

-4.4%

Indonesia

13.2

14.5

-8.9%

Vietnam

13.1

12.1

+8.2%

Canada

12.2

15.9

-23.2%

Taiwan

9.6

9.1

+5.4%

Japan

8.2

10.7

-23.3%

Chile

4.1

6.0

-31.6%

China

2.8

3.3

-15.1%

GONE COMMERCIAL

On the commercial truck tire side, tariffs continued to impact exports from China, which declined by more than 60% for the second year in a row. Both Vietnam (up 28.5%) and South Korea (up 16.6%) posted gains versus 2019 levels. (in millions of units)

Country

2020

2019

% Change

Country

2020

2019

% Change

Thailand

34.9

37.3

-6.4%

Thailand

3.7

4.5

-17.7%

South Korea

13.6

17.2

-20.9%

China

1.1

2.9

-62.0%

Mexico

13.3

14.1

-5.6%

Canada

1.0

1.6

-37.5%

Indonesia

11.4

12.5

-8.8%

Japan

1.0

1.4

-28.5%

Vietnam

10.5

9.9

+6.0%

Vietnam

0.9

0.7

+28.5%

Canada

8.6

12.4

-30.6%

South Korea

0.7

0.6

+16.6%

Taiwan

8.6

8.5

+1.1%

Brazil

0.2

0.3

-33.3%

Japan

6.5

8.4

-22.6%

Germany

0.2

0.3

-33.3%

Chile

3.4

5.5

-38.1%

India

0.2

+0.0%

Malaysia

2.5

1.6

+56.2%

Spain

0.2

0.5

-60.0%

34 03_MTD_Facts.indd 34

MTD January 2021 1/12/21 10:39 AM

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Passenger/light truck tire market share

2020 replacement Passenger Tire Brand Market Shares

2020 replacement Light Truck Tire Brand Market Shares

Goodyear.............................................11.0%

Goodyear.............................................10.0%

Michelin................................................9.0%

BFGoodrich...............................................7.5%

COVID-19 GAVE A BOOST TO CERTAIN BRANDS

Firestone................................................7.0%

Firestone................................................6.5%

Bridgestone..........................................6.5%

Michelin.................................................6.5%

Falken....................................................5.0%

Bridgestone..........................................6.0%

f one trend dominated consumer replacement tire sales during 2020, it was the gravitation of cash-strapped buyers to brands that occupy lower price points. The impact of COVID-19 and lingering economic malaise helped open the door. MTD’s passenger and light truck tire brand market share charts reflect some of the results of this movement. (All brands listed on the charts must have at least 1% share of market.) Will the domestic tire industry see a swing toward tier-one brands in the new year? Widespread distribution, acceptance and effectiveness of COVID-19 vaccines could drive increased consumer confidence. More economic stimulus — such as the recent round of checks distributed to struggling consumers — should help, as well. And while some industry experts believe that the resurgence in vehicle miles driven might have plateaued during the fourth quarter of 2020, personal vehicles will remain the preferred mode of transportation as the airline industry continues to struggle in the new year. According to the latest projections by the International Air Transport Association, the global airline industry’s 2021 revenue is expected to plummet 46% from 2019 levels. This will have a significant impact on domestic carriers.

Continental............................................4.5%

Cooper....................................................5.5%

Cooper....................................................4.5%

General..................................................5.5%

BFGoodrich...............................................4.0%

Toyo........................................................5.0%

Yokohama..............................................3.5%

Yokohama...............................................5.0%

General..................................................3.0%

Falken.....................................................4.0%

Hankook.................................................3.0%

Hankook.................................................3.5%

Kumho....................................................3.0%

Multi-Mile................................................2.5%

Multi-Mile..............................................3.0%

Nexen.....................................................2.5%

Hercules.................................................2.5%

Toyo........................................................2.5%

Continental............................................2.0%

GT Radial...............................................2.0%

Maxxis...................................................2.0%

Pirelli......................................................2.0%

Sailun.....................................................2.0%

Sumitomo..............................................2.0%

Uniroyal.................................................2.0%

Uniroyal..................................................2.0%

Kenda.....................................................1.5%

Hercules................................................1.5%

Nexen.....................................................1.5%

Nitto........................................................1.5%

Sumitomo.................................................1.5%

Primewell...............................................1.5%

Big O.......................................................1.0%

Sentury...................................................1.5%

GT Radial...............................................1.0%

Big O......................................................1.0%

Kelly........................................................1.0%

Kenda.....................................................1.0%

Mastercraft...........................................1.0%

Nitto........................................................1.0%

Maxxis...................................................1.0%

Others....................................................7.0%

Flight to value

36 03_MTD_Facts.indd 36

(based on an estimated 202.6 million units)

(based on an estimated 30.4 million units)

Others....................................................8.5% MTD January 2021 1/13/21 1:55 PM

OE ROLLERCOASTER

To say that demand for OE tires merely declined during the first half of the year would be a major understatement. By the end of March, more than 90% of auto manufacturers in the U.S. had slammed on the brakes, according to some reports — sending shockwaves through the

supply chain that forced many domestic tire manufacturers to temporarily suspend production. COVID-19 also had a profound impact on consumer spending as new vehicle purchases hit the basement in April. However, this was followed by a vehicle sales increase of more than 50% in May and

smaller fluctuations throughout the rest of 2020, according to Moody’s Analytics — the majority of them trending upwards, albeit slightly. All factors taken into account, light vehicle builds in North America are expected to total around 12 million for the year, a 20% drop from 2019 numbers.

2020 North American OE Consumer Tire Market Share BMW

Pirelli...................................34% Continental.........................26% Bridgestone.......................25% Dunlop...................................8% Michelin..................................5% Hankook..................................1% Yokohama...............................1%

FCA

Goodyear............................36% Michelin.............................14% Bridgestone.......................13% Firestone..............................7% Continental...........................5% Yokohama.............................5% Falken...................................4% BFGoodrich..........................3% General.................................3% Nexen...................................3% Hankook...............................2% Kumho..................................2% Pirelli.....................................3%

Ford

Goodyear.............................24% Michelin.............................24% Continental.........................20% Hankook.............................10% Pirelli.....................................9% General.................................7% BFGoodrich..........................3% Bridgestone.........................2% Toyo.........................................1%

General Motors

Goodyear............................37% Michelin.............................22% Bridgestone.......................14% Firestone............................12% Continental...........................6% Hankook...............................5% General.................................2% Pirelli.....................................2%

Honda

Goodyear..............................25% Michelin.............................25% Bridgestone.........................17% Continental.........................17% Hankook...............................9% Yokohama.............................4% Firestone...............................3%

Hyundai/Kia

Hankook.............................41% Kumho.................................29% Nexen.................................20% Continental.........................10%

Mercedes-Benz

Continental/........................32% Pirelli...................................25% Bridgestone.......................14% Michelin.............................11% Goodyear..............................7% Dunlop..................................6% Cooper..................................4% Yokohama.............................1%

Nissan

Continental.........................29% Michelin.............................28% Goodyear............................17% Falken...................................7% Bridgestone.........................5% Toyo.......................................5% BFGoodrich..........................4% Hankook................................2% Dunlop..................................1% General.................................1% Kumho...................................1% Bridgestone..........................57% Continental.........................27% Goodyear..............................8% Falken....................................6% Yokohama.............................2%

w w w . M o d e r n T i r e D e a l e r. c o m 03_MTD_Facts.indd 37

Subaru

Tesla

Continental.........................40% Michelin.............................25% Goodyear.............................20% Pirelli...................................10% Hankook...............................5%

Toyota

Bridgestone.......................25% Michelin.............................25% Goodyear............................12% Continental...........................6% Dunlop...................................6% Hankook...............................6% BFGoodrich..........................5% Toyo.........................................5% Yokohama.............................4% Firestone..............................3% General.................................2% Falken....................................1%

Volkswagen

Continental.........................46% Goodyear..............................14% Kumho.................................14% Hankook..............................11% Falken...................................9% Bridgestone.........................5% Nexen...................................1%

Volvo

Pirelli...................................50% Continental.........................30% Michelin.............................20%

2020 NORTH AMERICAN OE CONSUMER TIRE MARKET SHARE (BRAND TOTALS) (based on 47.8 million consumer tire units, excluding import vehicles)

Brand

2020

Goodyear

25.0%

Michelin

19.6%

Continental

13.9%

Bridgestone

13.1%

Hankook

7.3%

Firestone

4.0%

Pirelli

3.5%

General

2.4%

Kumho

2.0%

BFGoodrich

1.8%

Yokohama

1.8%

Nexen

1.5%

Dunlop

1.2%

Toyo

1.1%

Others

1.8%*

*”OTHERS” INCLUDES FALKEN AND COOPER

37 1/12/21 11:16 AM

Distribution

Changing channels

U.S. Consumer Tire Retail Market Share By Channel Channel

2020 2019

2018

Independent tire dealers

65.5%

63.0%

62.5%

Auto dealerships

9.5%

Mass merchandisers

8.0%

10.5%

Warehouse clubs

8.0%

8.5%

Tire company-owned stores

6.0%

6.5%

Miscellaneous outlets

3.0%

2.5%

WALMART TEMPORARILY SHUTTERED ITS WALMART AUTO CARE CENTERS DURING 2020.

In line with gains made in the replacement consumer tire sales channel, independents continue to gain in the wholesale channel, as well — now making up 80% of the U.S. wholesale market, followed by tire company-owned stores, which held a flat position year-over-year, and miscellaneous outlets, which lost some share.

U.S. Consumer Wholesale Market Share By Channel

PLAY IT AGAIN, SAM?

Despite consumers’ continued preference for buying tires at independent tire dealerships, most warehouse clubs have managed to hold their ground. Costco Wholesale Corp. added locations during 2020, bringing its current count up to 554, a gain of nearly 1.5% from this time last year and up 3.9% from 2018. (California has the most Costco locations, with 131 outlets.)

Warehouse Clubs in the U.S. Warehouse club

2020 2019

2018

Sam’s Club

557

599

597

Costco Wholesale Corp.

554

546

533

BJ’s Warehouse Club Inc.

219

223

AND NOW THERE ARE TWO

Looking at tire manufacturer-owned retail stores in the U.S., the number of Bridgestone outlets remained flat year-over-year. Goodyear Tire & Rubber Co.’s company-owned retail store count decreased from 580 at the end of 2019 to 557 at press time. A third tiremaker, Nokian Tyres plc, exited the company-owned retail store channel in September 2020 by selling its 10 Vianor Tire Centers. (All Vianor stores were in the New England area.)

Other Top Tire Retailers in the U.S. Retailer

Locations

Walmart Auto Care Centers

2,582

Bridgestone Retail Operations1

2,200

Monro Inc.

1,242

Discount Tire Co./America’s Tire

1,071

Mavis Tire/Town Fair Tire Centers

1,003

Pep Boys — Manny, Moe & Jack

951

Ford Quick Lane Tire & Auto Centers

802

TBC Corp.3

621

2020 2019

2018

Independent wholesale/distributors

80.0%

79.0%

79.5%

Goodyear Tire & Rubber Co.4

557

Tire company-owned outlets

8.0%

7.0%

Les Schwab Tire Centers Inc.5

443

Miscellaneous outlets

12.0%

13.0%

13.5%

Sears Auto Centers

38 03_MTD_Facts.indd 38

Channel

ndependent tire dealers remain the dominant force in replacement consumer tire retail sales in the United States and even gained ground during 2020 as vehicle owners turned to them for expert advice and service when pent-up demand that accumulated during the first few months of the COVID-19 pandemic finally loosened. At the same time, mass merchandisers lost share, which was driven in large part by the temporary shutdown of Walmart Auto Care Centers after the pandemic hit, followed by a slower-thananticipated reopening of those outlets. Auto dealerships and tire company-owned stores maintained their respective positions versus last year. While the below chart tracks market share for brick-and-mortar operations, it should be noted that online tire sales accelerated during 2020 due to stay-at-home orders and changing consumer habits.

BRIDGESTONE INCLUDES FIRESTONE COMPLETE AUTO CARE, TIRES PLUS, HIBDON TIRES AND WHEEL WORKS LOCATIONS; 2 MAVIS MERGED WITH TOWN FAIR TIRE CENTERS AT THE END OF 2020.; 3 TBC OPERATES TIRE KINGDOM AND NTB TIRE & SERVICE CENTER LOCATIONS; GOODYEAR INCLUDES GOODYEAR AUTO SERVICE AND JUST TIRES LOCATIONS; 5 LES SCHWAB INCLUDES ONLY COMPANY-OWNED STORES

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MTD January 2021 1/13/21 10:47 AM

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Distribution DEALERSHIP LOCATIONS BY THE NUMBERS

Mountain

Independent Tire Dealer Locations By Region and State

Pacific

13%

Out of the nine regions that make up the U.S., the South Atlantic area has the most independently owned tire dealership locations, with 21% of the total. The East North Central region is next at 14%. The Pacific and West South Central regions are tied, with 13% each. The West North Central area rounds out the “top five.”

(Based on 29,000 total)

New England

Maine......................................................................................11% New Hampshire.....................................................................16% Vermont.................................................................................. 6% Massachusetts......................................................................39% Rhode Island..........................................................................6% Connecticut............................................................................22%

Middle Atlantic

East North Central

14%

New York................................................................................ 36% New Jersey............................................................................21% Pennsylvania..........................................................................43% Ohio......................................................................................... 30% Indiana....................................................................................15% Illinois......................................................................................24% Michigan.................................................................................19% Wisconsin...............................................................................12%

Montana..................................................................................9% Idaho........................................................................................10% Wyoming.................................................................................4% Colorado..................................................................................24% New Mexico...........................................................................10% Arizona....................................................................................18% Utah..........................................................................................15% Nevada....................................................................................10% Alaska......................................................................................1% Washington............................................................................13% Oregon.....................................................................................10% California.................................................................................75% Hawaii.....................................................................................1%

BRAND BATTLE ROYALE

The MTD 100, which is published each July, lists the 100 largest independent tire store chains in the U.S., based on their number of outlets. The MTD 2020 also drills down into the brands that each dealership sells. Here are the 20 most-mentioned brands in the 2020 MTD 100, based on the number of dealerships that carry them.

Brands Listed in the 2020 MTD 100 2020 RANKING

BRAND

DEALERSHIPS/ 2019 LOCATIONS RANKING

Michelin

80/6,637

BFGoodrich

75/5,956

Bridgestone

74/5,399

Continental

70/6,855

Firestone

68/4,131

Goodyear

68/5,646

General

59/5,453

Uniroyal

59/3,094

Yokohama

59/4,788

Cooper

54/5,323

Hankook

48/5,599

Dunlop

42/4,939

Toyo

36/3,414

Kelly

34/2,111

Kentucky.................................................................................21% Tennessee..............................................................................35% Alabama..................................................................................27% Mississippi............................................................................. 17%

Pirelli

33/4,271

Falken

31/3,239

Kumho

28/3,538

West South Central

Nexen

23/1,007

Nitto

23/2,439

Nokian

14/1,100

West North Central

10%

Minnesota.............................................................................. 21% Iowa.........................................................................................17% Missouri..................................................................................29% North Dakota......................................................................... 4% South Dakota......................................................................... 4% Nebraska................................................................................10% Kansas.....................................................................................15%

South Atlantic

21%

Delaware................................................................................1% Maryland................................................................................ 6% Washington, D.C................................................................... 0% Virginia....................................................................................13% West Virginia...............................................................................3% North Carolina....................................................................... 20% South Carolina.......................................................................9% Georgia....................................................................................18% Florida......................................................................................30%

East South Central

13%

Arkansas.................................................................................10% Louisiana.................................................................................13% Oklahoma............................................................................... 10% Texas.......................................................................................67%

40 03_MTD_Facts.indd 40

NUMBERS ARE BASED ON TIRE DEALERSHIPS’ SELF-DISCLOSURES AND ADDITIONAL MTD RESEARCH.

MTD January 2021 1/12/21 11:16 AM

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Tire sizing

Up, up and away!

LARGE-DIAMETER TIRES CROWD PASSENGER, LT SEGMENTS

ne trend that will not reverse itself is the move toward larger-diameter passenger and light truck tires, both at the OE and replacement levels. In the P-metric category, one new 17-inch size, two new 19-inch sizes, one new 20-inch size and one new 21-inch size were added in 2020. Total P-metric sizes that are currently available equal 370.

Available Passenger Car Sizes by Rim Diameter

Most Popular Replacement Passenger Tire Sizes *SOURCE: USTMA

Size

225/65R17

205/55R16

215/55R17

215/60R16

13-inch: 14

14-inch: 26

15-inch: 55

195/65R15

16-inch: 61

17-inch: 61

18-inch: 65

19-inch: 30

225/50R17

20-inch: 34

21-inch: 3

22-inch: 10

23-inch: 2

225/60R16

24-inch: 7

26-inch: 1

235/65R17

225/60R17

235/60R18

In the LT metric category, one new 18-inch size and one new 34-inch size were added this past year. The total number of LT metric sizes equal 176.

Available LT Metric Sizes by Rim Diameter 14-inch: 6

15-inch: 18

16-inch: 37

17-inch: 30

18-inch: 33

20-inch: 23

22-inch: 17

24-inch: 9

26-inch: 3

*SOURCE: TIRE & RIM ASSOCIATION

In the LT high flotation category, one new 15-inch size, two new 17-inch sizes, one new 20-inch size, two new 22-inch sizes and one new 24-inch sizes were added in 2020. The total number of available LT high flotation sizes now equals 100.

Available LT High Flotation Sizes By Rim Diameter 14-inch: 1

15-inch: 22

17-inch: 18

18-inch: 15

20-inch: 21

22-inch: 9

24-inch: 9

26-inch: 3

28-inch: 2

*SOURCE: TIRE & RIM ASSOCIATION

*SOURCE: USTMA

OE P-Metric/Metric (current)

Rank

12-inch: 1

*SOURCE: TIRE & RIM ASSOCIATION

Most Popular Domestic OE Passenger/LT Tire Sizes

Currently, 225/65R17 is the most popular passenger tire size in the replacement channel. Four more 17-inch sizes are in the replacement passenger tire â€œtop 10,â€? listed above. (An 18-inch size is at number 10.)

Most Popular Replacement LT Tire Sizes

Size

% of total

235/45R18

4.7%

275/55R20

4.3%

225/65R17

4.1%

235/60R18

3.9%

235/40R19

3.4%

OE Light Truck (current)

Size

% of total

LT275/70R18

13.6%

LT245/75R17

11.9%

235/65R16 C

11.6%

LT275/65R18

10.8%

LT275/65R20

9.4%

OE P-Metric/Metric (previous year)

Size

% of total

225/65R17

4.1%

235/60R18

3.8%

275/55R20

3.5%

235/45R18

3.3%

235/40R19

3.0%

*SOURCE: USTMA

Rank

Size

LT265/70R17

LT245/75R16

LT225/75R16

LT275/70R18

LT265/75R16

Size

% of total

LT245/75R17

13.1%

LT235/80R17

235/65R16 LRC

11.8%

LT285/70R17

LT275/70R18

10.3%

LT275/65R18

8.6%

LT235/85R16

LT225/75R16

8.3%

OE Light Truck (previous year)

MTD January 2021 *SOURCE: USTMA

03_MTD_Facts.indd 44

1/12/21 11:17 AM

**BINDING EDGE**BINDING EDGE**BINDING EDGE**BINDING EDGE**BINDING EDGE**BINDING EDGE**BINDING EDGE**BINDING EDGE**BINDING EDGE**BINDING EDGE**BINDING EDGE**BINDING EDGE**

1/5/2021 3:44:55 PM

800.723.2553 45_FALKEN TIRE_0121.indd 45

Tire pricing

PRICES CLIMBED DURING 2020 A LOOK AT PRICING BY TIER, REGION AND MORE

erhaps the most significant pricing trend observed during 2020 was the aforementioned “flight to value” made by consumers who were financially impacted by the COVID-19 pandemic. This trend remained as 2020 drew to a close — placing a capstone on a year in which prices across all tiers continued to increase. “Over the course of 2020, we have seen tire prices across all steps trend upward slightly,” confirms J.P. Brooks, director of business development for The Fitment Group, which collects and analyzes more than eight million individual retail tire prices each week. “We found that the East South Central market — which includes Tennessee, Kentucky, Mississippi and Alabama — saw the most significant price increase” at the opening price point and fourth tier levels, specifically in size 225/65R17. “This market also trended to the higher end of advertised prices across all tiers of this specific size,” he adds.

TO THE EAST

According to The Fitment Group’s research, “some of the highest average pricing resides in the New England market,” reveals Brooks. The most dramatic price fluctuations happened in May, according to Fitment Group data. “We did see a small dip in pricing in the months of August and September, followed by a rebound in October.” The charts on these pages list passenger and light truck tire prices as they stood near the end of the year, broken down by price point, region and speed rating. (Regions listed on this page are identified slightly differently than the list of regions found on page 40.) The Fitment Group also provided a detailed look at online tire pricing across numerous e-commerce portals, including several that are operated by independent tire dealerships.

46 03_MTD_Facts.indd 46

2020 Average U.S. Advertised Tire Prices Size

Major Brand

Low-Cost

Overall

235/60R14

$160.38

$115.77

$138.45

235/75R16

$153.20

$88.46

$124.20

205/55R16

$136.32

$68.81

$120.57

215/60R16

$123.93

$72.71

$111.18

215/55R17

$157.38

$78.89

$134.34

275/65R18

$236.10

$146.79

$215.21

LT225/75R16

$190.17

$109.54

$163.49

LT245/75R16

$207.27

$124.58

$180.30

LT245/75R17

$228.03

$137.46

$198.29

31X10.5R15

$190.51

$138.75

$169.82

*SOURCE: THE FITMENT GROUP (WWW.FITMENTGROUP.COM)

The following major brand sizes listed above saw year-over-year price increases: 235/60R14, 235/75R15, 205/55R16, 215/60R16, 275/65R18, LT225/75R16, LT245/75R16 and LT245/75R17. The following major brand sizes were priced lower, year-over-year: 215/55R17 and 31x10.50R15.

Pricing By U.S. Region (Size LT265/70R17)

Region

Size

East North Central

OPP

Value

Better

Best

Winter

LT265/70R17 $150.29

$199.97

$213.98

$233.05

$210.41

East South Central

LT265/70R17 $149.05

$203.96

$220.91

$238.78

$218.00

Middle Atlantic

LT265/70R17 $134.01

$188.96

$214.63

$234.26

$209.65

Mountain

LT265/70R17 $157.97

$216.70

$208.70

$227.07

$202.08

New England

LT265/70R17 $146.05

$175.49

$227.84

$241.76

$212.78

Pacific

LT265/70R17 $153.29

$196.46

$200.60

$217.76

$198.49

South Atlantic

LT265/70R17 $143.22

$197.96

$214.67

$229.17

$205.55

West North Central

LT265/70R17 $155.37

$207.46

$209.79

$227.03

$201.33

West South Central

LT265/70R17 $147.24

$201.62

$211.18

$225.25

$198.39

*SOURCE: THE FITMENT GROUP (WWW.FITMENTGROUP.COM)

MTD January 2021 1/12/21 11:18 AM

Pricing By Speed Rating

2020 Advertised Pricing Breakdown (Size 215/55R17)

Tire Speed

Major Brand

Low-Cost

Overall

$133.72

$101.30

$128.75

$153.30

$94.58

$136.60

$162.00

$76.59

$136.56

*SOURCE: THE FITMENT GROUP (WWW.FITMENTGROUP.COM)

E-COMMERCE GROWS

The COVID-19 pandemic rapidly accelerated consumer usage of e-commerce portals. For comparison purposes, The Fitment Group collected the following advertised prices for two specific lines and sizes across a wide spectrum of websites:

Online Tire Pricing

2020 Advertised Pricing Breakdown

Nexen RoAdian GTX (size 225/65R17)

Toyo Open Country AT IIII (size LT245/75R16)

Website

Price

Website

amazon.com

$108.39

allamericanautoandtire.com $108.39

bigbrandtire.com

$118.93

americantiredepot.com

$138.06

canadawheels.ca

$141.11

belletire.com

$185.00

jackwilliams.com

$120.95

bigbrandtire.com

$236.99

lowtireprice.com

$106.00

integratire.com

$330.00

onlinetires.com

$114.99

mavistire.com

$184.08

simpletire.com

$118.98

onlinetires.com

$184.08

tirediscounters.com

$137.00

pneuschartrand.ca

$231.20

tireseasy.com

$111.45

prioritytire.com

$206.64

walmart.com

108.39

quicklane.com

$216.00

simpletire.com

$184.08

tireamerica.com

$184.08

tirebuyer.com

$184.08

tirecraft.com

$261.25

tirerack.com

$193.36

tireseasy.com

$184.08

townfair.com

$195.00

walmart.com

$182.48

w w w . M o d e r n T i r e D e a l e r. c o m 03_MTD_Facts.indd 47

Price

PRICES ARE GOING UP

A number of tire manufacturers enacted price hikes last month and earlier this month. Hankook Tire America Corp. raised its commercial truck tire prices up to 5% on Dec. 1, the same day that Yokohama Tire Corp.raised prices on select truck tires by up to 6% — following a consumer tire price hike of up to 5% that was enacted on Nov. 1. Goodyear Tire & Rubber Co. raised prices on its Goodyear and Dunlop brand consumer tires on Dec. 1. Sumitomo Rubber North America (SRNA) boosted its commercial truck tire prices up to 6% on Dec. 1. SRNA followed that on Jan. 1 with a consumer tire price hike of up to 8%, the same day that Bridgestone Americas Inc. increased the price of certain passenger and light truck tires, without publicizing exact amounts. Pirelli Tire North America Inc. raised rates on its passenger and light truck tires, varying by line and size, at the start of the new year. Michelin North America Inc. will increase prices on select Michelin and BFGoodrich brand consumer tires up to 5% on Feb. 1 What’s next? “Forecasting tire prices is very challenging at this time,” says The Fitment Group’s Brooks, due to an apparent top-out in miles driven and ongoing uncertainty around COVID-19.

47 1/13/21 10:48 AM

Commercial tire market

Diamond in the rough COMMERCIAL WAS A BRIGHT SPOT DURING A TOUGH YEAR

he medium truck tire segment was impacted much less than the passenger and light truck tire segments during the early weeks of the COVID-19 pandemic. After a somewhat rough, pre-COVID-19 start — in which the medium truck tire market contracted by 8% in January and 14% in February — the segment rebounded in March. This was primarily driven by large prebuys as fleets worried about potential tire shortages caused by plant shutdowns. Demand fluctuated over the next few months as the trucking industry grappled with declining freight movement. (The American Trucking Associations’ tonnage index plunged 12.2% in April, the biggest monthly decline in more than 25 years.) However, by mid-year, the supplydemand balance had improved to the point where one commercial truck tire executive remarked that “the worst is behind us.” (MTD estimated that nearly eight million truck tire units had been shipped in the U.S. by the middle of May.) Since then, replacement truck tire sales have been buoyed by rebounds in manufacturing and construction, continued activity by essential fleets and improving freight rates. The segment enjoyed its best month since March 2020 this past October. And November and December delivered solid demand, as well. However, as the year ended, supply constraints posed a problem. MTD estimates that 18.5 million truck tire units were shipped in 2020, slightly down from 18.9 million units shipped in 2019.

48 03_MTD_Facts.indd 48

2020 U.S. Replacement Medium/Heavy Truck Tire Brand Shares (based on 18.5 million units)

Brand Share Bridgestone.........................................13.5% Michelin...............................................13.5% Goodyear...............................................9.5% Yokohama..............................................8.5% Continental............................................7.0% Firestone................................................7.0% Double Coin...........................................5.0% Hankook.................................................3.5% Falken.....................................................3.0% Roadmaster...........................................3.0% Toyo........................................................3.0% Hercules.................................................2.5% BFGoodrich............................................2.0% General..................................................2.0% Sailun.....................................................2.0% Sumitomo...............................................2.0% Westlake................................................1.5% Dayton....................................................1.0% Gladiator................................................1.0% Triangle...................................................1.0% Uniroyal..................................................1.0% Others......................................................7.5% The growth of the “others” category beyond 2019 levels (6.5%) reflects the entry of more brands into the U.S. marketplace. (Brands must have at least 1% share of market to appear on the above list.)

RETREADING: STEADY AS SHE GOES

The explosion of truck tire retread sales that was expected to occur as the result of tariffs placed on new truck tire imports from China didn’t materialize in 2020, as some had predicted at the start of the year. But numerous independent retreaders took the opportunity to invest in their operations, with several expanding into new markets and others making significant upgrades to existing facilities or opening new plants. (There currently are around 640 medium truck tire retread plants and 17 OTR tire retread plants in the U.S.) Overall, tracking similarly to new truck tire sales, demand for medium truck tire retreads fell slightly from 2019 levels, ending the year at an estimated 14 million units.

2020 U.S. Retreaded Truck Tire Market SharE (based on 14 million units)

Bridgestone/Bandag............................44.0% Goodyear................................................23.0% Michelin/Oliver......................................23.0% Marangoni.............................................5.5% Continental................................................3.5% Others.....................................................1.0%

AG TIRES PLOWED AHEAD

Demand for ag tires remained healthy during 2020, particularly at the replacement level. An estimated 2.75 million total ag tires were shipped in the U.S. last year — at both replacement and OE — across several categories.

2020 Ag Tire Shipments

Category 2020 Shipments Radial rear OE..................................190,000 Radial rear replacement................298,700 Bias rear OE.....................................320,000 Bias rear replacement....................390,000 Small OE............................................310,000 Small replacement...................1.25 million MTD January 2021 1/12/21 11:21 AM

INDEPENDENT but never alone...

www.na.marangoni.com

49_MARANGONI_0121.indd 49

1/6/2021 10:06:07 AM

Plant capacities

North American Tire Plant Capacities AS OF JANUARY 1, 2021 (IN THOUSANDS OF UNITS)

Company/Plant Location/Year Constructed

Non-Union ISO Certified

Passenger per day Light truck per day

Truck per day

Others per day

Total 0.03

Bridgestone Americas Inc. Aiken, S.C., 2013

0.0

0.03

La Vergne, Tenn., 1972

x x

0.0

6.0

0.0

6.0

Warren County, Tenn., 1990

0.0

9.1

0.0

9.1

Bloomington, Ill., 1965

0.0

0.33

Des Moines, Iowa, 1945

0.0

4.57

Wilson City, N.C., 1974

28.0

0.0

28.0

Aiken County, S.C., 1999

25.5

10.2

0.0

35.7

10.3

7.3

0.0

17.6

6.8

0.0

6.8

13.5

7.5

0.0

21.0

84.1

25.0

15.1

4.93

129.13

Joliette, Quebec, Canada, 1966 Monterrey, Mexico, 2007

Cuernavaca, Mexico, 1980

Total: Carlstar Group LLC Jackson, Tenn., 2009

0.0

26.0

Clinton, Tenn. (Dico), 1974

0.0

15.0

0.0

41.0

12.5

1.0

0.0

13.5

30.0

4.0

10.3

0.0

44.3

Total: Continental Tire the Americas LLC Sumter, S.C., 2013

Mount Vernon, Ill., 1973, 1988

Clinton, Miss., 2020

0.0

2.8

0.0

2.8

Total:

42.5

5.0

13.1

0.0

60.6

Cooper Tire & Rubber Co. Findlay, Ohio, 1917

7.0

16.0

0.0

23.0

Texarkana, Ark., 1964

24.0

8.0

0.0

32.0

42.0

0.0

42.0

73.0

24.0

0.0

97.0

15.0

0.0

15.0

0.0

15.0

Tupelo, Miss, 1984/1960

Total: Giti Tire (USA) Ltd. Richburg, S.C., 2017

Total: Goodyear Tire & Rubber Co. Danville, Va., 1966

0.0

11.0

2.0

13.0

Fayetteville, N.C., 1969

31.0

10.5

0.0

41.5

64.5

0.0

64.5

Topeka, Kan., 1945

0.0

0.5

5.5

0.1

6.1

Medicine Hat, Alberta, Canada, 1960

0.0

13.0

19.0

0.0

19.0

16.4

0.0

16.4

130.9

11.0

16.5

15.1

173.5

12.6

1.3

0.0

13.9

12.6

1.3

0.0

13.9

11.0

0.0

11.0

0.0

11.0

37.5

3.4

0.0

40.9

0.0

9.5

0.0

9.5

25.5

10.7

0.0

36.2

36.7

0.0

36.7

8.7

0.0

8.7

0.0

0.07

26.5

0.0

26.5

0.0

0.1

Lawton, Okla., 1978

Napanee, Ontario, Canada, 1990

San Luis Potosi, Mexico, 2017

Total: Hankook Tire America Corp. Clarksville, Tenn., 2016

Total: Kumho Tire Co. Inc. Macon, Ga., 2015

Total: Michelin North America Inc. Ardmore, Okla., 1969

Dothan, Ala., 1979

Fort Wayne, Ind., 1961 Greenville, S.C., 1975

Greenville, S.C. (C3M), 1996

Piedmont, S.C. (Tweel), 2014

Lexington, S.C., 1981

Lexington, S.C., 1998

50 03_MTD_Facts.indd 50

MTD January 2021 1/12/21 11:21 AM

Company/Plant Location/Year Constructed

Truck per day

Others per day

Spartanburg, S.C., 1978

Non-Union x

ISO Certified

0.0

6.4

0.0

6.4

Starr, S.C., 2013

0.0

0.01

Tuscaloosa, Ala., 1945

Passenger per day Light truck per day

Total

19.7

5.5

0.0

25.2

Bridgewater, Nova Scotia, Canada, 1971

14.1

4.0

0.0

18.1

Granton, Nova Scotia, Canada, 1971

2.7

0.0

2.7

Waterville, Nova Scotia, Canada, 1982

0.0

7.0

0.5

7.5

Queretaro, Mexico, 2002

6.0

0.0

6.0

4.0

0.4

0.0

4.4

181.4

33.5

13.4

0.68

228.98

1.7

1.1

0.0

2.8

1.7

1.1

0.0

2.8

Leon, Mexico, 2018 Total: Nokian Tyres plc Dayton, Tenn., 2019

Total: Pirelli Tire North America Inc. Rome, Ga. (MIRS), 2002

Guanajuato, Mexico, 2011, 2018

Total:

1.2

0.0

1.2

20.0

0.0

20.0

21.2

0.0

21.2

Specialty Tires of America Inc. Indiana, Pa., 1915

0.92

0.18

0.05

2.35

3.5

Unicoi, Tenn., 1997

0.3

0.5

0.05

0.25

1.1

1.22

0.68

0.1

2.6

4.6

Tonawanda, N.Y., 1923

7.3

2.7

2.3

5.0

17.3

Total:

7.3

2.7

2.3

5.0

17.3

Total: Sumitomo Rubber USA LLC (Sumitomo Rubber North America Inc.)

Titan Tire Corp. Bryan, Ohio, 1967

0.0

0.33

Des Moines, Iowa, 1943

0.0

11.25

Freeport, Ill., 1964

0.0

8.1

0.0

19.68

40.0

6.5

0.0

46.5

40.0

6.5

0.0

46.5 0.07

Total: Toyo Tire North America Manufacturing Inc. White, Ga., 2005

Total: Trelleborg Wheel Systems Spartanburg, S.C., 2015

0.0

0.07

Charles City, Iowa, 2012

0.0

0.5

Total:

0.0

0.57

Yokohama Tire Corp. West Point, Miss., 2015

0.0

3.0

0.0

3.0

Salem, Va., 1968

25.7

1.1

0.0

26.8

Total:

25.7

1.1

3.0

0.0

29.8

0.0

14.2

3.8

0.0

18.0

0.0

14.2

3.8

0.0

18.0

Mexico City, Mexico

0.0

1.0

0.14

2.14

Tultitlan, Mexico

7.0

1.5

0.5

0.0

9.0

Tacuba, Mexico

8.0

2.5

0.0

10.5

Total:

15.0

5.0

1.5

0.14

21.64

10.0

7.2

2.8

0.0

20.0

10.0

7.2

2.8

0.0

20.0

U.S. Totals

534.82

92.68

56.50

76.06

760.06

Canadian Totals

46.10

11.30

7.00

13.50

77.90

Mexican Totals

91.70

34.30

8.10

0.14

134.24

TOTAL:

672.62

138.28

71.60

89.70

972.20

Grupo Carso/Euzkadi (Continental AG) San Luis Potosi, Mexico

Total: JK Tyre & Industries (formerly CIA Hulera Tornel)

Corporacion de Occidente SA de CV (Cooper Tire) Guadalajara, Mexico, 2005

Total:

w w w . M o d e r n T i r e D e a l e r. c o m 03_MTD_Facts.indd 51

51 1/12/21 11:21 AM

Automotive service

Auto service snapshot TPMS IS THE MOST COMMON SERVICE OFFERED

ne hundred percent of revenue generation from only the sale of tires and the performance of tire work is becoming increasingly rare among independent tire dealerships. According to MTD’s recently conducted 2020 Tire Dealer Automotive Service Study, 48% of tire dealers expect 48% of their full-year sales to come from auto service. They also expect auto service to make up 47% of their overall operating profit.

LUCKY NUMBER SEVEN

TIRE WORK DOMINATES

Tire/wheel-related services are among the most common performed by independent tire dealerships, according to MTD’s recent study. Nearly 100% of tire dealerships reported that they perform tire pressure monitoring system (TPMS) service. Ninety-five percent perform mounting and balancing work, followed by brake service at 92%. Eighty-six percent reported that they offer shock/strut service, as well as battery and other electrical services. And 85% perform bearing and seal work. The least common service offered out of the 17 that are listed below? Exhaust systems.

Number of bays % 1...................................................................4% 2..................................................................7% 3..................................................................11% 4...............................................................12% 5.................................................................7% 6................................................................13% 7..................................................................9% 8..................................................................17% 9...................................................................2% 10...................................................................6% 11...................................................................0 12...................................................................2% 13...................................................................0 14...................................................................3% 15...................................................................0 15+..............................................................7%

Automotive Services That Tire Dealerships Offer

NUMBER OF Technicians Employed Per Outlet

Number of Automotive Service Jobs Performed Per Month

Service % of dealers that offer Air conditioning.........................................59% Alignment...............................................79% Battery/electrical..................................86% Bearings/seals......................................85% Brakes.....................................................92% Chassis/suspension..............................82% Chemicals (injector cleaners, etc.)....55% Cooling systems....................................64% Electronic diagnosis.............................65% Engine repair/diagnostics/tuneups...61% Exhaust systems...................................52% Ignition and spark plug........................65% Mounting/balancing.............................95% Oil/lubrication.........................................83% Shocks/struts.........................................86% TPMS.......................................................97% Visibility (wipers)...................................79%

Number of technicians % None.............................................................3% 1...................................................................7% 2...................................................................16% 3................................................................20% 4................................................................18% 5.................................................................8% 6................................................................11% 7.................................................................4% 8.................................................................6% 9.................................................................1% 10...............................................................3% 11...................................................................0 12...................................................................1% 13...................................................................0 14...................................................................0 15...................................................................1% 15+.................................................................1%

Type of service Average number of jobs/month Air conditioning..........................................9 Alignment...................................................90 Battery/electrical.....................................27 Bearings/seals..........................................10 Brakes.........................................................56 Chassis/suspension.................................58 Chemicals (injector cleaners, etc.).......15 Cooling systems........................................24 Electronic diagnosis................................33 Engine repair/diagnostics/tune-ups.......17 Exhaust systems.......................................11 Ignition and spark plug...............................27 Oil/lubrication..........................................205 Shocks/struts............................................18 TPMS........................................................120 Visibility (wipers)......................................40

52 03_MTD_Facts.indd 52

Seventeen percent of respondents to MTD’s latest study have eight service bays per outlet.Thirteen percent have six bays. Twelve percent of respondents have four bays. Only 4% have one service bay per outlet. Overall, respondents have seven service bays per outlet, on average.

NUMBER OF SERVICE BAYS IN OPERATION

TECHS: HOW MANY ARE TRAINED AND WHAT THEY DO

The average number of technicians employed per outlet is six, according to survey respondents. Twenty-one percent of respondents report that 1% to 10% of their technicians are ASE-certified. Respondents say their technicians perform 205 oil changes per month, on average — followed by TPMS (120 jobs per month), alignments (90 per month), chassis and suspension service (58 jobs per month) and brake work (50 per month.)

Percentage of Technicians Who Are ASE-Certified Technicians Dealers None...........................................................23% 1-10%........................................................21% 11-20%.......................................................9% 21-30%.........................................................5% 31-40%..........................................................4% 41-50%.........................................................3% 51-60%..........................................................5% 61-70%..........................................................2% 71-80%..........................................................5% 81-90%..........................................................4% 91-100%......................................................19%

MTD January 2021 1/12/21 11:22 AM

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1/5/2021 3:44:39 PM

Mergers and acquisitions

Blue Skies Ahead M&A DIDN’T SLOW IN 2020. EXPECT MORE THIS YEAR

ergers and acquisitions continued unabated during 2020. Several factors drove activity, says tire dealership M&A expert Michael McGregor of Focus Investment Banking. “First, many tire dealers’ businesses bounced back and many achieved record results after the initial shock” of COVID19 dissipated. “Second, the stock market boomed. And last, interest rates went even lower and more cash became available. That’s an environment conducive to getting deals done.” Expect more of the same in 2021, he adds. “I think we will see M&A activity at all levels. The economy should continue to improve” and “there is a strong likelihood that some form of a long-term capital gains tax increase is going to happen within the next two years. Owners who are thinking about selling will want to do so before that happens. “With a stronger economy, the stock market at an all-time high and cash deals readily available, I don’t see it slowing down. I see nothing but blue skies ahead.” The chart to the right lists tire dealership acquisitions that took place during 2020. The largest acquisition, Meritage Group LP’s purchase of Les Schwab Tire Centers Inc., encompassed nearly 440 locations. Mavis Tire made two large acquisitions: 112 National Tire & Battery (NTB) stores during the first quarter and 100 Town Fair Tire Centers locations during the fourth quarter. GB Auto Service Inc. made the fourth largest acquisition: more than 30 Sun Devil Auto Service/Sun Auto Service outlets. Pomp’s Tire Service Inc. acquired nearly 20 GCR Tires & Service outlets from Bridgestone Americas Inc. Monro Inc. acquired 17 Allen Tire Co. stores. Leeds West Groups continued to pick up Big O and Midas locations.

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BUYER

TIMING ACQUIRED

# OF OUTLETS

LOCATION(S)

AutoStream Car Care

Baltimore, Md.

Brentwood Automotive

GB Auto Service Inc.

Louetta Automotive

Texas

Leeds West Group

Midas store

Kearney, Neb.

Mavis Tire Express Services Corp.

NTB stores

112

Atlanta, Ga.; Boston, Mass.; Chicago, Ill.; Philadelphia, Pa.

Pomp’s Tire Service Inc.

GCR Tires & Service stores (Bridgestone)

Iowa, Illinois, Kansas, Michigan, Minnesota, Nebraska, North Dakota, South Dakota, Wisconsin

Steve Shannon Tire Co. Inc.

K&K Tire Barn

Tunkhannock, Pa.

Telle Tire & Auto Service Inc.

KC Complete Auto Service

Kansas City, Mo.

Burt Brothers Tire & Service Inc.

Private owner (dormant Firestone store)

Salt Lake City, Utah

Jack’s Tire & Oil Inc.

A&E Tire Inc.

5 (commercial)

Colorado

Leeds West Group

Midas store

Oklahoma City, Okla.

Van’s Auto Service Tire Pros

Parrish-McIntyre Tire Co.

Akron, Ohio

GB Auto Service Inc.

Tate Boys Tire & Service

Oklahoma

GB Auto Service Inc.

Sun Devil Auto Service/ Sun Auto Service*

Arizona, Nevada, Texas

Gills Point S Tire & Auto Service

Vianor Tire Centers

New England

Integrity Tire Auto Service Centers

The Tire Guys store

Redlands, Calif.

Jack Williams Tire Co.

McCarthy Tire Service Co. Inc. store

Scranton, Pa.

K&M Tire Inc.

Safemark

Middletown, Pa.

Leeds West Groups

Midas store

Oklahoma City, Okla.

Leeds West Groups

Tires Plus store

Arvada, Colo.

Leeds West Groups

Big O Tires stores

Kentucky, Ohio

Meritage Group LP

Les Schwab Tire Centers Inc.

438

Oregon, Washington, Alaska, Idaho, Montana, California, Nevada, Utah, Colorado, Wyoming

Monro Inc.

Allen Tire Co.

California

Purcell Tire & Rubber Co.

Wilson Industrial Tire**

Springfield, Mo.

Ross and Sean Burton

Big O Tires Stores

Colorado

Service Tire Truck Centers

Highlands Tire & Service

3 (commercial) /1 retread plant

Pennsylvania

Telle Tire & Auto Service Inc.

J&W Automotive

St. Louis, Mo.

Van’s Auto Service Tire Pros

Auto Tire & Service Specialists

Akron, Ohio

Van’s Auto Service Tire Pros

Parrish-McIntyre Tire Co.

Medina, Ohio

AAA Northern California, Nevada & Utah

McLea’s Tire & Automotive Centers

California

Black’s Tire Service Inc.

Burlington Tire Service Inc.

Burlington, N.C.

Border Tire LLC

Canyon Tire Sales

5 (commercial) /1 retread plant

California

GB Auto Service Inc.

Reliable Automotive

Texas

Leeds West Groups

Big O Tires stores

Colorado Springs, Colo.

Leeds West Groups

Midas store

Norman, Okla.

Leeds West Groups

Midas store

Benton Harbor, Mich.

Mavis Tire Express Services Corp.

Town Fair Tire Centers Inc.

100

Connecticut, Massachusetts, Rhode Island, New Hampshire, Vermont, Maine

Purcell Tire & Rubber Co

Quality Tire Co.

Utah, Idaho, Montana, Colorado

Tire Discounters Inc.

Porterfield Tire Inc.

Georgia

*GB Auto says all Sun Devil stores will sell tires **Purcell Tire said Wilson’s operations would be incorporated into Purcell’s Springfield, Mo., location

MTD January 2021 1/13/21 1:52 PM

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1/5/21 9:15 1/5/2021 3:42:57 PMAM

DSP Insight

Remember — it is all about people! TIPS TO HELP YOU BUILD A CUSTOMER-CENTRIC CULTURE By

Jeff Morgan

t’s the start of a new year. That means new beginnings, new strategies and a renewed passion to succeed. This is when you have made your plans to maximize your results. In some cases, you have altered your stocking levels to be more efficient. You have created your budgets and are ready to go get those numbers. And maybe you have even raised your labor rate to help improve your gross profits. All of these things are absolutely the right things to do. But do not forget that in order to achieve what you want in the new year, you cannot forget what business you are in. Yes, you sell tires and automotive service, but the main business you are in is the people business. Let me explain. The consumer has many options as to where to go for their tires and auto service. In fact, within a couple-mile

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radius of your location, there may be dozens of options. If that is the case, why do they choose you? The answer is the experience they receive when doing business with you. There is an old saying that people will not remember what you said to them, but they will remember how you made them feel. In our industry, this is especially true. Those dealers who focus on an exceptional customer experience find themselves staying busy and collecting what they want for what they do. Those who do not are forced to discount and undercut their own business just to keep going. This concept is nothing new. To be successful in this industry, you need to have a passion for people. And you need to surround yourself with a staff that shares the same passion. It starts there. If you truly want your customers to have an exceptional experience doing business with you, every member of your team needs to be just as committed to delivering it. Watch how your team interacts with your customers. Are they going through the motions or are they truly committed to giving the customer an outstanding experience? You need to watch closely because sometimes it is not easy to tell. However, your customers will definitely know the difference. Think about it. Have you noticed that a longtime customer is just not coming to you as often — or at all — anymore? Why is this? If you get an opportunity to ask, you are going to find out that at some point the customer encountered someone inside your business who just did not seem to care. Remember, customers will always remember how you made them feel. That single experience created There is an old saying that a negative feeling. Often, you simply people will not remember do not get another chance to correct it. what you said to them, but Now, let’s consider they will remember how the loyal customers who continue coming you made them feel. to you. Your business has built a level of trust and expectation with those customers that is consistent every time. Something else you will notice about these customers is that cost no longer matters. If a service that should be performed is brought to their attention, it is usually followed with an “OK — do it.” It has gotten to that point because you have routinely treated them right. You cannot take advantage of that trust and do something you shouldn’t. My point is that you do not need to hard sell and you do not need to discount your service. You have earned the trust and confidence of those customers. MTD January 2021 1/12/21 11:26 AM

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DSP Insight

If you truly want your customers to have an exceptional experience doing business with you, every member of your team needs to be just as committed to delivering it.

Knowing that you are in the people business, you cannot leave it to chance that everyone within your business will be providing customers with an exceptional experience.

The first thing is to ensure that you have the right people interacting with your customers. As you look to fill roles in your counter staff, focus on bringing in people with customer service at heart. Too often, we look to hire those with automotive or tire experience. Often, you will find yourself trying to break old habits they had developed at their previous employers, rather than getting them to follow what you need them to do. I suggest looking for people who enjoy helping others first. You can teach them the rest. A very successful multi-unit manager I once knew often said, “We don’t give heart transplants.” In other words, if your employees do not have customer service-oriented hearts, you are wasting your time. Next is to ensure that your team understands customers’ expectations. You need to create an atmosphere in your store that is welcoming and stress-free. You want customers to feel at ease. This starts with their first contact with your business, either in person or on the phone. Friendly smiles go a long way! So does active listening with empathy. As customers explain their issues or wants, make sure they are getting 100% of your attention. If they are frustrated by the situation they are in, recognize it. Then let them know that you are here to help them. Let me give you a simple example. A customer comes into your

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INVENTORY MANAGEMENT

B U S I N ES S I N S IG H T

C U S TOM I Z E D T R A I N I NG

1/5/2021 3:41:54 PM

DSP Insight shop with a flat tire. While a flat tire, to us, is really no big deal, simply ask for the next available time. Secondly, is it possible that to that customer it is a life-altering event! His or her day has just you could potentially fit the customer in when they wanted? You spiraled out of control. When that customer comes in and you sense may need to ask for more time to complete the job and you may that frustration, recognize it. Show empathy for the situation and need to juggle some other things around. But in most cases, if you reassure the customer that you are going to do everything you can are really willing to try, you can make it happen. to get them back on the road as quickly as possible. Building a culture that is focused on the customer will help lead This simple gesture will help relieve the stress the customer to other aspects of creating an exceptional experience. is feeling. One such aspect is keeping the customer informed. Another Another byproduct of active listening with is a sincere desire to exceed the customer’s empathy is that you are much more likely to expectations and ensure that the customer is completely satisfied before they leave. truly understand exactly what the customer When you make customers wants or the problem they are having. This is Again, there is a real difference between going going to lead to a much greater likelihood that through the motions and truly wanting to make feel special, they become your solution will be the right one. Getting sure everything is to the customer’s liking. The special customers. it right the first time is absolutely part of an thing is, as mentioned previously, the customer knows the difference. So as you plan for what exceptional experience. In addition, make sure that your employees are focused on the you want to achieve in 2021, consider how you will achieve it. Creating customer’s convenience, not on their own. If a customer asks if a customer-centric culture in your business is a surefire way to get you they can make an appointment, what response do they hear? Are where you want to be and will lead to the great success you deserve. Just remember this little piece of wisdom: When you make they simply told the day and time of the next open appointment? If your people are focusing on the customer’s convenience, they customers feel special, they become special customers. ■ would ask the customer when they would like to bring the vehicle in. You might be thinking, “What if we cannot do it at that time?” Tire industry veteran Jeff Morgan is the executive director of Dealer Strategic Planning, the DSP Group. He can be reached at jeff.morgan@20dsp. That is a very valid question, but I want you to consider a couple com or (651) 846-9871. See the website www.20DSP.com. of things. First, it is entirely possible that the customer would

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Business Insight

Start going ballistic

DON’T ACCEPT INCOMPLETE OR MISSING VEHICLE INSPECTION DATA By

Dennis McCarron

know you’ve heard me grumble about technicians performing poor, improper vehicle inspections — or even skipping the entire inspection process — before. Performing thorough inspections can grow your revenue and when done right, will make customers happy. But hear me out: You need to go ballistic when an inspection report comes back with missing or poorly detailed vehicle data. Here are a few areas to watch: Missing or incomplete VIN. By volume, this is the number-one culprit. Vehicles are far too complex and have multiple in-production year changes. Ordering parts by year, make and model should be dead to you. There is too much pressure in getting cars in and out Get used to asking customers which communication method of the shop quickly. You can’t be the reason the wrong part shows they prefer. Make sure you can contact them in two to three up. At least know that you gave the parts house the right VIN. Every different ways. inspection form should have a VIN recorded on it — no exceptions. Contact number/text/email. Customers are busy people. They There are a few ways to create an inspection flow. Make sure tend to show up in bunches in the morning and afternoon, and your flow is designed in an efficient way. And don’t assume the when there’s a line of customers at your counter, it’s easy for service company that manufactured your digital vehicle inspection (DVI) advisors to cut corners and skip some questions. It is critical that tool took that into consideration. Your best bet is to go to your employees don’t just ask, “Can I call you on your cell?” That cell top technicians and ask them if the flow is good, and if not, how number you have in the system may be old. It may be wrong. it could be improved. A good DVI will let you customize your You never know. inspection items and the order in which they are inspected. It’s also time you get used to asking customers which communicaSpeaking of DVIs, don’t wait until the whole world has passed tion method they prefer. Make sure you are able to contact them you by. Using paper to perform inspections at this point is like in two to three different ways. If your point-of-sale system doesn’t using an old manual carbon copy credit card machine. (Half the support a robust communication tool, consider readers of this article probably don’t even know additional software. what those are!) Get in the game. A good tablet will cost you As far as email goes, I understand some Using paper to record customers’ hesitation in providing email about $200 — slightly higher if you go with bigger inspections at this point memory. And bigger shops should absolutely addresses. But it is crucial for service advisors to at least ask every time. This bit of data, get more memory. is like using an old along with reasons for declined service data DVIs reduce the amount of time a vehicle manual carbon copy and scheduled maintenance, can make a huge is in your shop as there’s no walking back and difference in your shop’s profitability and its forth from the car to the sales floor a hundred credit card machine. ability to capture additional sales. times a day. They also provide credibility through Missing tread depth levels or wear patterns on tires. If you say you photographic evidence and help you obtain customer approvals more are going to do a visual tire inspection and the technician doesn’t quickly. There isn’t a single valid reason why any tire dealership in record what was found, the inspection never happened. In a court North America shouldn’t have a DVI. of law, should it ever occur that a customer had a tragic accident This is the year for taking that big stride in making managing your shop and your life easier. Clamp down on your processes, on the way to a vacation after bringing their vehicle in for a basic go ballistic when you notice missing data so it doesn’t happen inspection and you have no record of it, get out your checkbook! Poor construction of inspection. Just because you have an again and start modernizing your operation. You’re out of excuses. inspection template for your store doesn’t mean you are done. Make 2021 the best year yet. ■ Does the flow of the inspection make sense? Does it move the Dennis McCarron is a partner at Cardinal Brokers Inc., one of the leading technician from one system to the next in an efficient manner? brokers in the tire and automotive industry (www.cardinalbrokers.com). Does it work from the driver’s front of the vehicle around to the To contact McCarron, email him at dennis@cardinalbrokers.com. driver’s rear, and then around the passenger side?

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Mergers and Acquisitions

The interplay between real estate and business value CHARGE YOURSELF FAIR MARKET RENT By

Michael McGregor

he wealthiest independent tire dealers I’ve met always simply not result in a maximizing exit. Charging fair market rent exposes a business that is not as profitable as the owner owned most of their own real estate. They lived in and thinks it is, nor as profitable as it could be. around the market areas that their stores were in, so they It’s likely that those great, average sales-per-store figures knew the good locations with the best demographics are because retail pricing is way lower than the competition. and highest traffic patterns. They also could predict This retail tire dealer has a lot of work to do to get that future growth areas and those in decline. And since most leases EBITDA closer to the 10% that I would look for. call for the tenant to pay rent, taxes and insurance, why not own Let’s examine the positive impact that fair market rent has it, too? Makes sense. When it comes time to sell, sometimes the value of that real on real estate value. estate is worth more than the value of the business. Real estate appraisers typically use three methods for estimatBut since both are valuable assets, maximizing their value ing value: the cost method, the comparable sales approach and is important. the income capitalization approach. To maximize value, you need to charge the tire business fair The cost method takes the value of the land and then adds market rent on real estate that you own. This will have your up what it would take to construct a building. tire business operating with a real-world expense structure The comparable sales method analyzes what other similar and the real estate will be at an acceptable rate if you choose properties have traded for recently in the area. to sell or lease it. But many times, it is the income capitalization method that Not charging fair market rent may lower your gross profit holds the most sway in determining the value of retail locations, margins and profits because you might particularly when the location is under a be pricing tires and service based upon a long-term lease. fictional cost structure. Here’s how: Imagine With income capitalization, you take the Don’t wait until the last a retail tire dealer with 10 great, visible annual net operating income stream from locations in a secondary market in the the property and divide it by the appropriate minute to charge yourself middle of the country doing about $18 capitalization rate, which is sometimes 7% fair market rent. million annually. ($1.8 million per store is for retail tire locations. Cap rates are impacted by the credit pretty good average sales per store.) An analysis of the stores’ recast EBITDA — which is a proxy worthiness of the tenant, the structure of the lease, the property for real profitability — shows it to be 5% or $900,000 on that type and many other variables. $18 million of revenue. Continuing with the same example above, taking $630,000 in annual rent and dividing that by a 7% cap rate gets an original On further analysis, we see that the dealer’s rent expense is only 3.5% rent-to-sales or $630,000 annually because the owner value for those 10 properties of only $9 million. of those locations simply has not raised rent in many years. But when the rent is raised to $1.2 million annually and the Now, I’m used to seeing 5.5% rent-to-sales on the low end business is shown to make a sustainable and reasonable profit to upwards of 12% or more in Western markets, so there is at that rent level, then the new value is now $18 million. a chance that the owner could legitimately raise the rents an On the face of it, $18 million for 10 great, visible retail additional $630,000 annually to 7% rent-to-sales, for a total of locations still sounds low to me. However, that’s a lot better than $9 million, right? $1,260,000 annually. To arrive at fair market rent, the owner really should consult Charging fair market rent for your real estate is important with a local commercial real estate broker or pay for a full-blown because many strategic acquirers will want to buy your business appraisal of each property. and lease the real estate from you for up to 10 years or more. Don’t wait until the last minute to charge yourself fair market All of this can help validate fair market rent. But let’s see the impact this new rent now has on recast rent because both your business value and real estate value EBITDA. depend on it. ■ The EBITDA before the rent was raised is $900,000. But Michael McGregor is a partner at Focus Investment Banking LLC increasing rent by $630,000 lowers this to $270,000 or a paltry (focusbankers.com/automotive/tire-and-service). He advises and 1.5% to sales. assists multi-location tire dealers on mergers and acquisitions. For more Applying a market multiple to this lower EBITDA level will information, contact him at michael.mcgregor@focusbankers.com.

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MTD January 2021 1/12/21 11:28 AM

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Focus on Dealers

Barnwell completes ‘corona shift’ DEALERSHIP GAINS MOMENTUM DURING PANDEMIC By

Mike Manges

“We’ve come out of this crisis really, really strong,” says Scott Weeden, Barnwell House of Tires’ vice president of sales. “We’ve done such a good job that we’re expanding our fleet.”

en months ago, Barnwell House of Tires found itself at the epicenter of the COVID-19 pandemic in New York City, supplying tires and related services that enabled waste haul, public utility and other essential fleets to continue operation. “The Big Apple” is no longer the nexus of the pandemic and Barnwell has emerged as a stronger, more nimble company, thanks to what Scott Weeden, the dealership’s vice president of sales, calls “the corona shift.” “We were already in cost saving mode coming into 2020,” he says “So we were already in that mindset. When the pandemic hit, we put together a plan that would enable us to continue to operate and satisfy customers” — all while implementing safety procedures to protect the well-being of both employees and clients. The Ronkonkoma, N.Y.-based dealership — which also operates in New Jersey, eastern Pennsylvania and adjacent areas — immediately went paperless, no longer requiring customers to provide physical signatures upon the delivery of products or services. “If one employee got COVID-19 and it trickled down, it would have destroyed

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anything we were trying to build,” said Weeden. The elimination of physical signatures was so well-received by customers that Barnwell has decided to maintain the practice. “We haven’t had anyone come down with COVID-19. And we want to keep that going.” The pandemic also gave Barnwell an opportunity to drill down into customers’ operations and business needs, he says. “We sat down with our key customers” right after COVID-19 hit. “We went over the tires they were running, how they were performing, if there were better tires for them and if we could get those tires. We looked at all of our existing customers and where we could fit in and help them.” While demand from certain commercial fleet customers has fluctuated over the last several months, “we haven’t seen a drag in our OTR tire business at all.” Demand for truck tire retreads has remained steady, as well, notes Weeden. The dealership also has continued to place commercial truck tires in fleet trials. “Right now, we have a pilot program with a major fleet in New York” that could result in $200,000 in savings for the trucking

operation over the next year-and-a-half, according to Weeden. “It’s all about putting the right tire in the right application.” Internally, Barnwell has maintained an intense focus on orders, inventories, receivables and cash flow. The result is that the dealership is “much stronger than we were” during the early days of the pandemic. “Revenue is up and our gross profit has gone up,” says Weeden. “That has put us in a position to invest in new equipment. We have three OTR boom trucks on order. We have additional road service trucks on order. And we’re gearing up to service Ryder,” the truck leasing giant that one of Barnwell’s tire suppliers recently signed. “We’re going to be handling all of that business in New Jersey and New York, which will result in significant growth.” Why was Barnwell able to pivot so successfully during the pandemic? “It was something we were committed to,” says Weeden. “We’re committed to our customers’ business models — whether it’s OTR, truck tires, retreading or road service. That’s helped put us in the position where we are now.” ■ MTD January 2021 1/12/21 11:28 AM

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Focus on Industry

Hercules unchained NEW PRODUCTS, PROGRAM FEATURES ARE ON THE WAY By

Mike Manges

ew products, program enhancements and additional support from American Tire Distributors Inc. (ATD) are some of the things that Hercules dealers can expect to see in 2021, says Josh Simpson, senior vice president, proprietary brands, ATD. “We’ve maintained a pretty steady cadence” of new product introductions, according to Simpson. Within the last 15 months, Hercules has added two products to its Terra Trac line: the Terra Trac HPT, which replaced the Hercules Terra Trac HTS, and the Terra Trac AT II, which features 3-Peak Mountain Snowflake certification. The Avalanche TT, the latest bolt-on to Hercules’ Avalanche winter tire line, also hit the market. And ATD expanded the Hercules Strong Guard truck tire line with the addition of the Strong Guard HDO regional-haul drive tire. “We’re going to keep our foot on the gas” in 2021, says Simpson. “In the second half, we’ll be introducing two new lines geared toward the SUV all-terrain segment and the light truck all-terrain segment. And we’re going to continue to transform the Hercules H series (truck In 2021, tire line) into the Strong Hercules will Guard line. roll out a new initiative “to “We’re really trying to help educate help our dealers capture not only our market share. We have to dealers, but make sure we keep up-toalso our sales team on our speed with the market.” brand and our The goal is to become products,” says a “one-stop brand” by Simpson. fully leveraging the reach and resources of parent company ATD, he says. “Hercules offers OTR tires. We offer various ST trailer tires. We offer industrial

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When ATD acquired Hercules in 2014, “we were really focused on passenger and light truck,” says Josh Simpson, senior vice president, proprietary brands, ATD. (Pictured, the Avalanche TT, the latest addition to Hercules’ Avalanche winter tire line.) “We also had medium truck tires. The reach of ATD has opened up a lot of opportunities to create a one-stop brand for the independent tire dealer.”

tires. We now offer lawn and garden tires. I believe we’ve been able to round out our product portfolio.”

PROGRAM POWERS UP

“Everybody has a different definition of ‘tier,’ but we see ourselves in what we call ‘the value segment,’” says Simpson. “But it’s not just about the product. It’s about programs and what we bring to the table, combined with distribution.” Simpson says ATD will continue to invest in the Hercules Power Program, which encompasses more than 4,000 independent dealer locations. “In 2020, we focused on communication to our family of dealers — being a support arm and providing resources to help them navigate through COVID-19.” Hercules also added a new tier to the program “called Diamond Level. What that provides is an increased payout for dealers who commit a larger portion of their business to Hercules. “We now offer two consumer rebates a year” to drive traffic to dealers’ locations, while continuing to offer other program features, including sales incentives, “retail

rewards,” warranties “that protect both the dealer and the consumer,” and more. Simpson notes that Hercules did not pull back on investing in its dealer program during the early months of the COVID-19 crisis as “that was really a time when our (customers) needed it the most. “On top of that, we’ve improved our communications with our dealers. We try to make sure we are talking to our dealers on a monthly basis — letting them know about new promotions and new products. “But as much as things change, things also stay the same,” he notes. “We continue to focus on exceeding our customers’ expectations. We continue to offer them quality products. We continue to have one of the best fill rates in the industry.” (Simpson declined to provide a specific fill rate percentage.)

GROWTH PLATFORM

ATD will continue to invest in Hercules’ marketing across multiple channels, including digital, broadcast, video and sports sponsorships. The company, which acquired Hercules in 2014, “has given Hercules a platform on which to grow and expand.” ■ MTD January 2021 1/12/21 11:28 AM

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Focus on Industry

‘There’s no going back’ GOODYEAR SAYS CHALLENGES WILL HELP DEALERS FACE THE FUTURE By

Joy Kopcha

he events of the last year forced tire dealers to adapt in lots of different ways. Goodyear Tire & Rubber Co. Chairman, CEO and President Rich Kramer said during the company’s recent online dealer conference that those adjustments have left dealers poised for a better future “ The changes in behavior and expectations driven by technology have taken root and will continue, long after the pandemic is over. In short, there’s no going back. If you picture the inflection point as the apex of a hill, we’re over the top, on the other side and picking up speed.” Kramer, who forecasted a faster industry recovery than what followed the Great Recession, congratulated dealers for their work in persevering through the COVID19 pandemic. “You kept your stores open,” he said. “You kept delivering tires. You kept fleets on the road. You made it possible for people, food, medicine and critical supplies to get where they needed to be most.”

FOUR CONSUMER TIRES

Mike Dwyer, leader of Goodyear’s consumer tire sales in North America, said, “In 2021, it’s time to turn our attention to the allterrain segment of the product screen.” The company’s new Wrangler Workhorse powerline will feature three new tires designed for consumers, as well as small business fleets that need both on- and off-road capabilities. The line is targeted for the middle price point, said Dwyer. The Workhorse HT is for those driving on local roads and highways.The tire comes with a 60,000-mile limited warranty. The Workhorse AT offers strong traction both on and off the road, with a 50,000-mile limited treadwear warranty. The Workhorse RT is for drivers on the most remote roads and roughest terrains, and it’s specifically made with both consumers and business-to-business customers in mind, including landscapers, plumbers

70 04_MTD_Columns-FocusOn.indd 70

and construction workers. It comes with a 40,000-mile limited treadwear warranty. Both the Wrangler Workhorse AT and RT come with the 3-Peak Mountain Snowflake symbol. Dwyer said that answers a specific need dealers had identified in the marketplace — a mid-tier product with the 3-Peak Mountain Snowflake designation. All three tires are set to launch in the third quarter of 2021 in 70 sizes, for wheels ranging from 15 inches to 22 inches. Another 22 sizes are planned for 2022. The fourth new Goodyear consumer tire to enter the market was actually introduced to dealers at last year’s conference. The Goodyear Assurance ComfortDrive, a premium commuter touring tire, was supposed to enter the market in September. “While we had to delay the launch due to COVID-19, it will roll out in February 2021,” said Dwyer.

TIRES, RETREADS AND A PORTAL

Goodyear will continue its focus on fleets with new fuel-efficient tires and three new retreads, plus a portal to help fleet managers track their tire programs. Dave Beasley, vice president of Goodyear’s commercial business in North America, said demand for truck tires “increased rapidly” in the second half of 2020. “It’s been a challenge for us to meet this growing demand as we work to safely operate our plants, while producing enough of the right tires.” Cary Budzinski, leader of commercial sales, provided an overview of the commercial tires coming in 2021, including the Fuel Max LHD2, a long-haul, SmartWay-verified drive tire that’s fuel-focused. Also new, the Fuel Max RSD is a premium, “super-regional,” fuel-efficient drive tire that offers traction and durability. It will launch during the second quarter of 2021. For mixed-service applications, Goodyear will combine three existing tires into a new powerline: the Armor Max MSA. This is designed for tough applications, like logging, oil fields and cement trucks. The first sizes

Among other products, Goodyear will bring three all-terrain tires to market during 2021, with the introduction of the Wrangler Workhorse HT, AT and RT.

Goodyear addresses Trump boycott During Goodyear Tire & Rubber Co.’s recent dealer conference, Steve McClellan, president of the company’s Americas region, acknowledged the negativity that Goodyear dealers faced when President Donald Trump called for a boycott of the manufacturer’s tires. The remarks by McClellan were the first about the issue since the company released statements right after Trump called for the boycott this past August. He never referred to Trump by name and didn’t repeat the word boycott, but the inference was clear as an image of the White House appeared on the screen behind McClellan. “It’s important to acknowledge that you received a lot of negativity when Goodyear got pulled into the political discussions this year,” he said. “I speak on behalf of all of Goodyear when I say we sincerely appreciate your patience and support through that time.” will debut during the second quarter of 2021. There also will be Unicircle retreads in 2021 for the Fuel Max RSD, Fuel Max RTD and the Ultra Grip RTD. Fleet Central is a new interactive portal from Goodyear. Beasley said fleets will be able to purchase tires, activate service and gain insights into their tire programs, all from one location. ■ MTD January 2021 1/12/21 11:28 AM

Thunderer continuously delivers the kind of product your customers want in a replacement tire. High quality with great value, it is a brand you can trust. Thunderer tires are backed by our No Questions Asked, 25/365 Free Replacement Limited Protection Policy. Contact us to learn more about the Ranger Series by Thunderer. Complete lineup includes more than 290 sizes from 15â€? to 20â€? including Rugged All-Terrain, All-Terrain, Mud-Terrain, SUV, Touring CUV and Specialty Commercial fitments Aggressive sidewall and tread patterns No Questions Asked, 25/365 Free Replacement Policy Exceptional quality at an excellent value

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1/6/2021 9:57:33 AM

TPMS

Kia Sportage — 2011-2019

he tire pressure monitoring system (TPMS) in 2011 to 2019 Kia Sportages monitors the air pressure in the four road tires with wheel-mounted tire pressure sensors. To do this, the system uses a TPMS receiver, four radio frequency (RF) tire pressure sensors, two warning indicators on the instrument cluster and a data circuit to perform system functions. The tire pressure sensor operates in two modes: stationary/rolling mode and sleep mode. In stationary/rolling mode, the sensor will measure pressure and temperature every four seconds and will measure acceleration every 60 seconds. In sleep mode, the sensor enters a low current consumption state where no measurements are made in order to conserve battery power. All sensors are

72 05_MTD_TPMS.indd 72

in this state when new. The sensor will not transmit unless requested to do so by the initiate command or when the vehicle accelerates to 15 mph (25 km/h).

TIRE PRESSURE MONITOR WARNING INDICATORS

The low tire pressure telltale illuminates when one or more tires are significantly underinflated. The low tire pressure telltale will illuminate after it blinks for approximately one minute when there is a problem with the TPMS. If the fault is considered “critical,” the light will stay on throughout the entire ignition cycle.

TPMS RESET PROCEDURES

NOTE: If a tire pressure sensor is replaced, it will need to be initiated. The TPMS is not affected by wheel and tire rotation.

The low tire pressure telltale illuminates when one or more tires are significantly underinflated. The indicator will go out after the tires are inflated to the specified pressure. Ensure the warning light goes off. (This may take up to four minutes if the tire is not rapidly re-inflated).

TIRE PRESSURE SENSOR INITIATION

Auto-learn sensors 1) Every time the ignition is turned on, all sensor locations are verified and/ or located. 2) If a sensor has been removed, the lack of response will cause it to eventually (this may take 20 minutes) be removed from its list of active sensors. 3) When new sensors are added, or the wheels are rotated, the system will automatically learn their new locations MTD January 2021 1/12/21 11:29 AM

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TPMS

within 20 minutes after turning on the ignition if the vehicle is being operated at a speed of at least 15 mph (24 k/ph).

IS THE ONLY

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DEMOUNTING/MOUNTING PROCEDURES

CAUTION: The tire should be demounted from the wheel using the tire changer manufacturer’s instructions. Use the following information to avoid damage during the demounting/mounting procedures. CAUTION: Ensure that the wheel to be fitted is designed for the mount. There should normally be a mark to indicate this. NOTE: If a tire pressure sensor is replaced, it will need to be initiated. See RESET PROCEDURES. The TPMS is not affected by wheel and tire rotation.

TIRE PRESSURE SENSOR

CAUTION: Do not use puncture repair fluid, as this can cause the sensor pressure port to block and an incorrect warning to occur. Removal 1) Remove the wheel and tire assembly. CAUTION: Avoid tire/tool contact with the valve while demounting the tire.

COURTESY OF KIA MOTORS AMERICA INC.

Figure 1: Registering the tire pressure sensor (1 of 2).

TPMS module must be used. 1) Condition — Ignition ON and Engine OFF 2) Holding the TPMS module within 3 inches (76 mm) of the sensor valve, read each tire pressure sensor ID in the following order: front left, front right, rear left, then rear right. 3) Press the ENTER button as each tire is illuminated on the screen. 4) Press the WRITE button after reading all of the sensor IDs. 5) Connect the GDS to the Data Link Connector (DLC) located under the left side of the instrument panel. Register the four sensor IDs to the receiver (see Figures 1 and 2). NOTE: The TPMS receiver will complete the learn procedure of the new sensor after the vehicle is driven up to 20 minutes at speeds over 15 mph (25 km/h). NOTE: For the system to correctly monitor the tires for under-inflation, there should be a total of exactly four sensors, one on each of the four road wheel positions. There should be no other sensors in the vehicle since this could cause the system to monitor the wrong sensors or fail to lean a new sensor. 6) Modify any sensor ID and press the [OK] button.

MTD January 2021 1/12/21 11:29 AM

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Nominate a candidate for MTD’s 2021 Tire Dealer of the Year Award Established in 1993, Modern Tire Dealer’s Tire Dealer of the Year Award is the oldest, most prestigious honor of its kind. Each year, Tire Dealer of the Year Award candidates are evaluated in five categories:

1. BUSINESS SUCCESS 2. MARKETING SKILLS 3. MANAGEMENT SKILLS 4. INDUSTRY KNOWLEDGE 5. COMMUNITY INVOLVEMENT

Do you know an independent tire dealer who excels in these areas? Nominate him or her today! DEADLINE FOR ENTRIES IS MAY 28, 2021. To nominate, go to: www.moderntiredealer.com/awards For more information, contact MTD Editor Mike Manges at mmanges@10missions.com

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Figure 2: Registering the tire pressure sensor (2 of 2).

TS508/TS508WF PLUS

Figure 3: Tire pressure sensor assembly.

SOLUTION

COURTESY OF KIA MOTORS AMERICA INC.

COMPLETE

Phone: (855) 288-3587 • USSUPPORT@AUTEL.COM AUTEL.COM • MAXITPMS.COM • MAXISYSADAS.COM

Figure 4: Tire pressure sensor installation.

76 05_MTD_TPMS.indd 76

MTD January 2021 1/12/21 11:30 AM

TORQUE SPECIFICATIONS COMPONENT

Ft.-lbs.

(N.m)

66-81

(90-110)

80-94

(108-127)

In.-lbs.

(N.m)

2011-16

(4)

2017-

(8)

Wheel nut 2011-16

Tire pressure sensor nut1

It is normal to feel a break as the 20 in.-lbs. (2.3 N.m) calibrated stop in the nut snaps and the torque falls. Increase torque smoothly. 1 In order to achieve a clean break of the stop. Do not exceed allowed torque. Do not use electric or pneumatic tools.

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2) Deflate tire and remove any balance weights. The tire bead should be broken about 11 inches (30 cm) from the valve inside the wheel. The bead breaker should not be set too deep. Demount should end near the valve. 3) While supporting the sensor with care, remove the valve nut and remove the sensor assembly. CAUTION: The seal and seal washer should not be re-used, remove and discard. 4) While supporting the rear of the valve so there is no movement, remove the seal and seal washer.

COURTESY OF KIA MOTORS AMERICA INC.

Installation CAUTION: Avoid bringing tire pressure sensor in contact with lubricant. Always handle the tire pressure sensors carefully. 1) While supporting the rear of the valve so there is no movement, install the new seal and seal washer (see Figure 3). 2) Ensure that the valve hole and mating face of the wheel are clean. Insert the sensor assembly into the wheel without modifying the angle of the valve stem. The fit should not be tight. CAUTION: Ensure the sensor feet are against the wheel throughout the remainder of the assembly process. 3) Tighten the nut by hand until it is lightly in contact with the wheel (see Figure 4). CAUTION: While tightening the nut, do not exceed allowed torque. Do not use electric or pneumatic tools. 4) Using a torque wrench, tighten the nut to 35 in.-lbs. (4 N.m). 5) Lubricate the tire bead (not the rim). Do not use excessive lubrication. 6) Start the tire mounting about 5.9 inches (15 cm) from the valve. Finish with the mounting tool near the valve. 7) Adjust the inflation pressure of all wheels. Install the valve cap. 8) If installing a new sensor, initiate the tire pressure sensor. See RESET PROCEDURES. ■ Information for this column comes from the tire pressure monitoring systems data in ProDemand®, Mitchell 1’s auto repair information software for domestic and import vehicles. Headquartered in Poway, Calif., Mitchell 1 has provided quality repair information solutions to the automotive industry since 1918. For more information, visit www. mitchell1.com. To read archived TPMS articles, visit www.moderntiredealer.com.

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Products QuickJack lift offers optimal access The QuickJack portable car lift makes vehicle repairs “safer and more efficient, while allowing unrestricted access to the middle of a vehicle’s undercarriage,” according to QuickJack officials. “No more floor jacks or stress over vehicle slippage during suspension work, oil changes, exhaust system swaps, detailing and other repair work.” The lift is easy to lower and store when not in use. QUICKJACK LLC www.quickjack.com

78 06_MTD_Products-Classified.indd 78

Bartec offers new Tech600Pro TPMS tool

Pirelli Scorpion ATR is made for the Ford-150

Bartec USA has rolled out a new tire pressure monitoring system (TPMS) service tool with a long-lasting battery and Bluetooth connectivity. The Tech600Pro enables OBD II relearns and other functions, while providing faster TPMS service, greater flexibility and wider coverage of sensors. It features a large, high-resolution color display; a graphical user interface; a wireless connection interface and more. BARTEC USA www.bartecusa.com

A new, “tailor-made” Pirelli Scorpion ATR has been designed for the all-new Ford F-150 pickup. The ATR boasts a “dedicated tread design to reduce tire noise by up to three decibels,” according to Pirelli officials. The tire also contains a new generation of tread compound to provide enhanced wet handling and snow performance, plus other features. The tire is available in two sizes: 275/60R20 and 265/70R17. PIRELLI TIRE NORTH AMERICA www.pirelli.com

MTD January 2021 1/12/21 11:49 AM

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For complete product and warranty details, please visit www.MastercraftTires.com

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1/5/2021 3:48:16 PM

Products BFGoodrich Off Road Wiper Blades debut

Trelleborg expands telehandler tire line Trelleborg Wheel Systems has expanded the Brawler HPS (High Performance Solid) telehandler tire range to include the Comfort line. Comfort tires are designed to reduce vibration and offer telehandler and compact wheel loader operators a more comfortable ride. This new line of solid tires maximizes ride comfort, while delivering excellent performance. Featuring a wide footprint, Comfort tires also provide enhanced traction. The tires are available in 43x15-24; 47x17-24; 13.00-24 and 14.00-24. TRELLEBORG WHEEL SYSTEMS www.trelleborg.com

Pylon Manufacturing, an official licensee of BFGoodrich Tires, is offering branded BFGoodrich Off Road Wiper Blades that were inspired by the BFGoodrich All-Terrain T/A KO2 tire’s tread design. The blades feature a durable rubber element with Weather-repel and Scrub-X Technology for improved driving visibility and superior performance. The Secure-X Connector feature offers easy and secure installation. Made specifically for trucks, Jeeps, SUVs and 4x4s, BFGoodrich Off Road Wiper Blades are tough enough for off-road driving, with proven performance for everyday travel, according to Pylon officials. PYLON MANUFACTURING www.offroadwipers.com/BFGoodrich

Bridgestone builds Firestone All-Terrain line The Firestone All-Terrain Powerline was built for maximum durability off-road and proven on-road dependability. Tires in the Firestone Destination X/T lineup provide “impressive traction to navigate and conquer rough off-road terrain,” according to Bridgestone Americas Inc. officials. The Firestone Destination A/T2 offers an aggressive tread pattern for enhanced grip. Firestone Destination X/T and Destination A/T2 tires feature Bridgestone’s Hydro-Grip Technology “to keep drivers pinned to the road in the rain and snow.” BRIDGESTONE AMERICAS INC. www.firestonetire.com

We Know the Tire Business

THIS ANNOUNCEMENT THIS ANNOUNCEMENT APPEARS AS THIS APPEARS A MATTER ANNOUNCE AS OFAR

A MEMBER OF A MEMBER OF

A MEM

SECURITIES TRANSACTIONS SECURITIES CONDUCTED TRANSACTIONS BY FOCUS CONDUCTED SECURITIES SECURIT B AN AFFILIATED COMPANY, AN AFFILIATED REGISTERED COMPANY, BROKER REGISTERED AN DEALER AFFILIATED AND BROKER MEM COMD

Call or email for a confidential discussion.

704-369-5900

Michael McGregor | FOCUS Managing Director and Automotive Team Leader

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80 06_MTD_Products-Classified.indd 80

MTD January 2021 1/12/21 11:49 AM

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Ad Index WHEN YOU CONTACT ONE OF OUR ADVERTISERS PLEASE BE SURE TO MENTION YOU SAW THEIR AD IN MODERN TIRE DEALER ADVERTISER

PAGE

WEBSITE

1-800EveryRim OEM Wheels

www.everyrim.com/MTD

31 Incorporated

www.31inc.com

Aftermarket Auto Parts Alliance Inc.

www.myplace4parts.com

American Omni Trading

www.thunderertireusa.com

Atturo Tires

www.atturo.com

AUTEL

53, 74, 76

www.autel.com

BKT USA Inc.

www.bkt-tires.com

Blackburn OEM Wheel Solutions

www.blackburnswheelfinder.com

CEAT Specialty Tires Inc.

www.ceatspecialty.com/us

Continental Tire

www.continentaltire.com

Cosmo Tires

www.cosmotires.com

Dannmar, A division of BendPak

www.dannmar.com

DSP 20 Group

www.20dsp.com

Falken Tires

www.falkentire.com

Federal Tires

www.federaltire.com

FOCUS Investment Banking LLC

www.focusbankers.com

Fury Tires

www.furytires.com

Gaither Tool Company Inc.

www.gaithertool.com

GRI Tires

www.gritires.com

GT Radial

www.gtradialsmartprogram.com

Hennessy Industries Inc.

www.coatsgarage.com

Hunter Engineering Company

www.hunter.com

Independent Tire Dealers Group

www.itdgusa.com

Katapult

hubs.ly/HOD8sgXO

Kenda Tires USA

IBC

www.kendatractionrewards.com

Kumho Tire USA Inc.

26A-B

www.kumhotireusa.com

Linglong Americas Inc.

www.linglongtire.com

Marangoni Tread N.A.

www.na.marangoni.com

Mastercraft Tires

www.mastercrafttires.com

Maxxis Tires

www.maxxis.com/razrat

Mighty Auto Parts

www.mightyautoparts.com/inventory

Nexen Tire America Inc.

IFC

www.nexentireusa.com/dealers

Nitto Tire U.S.A. Inc.

OBC

www.nittotire.com

Nokian Tyres Inc.

www.nokiantires.com/launch

OTR Wheel Engineering Inc.

www.otrwheel.com/neverdown

Prinx Tire North America Inc.

www.prinxtire.com

Sailun Tire Americas

www.gosailun.com

Schrader TPMS Solutions

www.schradertpms.com

Sentury Tire

www.delintetires.com

Sumitomo Tire

31, 42-43

www.sumitomotire.com

TECH

www.techtirerepairs.com

Tireco Inc.

www.milestartires.com

Toyo Tires

www.toyotires.com/at3

TR Wholesale Solutions

www.trwholesalesolutions.com

Triangle Tire USA

www.triangletireus.com/the-scoop

Vredestein Tires

www.vredestein.com

Yokohama Off-Highway Tires America Inc.

www.yokohama-oht.com

ZC Rubber America Inc.

www.arisuntires.com

82 06_MTD_Products-Classified.indd 82

MTD January 2021 1/13/21 1:56 PM

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1/15/2021 9:07:52 AM