Modern Tire Dealer - January 2019

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The Industry’s Leading Publication January 2019, Volume 100, Number 1

F E AT U R E S 30

22 2018 was a year of

change, 2019 will be a year of the impact

DEPARTMENTS

John Healy analyzes how the industry ’blue bloods’ are changing the market

4 Publisher’s Notes Let our 100th anniversary celebration begin

8 Editorial

53rd annual Facts Section

10 moderntiredealer.com

30 Overview

12 News/Views

34 Tire Shipments

Amazon has a weak spot: Installation will limit its potential to sell tires

News and navigation tools for MTD’s website

Toyo’s plans for 2019: Targeted marketing is already paying off for the brand

20 Numbers that Count Relevant statistics from an industry in constant motion

28 Your Marketplace Majority of dealers surveyed feel tire price hikes will stick

54 Business Insight Benchmarks are not a myth: It’s time we fine-tune the recipe for success

62 European Notebook New improved regulations in European tire safety are on the way

64 Mergers and Acquisitions Independents vs. conglomerates: Who’s winning the battle for tire-buying consumers?

Focus on Industry 68 New plant, new plans: BKT USA has a lot going on in 2019 70 Kumho focuses on independent dealers: 3-part plan includes more stable pricing

36 Market Share 38 Consumer Buying Habits 40 Tire Distribution 44 Tire Sizes 46 Tire Pricing 48 Commercial Tire Market 50 Plant Capacities 52 Automotive Service

72 More from the floor: SEMA Show wrap-up TPMS 74 Honda HR-V, 2016-2018 78 Products 80 Ad index

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81 Classified COVER DESIGN BY VINCE TAROC

Modern Tire Dealer is a proud member of:

w w w . M o d e r n T i r e D e a l e r. c o m

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P u b l i s h e r ’s N o t e s

Let our 100th anniversary celebration begin By

Greg Smith

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his year marks a very significant milestone for all of us at Modern Tire Dealer, as we are celebrating 100 years in business. I could list all of the major companies and industries that have come and gone during this time frame, but that’s something for another day.

I could write in great detail about how our industry has changed drastically over the years, moving from clincher tires to the early balloon tires to the major switch to radial passenger tires, which unbelievably took place 50 years ago.

Or I could write about how mass merchandisers like Sears, JCPenney, Montgomery Ward and Kmart had strong

THE MAGAZINE’S 100TH ANNIVERSARY IS ONE OF THOSE EVENTS THAT ALLOWS YOU TO STOP AND REFLECT ON THINGS. tire sales programs, and all are either gone or a fraction of what it once was.

The threat of extinction of tire dealers by warehouse clubs and new car dealers has subsided, now being replaced by the ever-evolving nature of online commerce.

Or I could look to the future, wondering if non-pneumatic tires, like the Tweel, will someday replace radial tires, and if online sales will peak and be supplanted by some new form of sales platform that has yet to be invented.

Or I could write about the dramatic changes that the retreading industry

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has seen, with fewer, but larger, players capturing more and more market share.

But in my mind, that might be a bit too cliché. The magazine’s 100th anniversary is one of those events that allows you to stop and reflect on things. So, I’d prefer to write about something far more personal to me: why I enjoy our industry so much.

It started when I was very young, maybe eight to 10 years of age. I used to beg my father to let me ride along and “help” him work during summer vacations. He had a contract to perform service station maintenance for Sunoco dealers throughout northeast Ohio. We did everything from replacing underground storage tanks and repairing lifts to planting flowers and shrubs as part of a company’s “beautification” program — a forerunner to what today is commonplace at each of your dealerships because you understand the importance of making your shops look hospitable for customers.

It’s was a generational thing, you see, as my father worked for his father, only to have that partnership take a hiatus while my father served in the military during the Second World War. When he came home, the time was right for him to take over the business from his father.

He worked long hours, came home and then “allowed” my brothers and me to help him work in our garden, or our fruit orchard, or mow our three acres of land. When you were young in those days, being allowed to drive the tractor and mow the lawn was great fun.

My father agreed to sometimes allow me to go to work with him, but even at that early age, it came with a promise I had to make. He knew that the service station industry was changing rapidly, and companies like his would either have to become very large to be able to deal with new government regulations, such as OSHA and EPA, or fold. Either

1919

way, he knew that a college education was going to be necessary. My promise was to make good grades, go to college and then see what the environment was like when I graduated.

Nothing was better to me than piling onto the front seat of a pickup truck, sitting alongside my dad and a co-worker

MTD January 2019

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For what drives you.

P u b l i s h e r ’s N o t e s 1942

1953

1959

driving to a job site. It didn’t matter that I sat between two heavy smokers with the ashtray right in front of my face — to this day, even though I am a non-smoker, I can honestly say I probably have inhaled more second hand smoke than just about anyone else.

And it was always with great pride that I can say I could find the right tool, the right pipe fitting or deliver a nice cold cup of water from our thermos jug when my named was called.

And let me tell you about the pay. We’d stop at this new start-up franchising eatery called McDonald’s, or maybe stop at a Red Barn (those of you from Ohio probably remember them). But mainly we’d stop at a small diner where the waitresses were always friendly. There was a Howard Johnson’s restaurant in Wooster, Ohio, where we would sometimes stop and I’d get a great hot glazed donut and chocolate milk. If I played my cards right, the one waitress would always sneak me a refill on the milk.

I also talked with the service station owners. Some were characters who I remember to this day. But most of them had the entrepreneurial spirit and drive.

Most of them also knew I loved cars, mainly because I’d stick my head inside

the engine compartment and ask them non-stop questions while they were trying to work on a car, such as why they put that glob of goop on the tire when they were manually struggling to mount it on a rim.

They’d also allow me to take home their old copies of trade magazines — and on the rare occasion where we would be cleaning up an abandoned station, I would

for me, and that’s a photograph which hangs on my office wall. I found it in a family photo album many years ago. It’s a photo of my great-uncle Pete working in a tire shop circa 1921.

I hope all of you have equally fond memories about how you became part of this dynamic industry. And I look forward to creating more great memories in the years to come. ■

1969 (50 YEARS)

OUR GOAL THEN, AS IT IS NOW, IS TO PROVIDE YOU ALL OF THE INFORMATION NECESSARY TO BE SUCCESSFUL. find old “Motor” manuals that listed all sorts of repair procedures, including specifications for engines.

I would memorize every engine fitment, size and horsepower ratings from those 1950s through 1960s cars. It was great fun to know more about cars than my friends.

So there you have it — my reflections on how I somehow stumbled upon the great opportunity of publishing a magazine about an industry I thoroughly enjoy.

Oh yeah, there’s one more connection that brings this anniversary year to life

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a thank you note ”This, the first issue of Tires and Accessories, marks the advent of a trade journal which we believe will perform a definite mission in the great industry to which it is exclusively devoted.

The need for a publication rendering specialized, practical service to manufacturers, jobbers and dealers alike has long been felt in the tire and accessory industry, and the purpose of Tires and Accessories is to fill this need, thereby taking its place as an important factor in the development and forward progress of the industry it shall serve.”

These are the first words written in Tires & Accessories magazine, founded by Edward Lyman Bill Inc. in August 1919. The magazine has changed its name a half-dozen times over the years, finally becoming Modern Tire Dealer in 1959.

Our goal then, as it is now, is to provide you all of the information necessary to be successful. Since day one, we’ve strived to be an integral part of the tire industry.

“Tires and Accessories will be a clearing house for ideas and you should be a member of this clearing house.”

As you can tell from this quote in our first issue, we’ve long realized that exchanging information and ideas is a two-way street, and the feedback we’ve received from everyone over the years has been amazing. Thank you very much from all of us at Modern Tire Dealer.

MTD January 2019

Editorial

Amazon has a weak spot INSTALLATION WILL LIMIT ITS POTENTIAL TO SELL TIRES By

Bob Ulrich

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mazon.com Inc. is the $230 billion gorilla in the room.

The company is still in the early stages of selling consumer tires, but with online buying trending up, the opportunity for the No. 1 online shopping site in the world to become a major player in the tire industry seems a foregone conclusion.

Maybe it will one day. No tire manufacturers supply Amazon. com directly, but if that unified front ever cracks, buying name brand tires in bulk will give it a big price advantage.

That, however, is not enough of an advantage to upset our aftermarket ecosystem, in my opinion. Walmart Inc., Monro Inc. and Reinalt-Thomas Corp., which does business as Discount Tire/ America’s Tire, all have more than 1,000 outlets, and certainly leverage their economies of scale. All three of them sell a lot of tires. But they haven’t displaced smaller dealers solely based on price.

Single-store owners make up close to 59% of all 29,000 independent tire dealerships in the U.S. It has been that way for a long time. Their knowledge of the local market and personal service keep them in business. That is something Amazon doesn’t have, and never will. Does it matter to anyone ordering online? Perhaps not if they are ordering books or electronics or apparel.

Once these items show up on their doorsteps, the transaction is complete.

Tires, by comparison, have to be installed, which requires another step in the transaction and takes up more time. And that is why I believe Amazon does not have unlimited growth when it comes to selling tires.

Even Amazon understands this. That is why it has partnered with three large retailers to install tires purchased online: Pep Boys — Manny, Moe & Jack, Monro and Sears Holdings Corp.

Their combined store count is 2,457.

That will help Amazon sell more tires. That will not, however, result in a paradigm shift in its favor.

Amazon has other weaknesses. It has to either charge for shipping or hide the cost in the price of the tire. If it chooses to do neither, the cost comes off the bottom line, which hurts its profitability.

Anyone buying tires from Amazon, or any other online-only retailer for that matter, has to wait to have their tires installed. The transaction is not timely. For example, no one needing to buy tires because of an emergency would buy online.

For now, Amazon does not have ready access to all tire brands and all sizes. That, too, limits its potential.

For the sake of argument, let’s say low price and the ability to purchase tires without speaking to a human being trumps all other factors to the person needing to buy tires. How low does Amazon go?

I recently checked various websites for pricing on a Goodyear Wrangler SR-A, size P275/65R18. For comparison purposes, the average advertised price for a major brand in that size, courtesy of The Fitment Group, was $223.33.

• • • • • •

Amazon............................................. $172.97 Simple Tire ....................................... $199.97 Tire Rack........................................... $220.75 Discount Tire Direct....................... $172.97 Monro................................................ $203.99 Conrad’s Tire Express..................... $173.00

Although I don’t know what Goodyear Tire & Rubber Co.’s MAP (minimum amount price) is on the Wrangler SR-A, I know Goodyear has, at least in some cases, instituted MAP pricing.

As you can see, Amazon’s price was the lowest, but was essentially matched by Discount Tire Direct and Conrad’s Tire Service Inc., a 37-store independent chain based in northeast Ohio.

How many Amazon tire buyers will decide to buy from the installer directly the next time they have to buy tires? According to the Modern Tire Dealer 2018 Consumer Survey on Tire Purchasing, 42% of the respondents who paid for their tires online said it was “extremely easy” to find tires and make the purchase online. Another 23% said it was “very easy.”

In and of itself, that bodes well for repeat business for online tire retailers. And I don’t mean to belittle the process in any way. The Tire Rack has turned selling online into a science, and it is one of the most successful independent tire dealers in the U.S. However, when asked about their tire-buying experience with the installer following an online purchase, 54% of survey respondents said they were “extremely satisfied” with the experience, while 23% said they were “very satisfied.” That gives the installer the opportunity to convert the online buyer to an in-store buyer.

MTD estimates 8% of the replacement consumer tires sold in the U.S. in 2018 were purchased online, up from 6% in 2016. That represents 19.6 million of the 245.4 tires shipped last year.

Those numbers will grow, but slowly, in part because online-only tire retailers will continue to cannibalize each other’s sales to some degree, and in part because tires need to be installed.

Disregarding digital trends will not help you run your business more profitably, so don’t underestimate them. But don’t overestimate them, either. ■

FOR NOW, AMAZON DOES NOT HAVE READY ACCESS TO ALL TIRE BRANDS AND ALL SIZES.

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If you have any questions or comments, please email me at bob.ulrich@bobit.com.

MTD January 2019

ModernTireDealer.com DIGITAL RESOURCES FOR THE INDEPENDENT TIRE DEALER

MTD digital edition You can view the digital version of Modern Tire Dealer’s monthly magazine plus archived issues at http://mtd.epubxp.com/t/22225

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HOME OFFICE 3515 Massillon Rd., Suite 350 Uniontown, OH 44685 (330) 899-2200, fax (330) 899-2209 Website: www.moderntiredealer.com

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EDITORIAL Editor: Robert J. Ulrich, ext. 2211 Bob.Ulrich@bobit.com Managing Editor: Lori L. Mavrigian, ext. 2216 Lori.Mavrigian@bobit.com

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SALES South and Texas: Greg Smith

MTD’s website covered the multiple steps to ATD’s Chapter 11 banckruptcy proceedings and the financial recapitalization that will allow it to move forward.

ATD drives readers to MTD’s website Three of the top 10 most-read news items on www.moderntiredealer.com last month had to do with updates on American Tire Distributors Inc. (ATD) bankruptcy proceedings. In late December, the company completed its financial recapitalization and emerged from Chapter 11 bankruptcy. Also of note was the passing of private brand tire industry icon Al Hoffman.

1. Bankruptcy court signs off on ATD’s reorganization plan 2. Private brand tire pioneer Al Hoffman dies at 94 3. Stakeholders vote to accept ATD’s reorganization plan 4. It’s over: ATD emerges from Chapter 11 bankruptcy 5. Nokian Tyres fills 2 positions in North America 6. Beth Barron named next CEO of Chabill’s Tire and Service 7. Kumho names a new CEO for U.S 8. Tire Discounters supports unsafe used tire bill 9. TireGet website adds Maxxis Tires 10. Icahn Automotive buys 10 stores in Florida

Greg.Smith@bobit.com (330) 899-2200, ext. 2212 Midwest: Bob Marinez Bob.Marinez@bobit.com (330) 899-2200, ext. 2217 West Coast: Marianne Dyal /The Dyal Company Marianne.Dyal@bobit.com (760) 451-9216 Automotive Aftermarket: Dan Thornton djtinc@gmail.com (734) 676-9135, mobile (313) 410-0945 Classified Sales: Bob Marinez Bob.Marinez@bobit.com (330) 899-2200, ext. 2217 Reprint Sales: Karen Runion Karen.Runion@bobit.com (330) 899-2200, ext. 2210

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MODERN TIRE DEALER (ISSN 00268496) (CDN IPM #40013413) (USPS #369-170) is published monthly by Bobit Business Media, 3520 Challenger St., Torrance, California 90503-1640. Periodicals postage paid at Torrance, CA 90503-9998 and additional mailing offices. POSTMASTER: Send address changes to MODERN TIRE DEALER, P.O. Box 3312, Northbrook, IL 60065-3312. Please allow 6 to 8 weeks for address changes to take effect. Subscriptions in the U.S. and its possessions, $65; Canadian, $99; Int’l surface mail, $99; Int’l airmail, $198. Single copies, $10, except the January Facts Issue, $30. Address all subscription correspondence to MODERN TIRE DEALER, P.O. Box 3312, Northbrook, IL 60065-3312. Please allow 6 to 8 weeks to receive your first issue. Please address Editorial and Advertising correspondence to MODERN TIRE DEALER, 3515 Massillon Road, Suite 350, Uniontown, OH 44685-6217. The contents of this publication may not be reproduced either in whole or in part without consent of Bobit Business Media. All statements made, although based on information believed to be reliable and accurate, cannot be guaranteed and no fault or liability can be accepted for error or omission. For your information: We sometimes make our subscriber information (i.e. fax, e-mail or mailing address) available to carefully screened organizations whose products and services may be of interest to you. If you prefer not to have your information made available, please write MODERN TIRE DEALER, P.O. Box 3312, Northbrook, IL 60065-3312.

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MTD January 2019

A LONG WAY

TOGETHER

Deep tread with sturdy lugs Longer tire life High crack resistance

BKT USA Inc. 2660 West Market St., Suite 100 Fairlawn (Akron) - OH 44333 Toll free: (+1) 888-660-0662 - Office: (+1) 330-836-1090 Fax: (+1) 330-836-1091

News/Views

Toyo’s plans for 2019 TARGETED MARKETING IS ALREADY PAYING OFF FOR THE BRAND

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im Chaney’s broad goal is to take Toyo to the masses. Along the way, Toyo Tire U.S.A. Corp.’s vice president of marketing says he will not forget what — and who — have made Toyo such a strong Tier 2 brand in the U.S. Modern Tire Dealer sat down with Chaney and Roy Bromfield, Toyo’s president and chief operating officer, at the SEMA (Specialty Equipment Market Association) Show in Las Vegas last year to talk about their plans for 2019. As usual, Toyo’s presence on the trade show floor was substantial.

“We’re going to maintain and defend our strong position for this audience here, the enthusiast audience, through our existing motorsports activities,” said Chaney.

“All of our drivers are returning, and our participation in all of our races continues.

“Our event marketing in the enthusiast world, both UHP and light truck, continues.

So we’re heavily invested in this world, and we’ll continue. That’s the first thing.”

Consumer education is a different story, he said.

“Our awareness is not what we would like it to be for the mass market. We’re not as well-known as we are in this world. We have a number of initiatives we’re working on in the marketing and advertising space with some regional and digital marketing efforts to build our (consumer) awareness.

We’ve got a bit of work to do in that area, but we’ve got great opportunity as well.

“We’ve been growing primarily through the expansion of our distribution channels. And dealers are doing a great job for us, and we’ll continue to invest in our expanding dealer-distribution channels to support those dealers. But direct-consumer marketing and advertising and mass market is what we’re working on and looking to expand next year.”

Bromfield said the company wants to expand on its original equipment fitments.

“We have some reasonable positions on a number of Japanese manufacturers, but we look to do more with some of the domestics here. OE positioning really does help build brand awareness, so it’s consistent with what Tim was saying in the aftermarket. It does give us (more)

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“We do see… the heavy influence of dealers on the purchase decision at the retail level,” said Tim Chaney, Toyo’s vice president of marketing (pictured next to a Jeep CJ7 fitted with Toyo Open Country M/T tires). “There’s no doubt. But we’re looking to balance that with (brand) awareness, opinion and consideration.”

credibility. And it gives us brand awareness.

Working with our Japanese headquarters, Tim’s group just completed a major global brand-positioning study. We have many markets in this country and around the world that are still not aware of the brand.

Outside Japan it’s a global issue.

“OE is part of the positioning,” said Bromfield. “We have to balance OE and replacement in terms of capacity and where we want to direct capacity.”

Chaney said the study to which Bromfield was referring also included a “customer-segmentation study,” a first for Toyo. “So we have a better idea who is more predisposed to buy our tire and who should be our target customer. We’re still working through that data.

“But a lot of the research showed us customers… don’t know much about Toyo, but they want to. And we get a lot of credit because of our Japanese heritage.

The reputation that Japanese heritage equals quality is one (asset) we have in this business.”

In 2018, Toyo targeted Dallas as a market with plenty of sales volume growth potential. It had both a strong retailer base and consumers the company wanted to target.

Following a five-month integrated, multi-media advertising program that

included digital and search-engine marketing; local television and radio spots; and high-profile “platforms” like the Super Bowl, Academy Awards, NBA finals and NCAA Men’s Basketball Tournament, Toyo experienced very positive results.

There were “huge spikes” in volume to Toyo’s website, said Chaney. “The TireFinder portion of our website, where people are shopping for tires for their own vehicles, spiked 1,150% in that time frame. And we saw that in some of our other markets we targeted as well.

“In that five-month concentrated period, we saw enough evidence, both anecdotally from the field as well as the data we had, that if we advertise they will come. We’re encouraged, and we’d like to continue and expand markets if possible as we go into 2019.”

Toyo also is the longest-running sponsor of the Ultimate Fighting Championship (UFC).

“We will continue with the UFC,” said Chaney. “They’re growing. They just did a deal with ESPN that starts in 2019. ESPN will expand their awareness and promote them heavily through their powerful media platform. We’re really excited about the UFC and ESPN partnership, and what it can do for us as well.” — Bob Ulrich MTD January 2019

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News/Views

Bites Discount Tire expands Discount Tire added 55 stores nationwide in 2018, with nine outlets opened in December. The new stores are in Arkansas, Kansas, North Carolina, Texas, Wisconsin and Virginia. The parent company, ReinaltThomas Corp., now has 1,020 Discount Tire and America’s Tire stores.

Auto Pride grows The Automotive Distribution Network has added two Auto Pride members in New York City: Brooklyn-based South Shore Auto Parts and Long Island City’s E&Y Distributors Inc.

Goodyear sponsors Cotton Bowl Goodyear Tire & Rubber Co. will have naming rights to the Goodyear Cotton Bowl Classic for the next six years after signing a multiyear agreement.

Best Drive adds 4 outlets BestDrive LLC opened four locations in the second half of 2018, including its first store in Oklahoma. The Continental Tire the Americas LLC subsidiary now has 28 commercial tire centers in the U.S.

Beth Barron is Chabill’s new CEO

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retired.

Barron has spent the last 26 years working for the 17-store operation, which does business as Chabill’s Tire and Auto Service. She most recently served as vice president of operations and sales for the business, which serves southern Louisiana.

“I plan to continue the tradition of high quality customer service that has been established under my father’s leadership,” says Barron. “With the ongoing support of the Chabill’s leadership team, we will continue to offer high quality products and superior technical services. We will also continue to look Beth Barron became CEO of Chabill’s Tire at expansion opportunities.”

Auto Service on Jan 1, 2019, when her Her father will retire 50 years after and father, Charley Gowland, retired. founding Chabill’s with Billy Parker in Morgan City, La., in 1968. They combined their first names to form the store’s name. Over the next five decades the business has grown to 17 stores and more than 130 employees. The company has expanded its tire brand offerings along with the automotive services it offers consumers.

ATD emerges from bankruptcy reorganization

Hankook hosts events Hankook Tire America Corp. partnered with tire dealers and a tire distributor to host a dozen events offering free services to veterans and their families in 2018.

The events are part of Hankook’s support of the Mobile Service Office (MSO) program run by the Disabled American Veterans (DAV).

Nexen honors veteran Retired Marine Cpl. Steven Diaz is the new owner of the American Muscle for American Heroes Nexen Tire Dodge Challenger R/T. Nexen Tire America Inc. partnered with the Purple Heart Foundation to select a Purple Heart medal recipient to receive the custom-built 2018 Dodge Challenger R/T 392 Scat Pack.

Simple Tire sponsors tour In partnership with the Wounded Warrior Family Support organization, Simple Tire LLC sponsored the 2018 Ford F-150 Raptor presented to a three-time recipient of the Purple Heart, Scott West, a U.S. Army veteran. Simple Tire is a sponsor of the organization’s High Five Tour.

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n Jan. 1, 2019, leadership of Chabill’s Tire Service LLC transitioned to the second generation. Elizabeth “Beth” Gowland Barron took over as CEO, and her father, Charley Gowland,

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merican Tire Distributors Inc. (ATD) emerged from Chapter 11 bankruptcy on Dec. 21, 2018, following the completion of its financial recapitalization. The bankruptcy reorganization enabled ATD to reduce its debt by approximately $1.1 billion.

“We are a stronger company with the financial flexibility to build on an 80-year history of leadership and innovation,” said CEO Stuart Schuette. “We are laserfocused on delivering greater value for our customers and manufacturer partners, with differentiated capabilities based on advanced analytics.”

In connection with emergence, ATD is issuing payment for all pre-petition obligations currently due. The company recapitalized on a fully consensual basis, with the support of all of its key financial stakeholders, as well as its vendors and customers, and moves forward with $1.005 billion of committed exit financing

arranged by Wells Fargo Capital Finance to support operations and future growth initiatives.

ATD filed for Chapter 11 bankruptcy protection Oct. 4, 2018. The bankruptcy filing came after Goodyear Tire & Rubber Co. and Bridgestone Americas Inc. stopped distributing their passenger and light truck tires through ATD in the spring of 2018.

Goodyear and Bridgestone formed a joint venture wholesaling operation, TireHub LLC, which began serving customers in July.

ATD said its operations across its distribution network served customers without disruption during the reorganization process. ATD began shipping products out of a new 1-million-square-foot warehouse in Blakeslee, Pa., on Dec. 3, 2018. The new Pocono Mixing Warehouse primarily services vendors in the northeast and mid-Atlantic United States as well as eastern Canada.

MTD January 2019

THESE TIRES MEAN BUSINESS OPEN COUNTRY M/T Off -Road Maximum Traction

OPEN COUNTRY R/T On-/Off -Road Rugged Terrain

OPEN COUNTRY C/T On-/Off -Road Commercial Grade

OPEN COUNTRY A/T II On-/Off -Road All-Terrain

OPEN COUNTRY H/T Highway All-Season

OPEN COUNTRY Q/T CUV/SUV Touring All-Season

P R E M I U M . PO P U L A R . P RO F I TA B L E .

When it comes to light trucks, SUVs and CUVs, the Toyo Open Country line has everything your customers need. Whether cruising the highway or crushing it off-road, they’ll be thrilled with their purchase — and come back to the dealer who sold it to them.

“I recommended a set of Toyo Open Country A/T II tires to a friend of mine when

upgrading his truck… today the tires have over 80,000 miles on them and they still have good tread! He is now looking to purchase another set of Toyo Tires.”

—BRIAN ROSE, TREADMAXX

©2018 Toyo Tire U.S.A. Corp.

News/Views

Bites Marangoni expands plant Marangoni Tread North America Inc. is expanding its Tennessee facility following a year of increased unit sales. The company is adding a production line to manufacture the XP Extreme Performance wide-base Ringtread.

GRI plant is ISO certified The new Global Rubber Industries Pvt. Ltd. (GRI) specialty tire plant in Sri Lanka has achieved ISO 50001: 2011 certification for the implementation of a comprehensive and far-reaching energy management system.

Icahn buys RPM Automotive Icahn Automotive Group LLC has acquired the 10-location business of RPM Automotive Holdings LLC based in Jacksonville, Fla.

Coker acquires wheel brands The Coker Group is acquiring PS Engineering Inc. and Vintage Wheel Works.

Coker Tire will become a distributor of both brands, giving customers the company’s first aluminum wheel offerings in its catalog and online.

Giti sponsors Rose Parade Giti Tire (USA) Ltd. was the official tire sponsor of the Rose Parade and presenting sponsor of Decorating Places, an area where volunteers decorate floats, on Jan. 1, 2019, in Pasadena, Calif.

nd per uclf of city

Sullivan signs 2 celebrities Boston Bruins defenseman Torey Krug and New England Patriots fullback James Develin will continue as celebrity spokespersons for Sullivan Tire Co. Inc. in 2019.

Nokian has new headquarters Nokian Tyres Inc. has opened its new North American headquarters in downtown Nashville, two hours away from what will be the company’s first tire factory in North America. The office opens as construction continues on Nokian’s passenger tire plant in Dayton, Tenn., which is scheduled to open in 2020.

om s’ on

Raben Tire adds store Raben Tire Co. LLC has opened a commercial truck and farm tire center in Greenville, Ky.

16

Point S dealer expects new store to boost sales 20%

W

ith six bays and two crews dealers who serve on the cooperative’s of employees, Cory Brown’s board. He says it didn’t make sense to tire store was servicing 1,500 invest in the signage and branding at to 2,000 vehicles a month from a 6,200the Campbell Street store only to have to square-foot location on Campbell Street do it again when the new store opened. in Rapid City, S.D. “We were climbing all (The Campbell Street store is now fully over ourselves for space,” he says. focused on commercial tire business Brown, president of Redline Automotive Inc., and his father, Ross Brown, vice president, knew they needed more space.

Their retail, commercial and fleet business couldn’t remain under one roof.

After two years of planning and construction, the Browns on Nov. 19 opened their third tire store in South Dakota. The new Cory’s Point S Tire and Auto Service in Rapid City The showroom space is designed to be open and airy, with lots of windows and a tall ceiling. The is a retail-focused store with Browns plan to display a collectible car regularly. more than 11,000 square feet This 1962 Corvette belongs to Cory Brown’s mother. and 12 bays.

“It’s much more retail friendly. It has and fleets, and operates as Tri-State Tire a very comfortable waiting area with a Commercial Fleet.) fireplace,” Cory Brown says. “It has an “I have been pretty impressed with open air showroom with a lot of windows how the public has reacted to the Point and tall ceilings. Our old shop was a S colors and name. I’ve had a lot of really metal, pole barn space. This is more of great responses to not just how the store a retail-friendly space.” looks, but also the color scheme, and the The store also features a counter-top fact Point S is an international brand seems work area for customers, Wi-Fi, and a to carry a lot of weight with our retail playroom for children. There’s even room customers. That’s been a nice revelation.” to park a 1962 Corvette inside the lobby.

Moving the Rapid City retail business to They plan to display a different vehicle its own location will give the commercial every few months, including some that and fleet business room to grow. are owned by customers.

In its first year, Cory expects the new The opening of the new store is the store will help boost the company’s overstart of the Browns using the Point S all sales by 20%. That increase would name. Cory Brown is among the tire beat what’s become the norm. “Since 2008 we have averaged year-over-year growth of 16%. That’s the direction I would like to continue to head.” In 2018 he expects the business, which also includes a retail store in Belle Fourche, S.D., to end the year with just over $4 million in sales.

In 2019 the business is Cory’s Point S Tire and Auto Service in shooting for around $5 Rapid City, S.D., sits atop a hill in the midst of a new retail development. million in sales.

— Joy Kopcha MTD January 2019

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News/Views

Dates February 20-23 Tire Industry Association Off-the-Road Tire Conference, Saddlebrook Resort, Tampa, Fla. (800) 876-8372 www.tireindustry.org

February 21-22 North Central Tire Dealers & Suppliers Association Conference & Trade Show, Treasure Island Resort & Casino, Red Wing, Minn.

(952) 544-6805 www.northcentraltiredealers.com

March 5-8 The Work Truck Show, Indiana Convention Center, Indianapolis, Ind. (800) 441-6832 www.worktruckshow.com

March 8-9 North Carolina Tire Dealers Association Expo, Raleigh Convention Center, N.C. (877) 784-0111 www.nctda.com

18

Kumho names a new CEO for U.S.

S

amuel Choi will take over Kumho Tire USA Inc. as its next CEO. He succeeds Harry Choi, who is stepping down after six years leading the tire maker’s U.S. operations.

Despite sharing the same last name, the two men are not related.

Samuel Choi has spent more than 28 years with Kumho. Part of his management experience was leading sales planning in the Middle East and Europe with a focus on the French market. He most recently served as president of Kumho Mexico.

He takes over operations in the U.S. as Kumho searches for its next global chairman.

Jong Ho Kim has recently resigned, and the company says it has yet to pick his successor.

For details on Kumho’s plans for 2019, read MTD Senior Editor Joy Kopcha’s coverage of the company’s annual dealer meeting on page 70.

Community Wholesale Tire opens first warehouse outside of Missouri

C

ommunity Wholesale Tire Inc. opened its fourth distribution center. The 77,000-square-foot warehouse, located in Peoria, Ill., gives the company nearly 600,000 square feet of warehouse space.

The company also operates warehouses in Kansas City, Springfield and St. Louis, Mo. It distributes to tire dealers in nine states: Missouri, Illinois, Iowa, Indiana, Kansas, Kentucky, Nebraska, Arkansas and Oklahoma.

“The additional warehouse space in Peoria allows us to better service our existing northern and central Illinois and Iowa customers, and expand our overall marketing area,” says Andy Berra, president. ■

MTD January 2019

NumbersThatCount

Relevant statistics from an industry in constant motion PHOTO PROVIDED: YOKOHAMA TIRE MANUFACTURING MISSISSIPPI

Yearly tire capacity in North America’s 62 plants as of Jan. 1, 2019.

SOURCE: MODERN TIRE DEALER’S 2019 FACTS ISSUE

$2.75 Forecast for average retail cost of a gallon of regular gasoline in 2018 and 2019.

218.1 million Number of licensed drivers in the U.S. in 2017.

SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION

SOURCE: IHS MARKIT ©GETTYIMAGES.COM/VLADRU

©GETTYIMAGES.COM/JABEJON

$8,876 Cost per year to own and maintain an average car in the U.S. That’s $443,800 in 50 years.

SOURCE: FACTS DAILY, WWW.FACTSD.COM ©GETTYIMAGES.COM/400TMAX

25% Percentage of all motor vehicle crash fatalities caused by distracted driving.

SOURCE: TEENSAFE, WWW.TEENSAFE.COM

85 mph Highest speed limit for any road in the U.S., found in Texas.

SOURCE: WEATHER.COM

20

©GETTYIMAGES.COM/MICHAEL BURRELL

348.6 million

85

80% Percentage odds are increased of getting into an accident while eating or drinking while driving.

SOURCE: NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION

MTD January 2019

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Industry Analysis

John Healy (on right) met with Saul Ludwig at the Specialty Equipment Market Association (SEMA) Show in Las Vegas last November. Ludwig wrote MTD’s Your Marketplace column for almost 40 years before retiring in 2012.

2018 was a year of change, 2019 will be a year of the impact JOHN HEALY ANALYZES HOW TIRE INDUSTRY ‘BLUE BLOODS’ ARE CHANGING THE MARKET

W

hat transpired in the tire industry in 2018 and what will happen in 2019? John Healy, a managing director and research analyst with Northcoast Research Holdings LLC based in Cleveland, Ohio, and author of MTD’s monthly column Your Marketplace, took on our questions and offered his thoughts and predictions.

MTD: How would you summarize the tire industry in 2018?

Healy: The industry backdrop seemed to steadily improve throughout the year and culminated in a strong finish. Initially, the start to 2018 did not seem to pan out as many industry participants expected, given the various tailwinds present within the environment. Dealers expected the contribution of historically low unemployment/tight labor market, new tax legislation, post-recession highs in consumer confidence and a strong economy to act as tailwinds for sell-out trends (as well as the continued adoption/ trade-up to HVA products).

Instead, the beginning of 2018 got off to a very choppy start and left many dealers questioning whether this was a shift in

22

the industry landscape or just transitory pressures.

However, demand trends seemed to firm up throughout the year and an unexpectedly early start to the winter/unseasonable weather helped consumers remember how rough the last couple winters were and may have impacted consumer behavior in a positive way for sell-out trends in the final periods of 2018.

While sell-out trends are one piece of the story, another piece relates to changes in distribution. Moves by some of the “blue bloods” of the tire industry relating to distribution caused changes and a ripple effect to peers.

These moves as well as issues encountered by American Tire Distributors (ATD) resulted in new partnerships formed and a decision to be made by dealers on how to source their product portfolio going forward. We look to 2019 to see what the absolute impact of these changes will be on the industry.

MTD: How have independent tire dealers been affected by President Donald Trump thus far in his administration?

Healy: Two words — complicated and beneficial. The complicated side of the equation relates to tariffs on raw materials and

finished goods. These tariffs have caused changes on how distributors source product and also have caused the industry to evaluate price increases. Beyond these items, we view a robust economy and record low unemployment as a by-product of consumer and business confidence which ultimately resulted in better replacement volumes.

MTD: What are your 2019 predictions for Goodyear Tire & Rubber Co., Michelin North America Inc. and Bridgestone Americas Inc.?

Healy: 2019 will likely be a mixed year for each of these manufacturers with some bright spots and difficulties. On the positive side, we expect the truck tire market to be vibrant, the U.S. replacement market to be upbeat. On the challenging side, we expect weaker volumes in China in 1H19 to be an issue that manufacturers need to manage through.

Additionally, we see the OE side of things in the U.S. as softer, both from a market and a share shift standpoint (negatively impacting legacy industry nameplates like Goodyear, Michelin and Bridgestone). All these items considered, we expect dealer behavior to dictate the success or softness in the business MTD January 2019

Industry Analysis for each of these manufacturers in 2019.

With changes in distribution, how dealers buy and who they buy from will be key.

The question we ask ourselves is — is the brand or the distribution partner paramount to the dealer? 2019 will tell us more.

MTD: How would you describe the strategy of Monro Inc.? Is it succeeding?

Healy: Monro’s strategy mainly involves significant reinvestment into various aspects of the business (digital, consumer-facing initiatives, employee improvements, etc.) to help it break from challenged sales and historical under-performance against peers.

From our perspective, the strategy is showing very strong early signs of success, with high-single-digit same-store sales levels

even in some months. At a high level, by continuing to give employees additional training via Monro U, reinvesting in store re-image initiatives, continuing to enhance its online presence, among many other efforts, should help them close the gap between competitors and should drive increased customer traffic with the ultimate goal of retaining those customers for many years to come.

MTD: What are your thoughts on Sears?

Healy: Sears is in an extremely precarious position, but all hope is not lost. I believe there is a chance for them to survive, but in a significantly reduced footprint and format from where they are now. I think they have the opportunity to exist for many years to come in their new concept — small format stores. However, for the company to thrive they really need to establish a product identity and try to garner relevancy with younger generations who will ultimately be the consumers of the future.

As it relates to Sears Auto Centers, time will tell, but we do not see meaningful evidence that a turnaround is in the cards as of yet. While a partnership with Amazon has been formed, we note this is not exclusive.

Additionally, we think entities like Costco and Walmart seem better positioned to get a share of wallet from consumers who elect to get their tires at big box retailers.

MTD: What impact has tire manufacturers’ online tire sales had on the market?

Healy: Currently, tire buying research is done online but tire buying transactions are largely done in person, from our perspective.

I do not think there are any notable impacts that these online efforts have had so far; they remain such a small percentage of overall activity and will continue to remain that way in the near-term.

However, I believe that manufacturers need to continue selling through these channels and other manufacturers will enter these channels, as well. As the more digitally savvy generations get older and begin commanding a greater percentage of consumer spending, these online sales channels will gain increased importance.

MTD: Do you believe online tire selling in total units will continue to grow?

Healy: It would be crazy to think otherwise, but I think the migration will be gradual but continual. It may take some

24

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Industry Analysis time for these efforts to gain traction (many consumers do not know about this currently; many people prefer talking to a service tech in-person when getting tires), but they will undoubtedly have a place in the future of tire retailing. But I’m not sure to what extent it will ultimately grow.

MTD: The landscape of wholesale distribution changed dramatically in 2018.

How soon before TireHub (Goodyear and Bridgestone Americas) and NTW (Michelin and Sumitomo Corp. of Americas ) iron out the logistics of their respective joint ventures?

Healy: I can’t speak to a timetable as to when everything will be ironed out, but things already seem to be progressing well and the only logistical issues that seem to be occurring based on our conversations mainly revolve around administrative issues, which are not difficult issues to overcome. Anecdotally, we would give the “new distribution entities” high marks in their early efforts to make the businesses stand up independently.

MTD: Can we expect more changes at American Tire Distributors?

Healy: It’s hard for us to see how the situation at ATD does not find a level of stability in the near-term followed by what would be some very natural evolution of their business. From our perspective, dealers still support ATD and service levels have been fairly consistent with previous standards.

That said, there are new owners at ATD and they will have a view on how the business should run and operate. We would not be surprised to see its facility structure adapted in some ways as new owners look to make more profit per tire and to steer the company toward efficiencies and maximizing returns.

MTD: Do you expect more changes in wholesale distribution in the U.S.?

Healy: I would say it just depends on how the tire distribution landscape plays out. NTW, TireHub and Max Finklestein have already formed their own distribution partnerships, so if other manufacturers continue to go that route pressure could remain on ATD. Operations seemed to be troubled even before many of these changes happened over the past year, so increased factors exacerbating ATD’s operational execution could lead to more changes. We have not seen the last of manufacturers creating their own buying groups/distribu-

26

tion channels, although I’m not sure of the timing of these actions.

MTD: What new technologies should tire dealers be paying attention to?

Healy: Dealers should be paying attention to social media and online selling opportunities, including online scheduling offerings.

Reducing friction and ease of use should be a focus of all online offerings by dealers. Today a dealer’s online presence has a dramatic impact on their business. I feel dealers need to be mindful of their online reputation and be working to manage/ improve it continuously because that has the ability to drive traffic trends.

Furthermore, dealers should be engaging potential/existing customers on social media

‘THE GREATEST THREAT TO INDEPENDENT DEALERS IN 2019 IS FURTHER CONSOLIDATION AMONG THE BIGGER OPERATORS.’ channels to differentiate themselves from peers and keep their business in the back of customers’ minds. Dealers also need to begin offering online sales opportunities; although it will be a small fraction of overall business at first, it will gain increased importance over time.

Lastly, dealers should also be paying attention to the changes in the mobility ecosystem (self-driving cars, car sharing, etc.) and how those trends evolve because that will have a major impact on their end markets and the products this new ecosystem will demand. We have seen some dealers create programs to win business via offering discounts to Uber and Lyft drivers. From our perspective, these targeted campaigns could be a useful tool to build a new customer base.

MTD: What are your thoughts on autonomous vehicles?

Healy: From our perspective, increased

use of mobility and ease of friction in transportation generates more miles driven. So if this historic relationship holds, more miles will be driven which means more tires will be worn, thus creating growth in replacement related volumes.

MTD: BKT recently announced it would build a plant in the U.S. Do you expect more companies to follow suit?

Healy: We expect more suppliers and manufacturers to move production areas closer to landing areas. As demand in emerging markets begins to mature and labor rates move higher coupled with increased costs to land a tire to shipment areas, the equation toward where to produce begins to produce different outcomes. We see this both in terms of new plants in the U.S. for manufacturers and also suppliers.

MTD: Who or what poses the greatest threat to the business of independent tire dealers in 2019?

Healy: The greatest threat to independent dealers in 2019 is further consolidation among the bigger operators. If these operations continue to grow larger, they will be able to leverage scale, pricing, geographic presence, capital expenditure resources, etc., to a much greater degree than small independents and this could cause them to have a tough time competing and lose share.

Additionally, larger entities are likely to be more capable to bring e-commerce offerings (e.g. mobile scheduling) to the consumer, which could be seen as a differentiator.

While the big keep getting bigger, we do recognize this business is about people, too, and it would not be unlikely for a consumer to opt to go with a smaller independent, even if price may not be superior, if they trust the service technician/business that stands out by offering not only great service but an exceptional customer experience.

MTD: What segment of the tire industry was the most interesting to follow in 2018 ?

Healy: Clearly the changes in distribution were the story of the year. Watching distribution evolve and new partnerships and paths forged is always exciting. We see 2018 as a year of change and 2019 a year of the impact. It will be interesting to see how brand market share changes as a result of these distribution shifts.

MTD: Thanks for your insights, John.

MTD January 2019

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

Majority of dealers surveyed feel tire price hikes will stick By

John Healy

O

ur recent discussions with dealers provide us with confidence that retail sell-out continues to trend in a favorable direction. Feedback from the dealer community indicates that conditions remain healthy with volumes improving year-over-year for a fifth straight month. From a volume standpoint, surveyed dealers reported they saw unit sales volumes improve modestly (approximately 1.3%) compared to the same period last year.

In our column last month, we surmised that an early start to unseasonable climate conditions would act as a tailwind to sell-out activity through the rest of the year. This hypothesis seems to have come to fruition as commentary from dealers indicated these conditions have set up a constructive backdrop for the retailing market.

More specifically, our dealer contacts in the northeastern U.S., which has been one of the first regions to experience unfavorable winter weather, have reported immensely higher volume growth than the rest of our domestic contact base over the past two months.

Our checks over the last few months suggest that almost every tire manufacturer we monitor introduced or announced some level of price action to offset rising raw material costs; based on our tracking, we have seen 15 increases in recent months. We note most increases were in the 3% to 4% range, were described as reasonable and digestible by retail and wholesale contacts and for the third month in a row, over 70% of contacts asked indicated that price increases will stick.

Although raw material pressures have begun to abate, the year-over-year trajectory remains upward, and contacts continue to speculate that further price increases could be on the horizon. In addition to studying the state of tire demand, we also monitor the pricing trends of over 10,000 consumer replacement tire SKUs. Our survey work suggests that the average tire price increased 1.6% from October and roughly 2% versus November 2017. We believe the recent growth in the SKUs we track reflects price increases across manufacturers have stuck and are flowing through to wholesalers and retailers; furthermore, data we have collected in the first half of December show tire prices increasing at similar levels on a month-over-month basis.

Looking closer at the recent trajectory of raw material costs, the

Average tire tier rankings Tier

Sep ’17

Oct ’17

Nov ’18

Sep ’18

Oct ’18

Nov ’18

Tire 1

3

1

1

2

3

2

Tire 2

2

2

3

1

1

1

Tire 3

1

3

2

3

2

3

SOOURCE: NORTHCOAST RESEARCH HOLDINGS LLC

28

basket of raw materials to make a common replacement vehicle tire increased over 3% year-over-year in November while decreasing 5.3% from October.

MONTHLY SURVEY A number of independent tire dealers were surveyed concerning current business trends. The results of the November 2018 survey are compared with those of November 2017. See the report on www. moderntiredealer.com.

REPLACEMENT TIRE SALES ROSE IN NOVEMBER Dealer commentary suggests consumer demand for passenger and light truck replacement rose in November compared to the same period last year. The net number of respondents indicating they saw an increase in demand year-over-year was 36.3% of contacts.

Despite the vast majority of price increases having worked their way through the supply chain all the way to the retail level, contacts conveyed that price actions have not detrimentally impacted demand and volumes were healthy through November.

A LOOK AT MIX TRENDS IN THE MARKET In response to best and worst performers, our recent survey suggests that Tier 2 brands continued recent momentum and were the top performer last month while Tier 3 brands returned to the bottom of our rankings. Even though consumers may desire a recognizable brand, the combination of price and performance that Tier 2 tires provides continues to be a winning formula among shoppers as value-conscious consumers continue to gravitate toward this segment.

This is further exemplified by the fact that Tier 2 brands have only been at the bottom of our rankings one time since September 2016 and have been the best performers in our index over one, two, and three-year time frames.

Furthermore, we note that Tier 2 brands have been the segment of most significant growth according to surveyed dealers for nine out of the last 12 months while, on a longer-term basis, Tier 3 brands have been ranked or tied for last place by our respondents in 24 of the past 51 months. Tier 2 was our second-best performer this month and despite external factors that should aid in these legacy nameplates’ sellout activity (confident consumer, tax cuts, strong economy), the recent introduction of price increases may have led consumers to shy away from higher prices in favor of Tier 2 brands.

However, we feel the mega-trend of the market shifting to HVA shipments remains a long-term opportunity. ■ 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 2019

2019 Facts Section: Overview

MTD is 100 years young!

WE START OUR CENTENNIAL CELEBRATION WITH FACTS ISSUE NO. 53

O

nly three years ago, Modern Tire Dealer published its 50th Facts Issue. Now we are celebrating the magazine’s 100th anniversary! And what better way to start than with our 53rd annual look at the tire industry that was, is, and will be.

Our 15-page Facts Section lets our readers know what happened in 2018. How many shipments were there? Which countries affected our industry the most? Were retreaders really affected by low-cost new truck tires from China? (Spoiler alert: The numbers say “yes.”)

Why are your fellow tire dealers buying specific brands of automotive parts? The answers may surprise you.

If you want to know how healthy the market is, check out the tire sales chart below. For the first time, the replacement tire market in the U.S. topped the $40 billion mark! And you are responsible for the majority of those sales, either directly through your 29,000 independently owned outlets or indirectly through wholesale distribution.

At the same time, the market remains very competitive.

The average sales margins chart, also on this page, gives you a benchmark of how you are doing. As you can see, there is room for more profitability on the retail side.

On the wholesale side, 2018 was one for the ages. By mid-year, Michelin North America Inc. had purchased 50% of TBC Corp. from Sumitomo Corporation of Americas and formed National Tire Wholesale (SCOA), while Goodyear Tire & Rubber Co. and Bridgestone Americas Inc. had formed TireHub LLC. In less than three months American Tire Distributors filed for bankruptcy, reorganized, and emerged from bankruptcy.

Those three wholesalers enter 2019 with the combined capacity to distribute 58 million tires in the U.S. through 348 distribution centers.

The facts we present not only verify what has happened, but also reveal trends that give you an idea of what will happen. For example, you can expect to compete against fewer Sears Auto Centers in 2019. At the same time, the increase in the number of Pep Boys Service & Tire Centers makes Icahn Automotive Group LLC — as in billionaire Carl Icahn — a company with which to be reckoned in the aftermarket.

What tire sizes can you expect to replace in 2019 and beyond?

You ask, we answer by listing the most popular original equipment sizes in the last five years.

Beginning this month price increases on Vredestein, Continental,

U.S REPLACEMENT TIRE SALES, 2018-2015 (IN BILLIONS OF DOLLARS) In 2018, the U.S. replacement tire market was worth $41.9 billion.

Tires

2018

2017

2016

2015

Passenger

$26.6

$25.5

$24.9

$24.4

Light truck

$5.4

$5.3

$5.1

$4.8

Truck

$7.5

$6.8

$6.3

$6.4

OTR

$1.8

$1.7

$1.6

$1.6

Farm

$.622

$.535

$.512

$.500

2018 TIRE SALES MARGINS Tire segment

2018

2017

Retail passenger

24.2%

24.8%

Retail light truck

22.8%

24.6%

Commercial light truck

21.2%

20.5%

Medium/heavy truck

15.6%

16.8%

Wholesale passenger

12.2%

11.7%

Wholesale truck

11.3%

10.4%

General, Michelin, BFGoodrich, Uniroyal and Pirelli passenger and light truck tires were implemented. So were prices on select Toyo consumer and commercial tires. Bridgestone Americas Tire Operations LLC and Bridgestone Canada Inc. will increase prices on Firestone truck tires beginning Feb. 1.

Will those price increases stick nationwide? You may have to wait until the 54th Facts Issue to find out, although you will quickly discover what your own customers will pay for those tires.

Over the next 11 months, we will continue to acknowledge our anniversary with more facts, figures and stories about our past, all designed to give you further insight into a market that is in constant motion. Let the celebration begin! — Bob Ulrich

All figures in this 15-page Facts Section are Modern Tire Dealer figures unless otherwise noted.

30

MTD January 2019

2019 Facts Section: Tire Shipments

TIRES, TIRES AND MORE TIRES! A RECORD NUMBER REACHED THE U.S. AFTERMARKET IN 2018

A

record 214.3 million domestically produced and imported passenger tires were shipped in the U.S. in 2018. That’s nearly 30 million more than

10 years ago!

Truck tires also set a record with 21 million units shipped, topping the previous highwater mark of 19.5 million tires set

Close to 66% of the retailers responding to Modern Tire Dealer’s Exclusive State-ofthe-Industry Survey estimated their tire sales would be up in 2018, the highest level of optimism since 2010. They also said sales would be up by an average of 10%.

Independent tire wholesalers were a little more cautious. Although 70.6% reported their sales were up after three

NEW P-METRIC AND LT TIRE SIZES/SKUS IN 2019 (NOT COUNTING TEMPORARY SPARES OR ADDITIONAL RIM CONTOURS ADDED TO EXISTING LT SIZES) P215/40R19 XL LT275/50R22 LRC/E 32x9.50R15LT LRB 37x14.50R24LT LRF 42x15.50R26LT LRD

LT235/60R18 LRD LT275/55R22 LRE 35x10.50R17LT LRE 38x15.50R22LT LRE 42x15.50R28LT LRE

LT235/75R18 LRE LT295/55R22 LRE 37x14.50R20LT LRE 38x15.50R24LT LRF 44x15.50R28LT LRD

SOURCE: TIRE & RIM ASSOCIATION

last year. And the 31.3 million light truck tire shipments were not far off from the high of 31.4 million in 2016.

Thailand again shipped more passenger (34 million) and light truck (6.4 million) tires to the U.S. than any other country.

Based on shipments alone, it was a good year for independent tire retailers and wholesalers. When asked about their full-year dollar sales projections in October, most of them were optimistic.

THE GREAT DEPRESSION

1929 32

with Northcoast Research Holdings LLC, says there are a number of economic factors that could affect tire shipments in 2019.

“We see tariffs, consumer-related items (e.g., confidence and employment levels), and global auto sales as the big three items to monitor in 2019. Tariffs as they relate to global production and sourcing and other factors as they relate to the always import supply/demand dynamics.

From our perspective, there are reasons to be cautiously optimistic on most of these fronts.

“Compared to this time last year, inventory levels for dealers are much improved from the elevated levels at the end of 2017. Manufacturers seem to be a lot more disciplined in their production approaches and this rationalization has led to much leaner inventories.” ■

ARAB OIL EMBARGO

quarters, 64.8% projected they would be up at the end of the year. The average increase in dollar sales was 12%.

What about next year? John Healy, a managing director and research analyst

KOREAN CONFLICT

WORLD WAR II

1939

1949

1959

1969 MTD January 2019

U.S. PASSENGER TIRE SHIPMENTS, 1929-2018 (IN MILLIONS OF UNITS)

600 THE GREAT RECESSION 500

BLACK MONDAY 400

TOTAL 300

OE

200

100

REPLACEMENT 1979

1989

w w w . M o d e r n T i r e D e a l e r. c o m

1999

2009

0 2019 33

2019 Facts Section: Tire Shipments

U.S. TIRE UNITS SHIPPED (IN MILLIONS, INCLUDING IMPORTS) PASSENGER TIRES

LIGHT TRUCK TIRES

MEDIUM/HEAVY TRUCK TIRES

Year

Replacement

OE

Year

Replacement

OE

Year

Replacement

OE

2018

214.3

47.0

2018

31.1

5.2

2018

21.0

6.1

2017

209.3

46.0

2017

30.8

5.4

2017

19.5

5.6

2016

207.7

49.0

2016

31.4

4.9

2016

18.4

5.3

2015

205.9

49.0

2015

29.0

4.6

2015

18.0

6.3

2014

206.6

46.3

2014

28.8

4.8

2014

17.3

5.8

2013

201.6

44.0

2013

28.3

4.4

2013

15.7

5.0

2012

192.0

40.5

2012

28.3

4.2

2012

16.0

5.3

2011

196.5

36.0

2011

28.6

4.1

2011

17.0

4.9

2010

198.7

34.6

2010

28.0

3.5

2010

15.3

3.0

2009

184.0

25.0

2009

26.0

2.6

2009

12.7

2.1

U.S. PASSENGER TIRE IMPORTS, 2018

U.S. CONSUMER TIRE IMPORTS, 2018

(IN MILLIONS OF UNITS)

(IN MILLIONS OF UNITS)

Country

2018

2017

%change

Country

2018

2017

%change

Thailand

34.0

30.0

+13.3%

Thailand

40.4

34.9

+15.7%

South Korea

16.1

15.9

+1.2%

South Korea

18.7

18.6

+5.3%

Indonesia

12.6

15.0

-16.0%

Canada

16.2

16.0

+1.2%

Canada

12.1

9.5

+27.3%

Indonesia

14.4

17.1

-15.8%

Mexico

11.6

11.8

-1.7%

Mexico

12.8

12.8

0.0%

China

9.0

10.5

-14.2%

China

10.3

12.0

-14.1%

Vietnam

8.4

6.2

+35.4%

Vietnam

10.7

8.7

+23.0%

Taiwan

8.0

8.4

-4.7%

Taiwan

8.5

8.9

-4.5%

Japan

6.6

6.7

-1.5%

Japan

8.4

8.3

+1.2%

Brazil

3.3

3.1

+6.4%

Brazil

4.1

4.5

-8.8%

Passenger tire imports from Thailand increased 79% from 2015 through 2018. The same imports from Vietnam increased 212.4% over the same time period. Germany was 11th on the list.

Consumer tire imports from China reached 60.5 million units in 2014. Since then, in part due to tariffs or the threat of tariffs, they have decreased 83%, dropping China to sixth on the list.

U.S. TRUCK TIRE IMPORTS, 2018 (IN MILLIONS OF UNITS, ROUNDED) Country

2018

2017

%change

2018

2017

%change

China

8.9

6.5

+37.0%

Country South Korea

0.4

0.7

-40.3%

Thailand

2.3

2.1

+9.4%

Germany

0.4

0.3

+25.6%

Canada

1.5

1.6

-9.9%

Spain

0.4

0.3

+41.7%

Japan

1.3

1.4

-7.5%

Vietnam

0.4

0.2

+44.4%

China has shipped at least 6.3 million truck tires to the U.S. since 2012. Italy and Brazil are tied for ninth with 220,000 units each.

34

MTD January 2019

2019 Facts Section: Market Share

2018 U.S. REPLACEMENT PASSENGER LT TRUCK TIRE TIRE BRAND BRAND SHARES SHARES

36

(BASED ON 214.3 MILLION UNITS)

(BASED ON 31.1 MILLION UNITS)

Brand 2018 Goodyear ........................ 12.0% Michelin............................ 9.5% Bridgestone....................... 7.0% Firestone ........................... 7.0% Cooper .............................. 5.0% BFGoodrich...................... 4.5% Continental....................... 4.5% Hankook ........................... 4.0% Yokohama ......................... 4.0% Falken................................ 3.5% General.............................. 3.0% Kumho .............................. 3.0% Toyo................................... 3.0% Multi-Mile ........................ 2.5% Nexen ................................ 2.5% Pirelli ................................. 2.5% Primewell.......................... 2.0% Sumitomo ......................... 2.0% Uniroyal ............................ 2.0% Dunlop.............................. 1.5% GT Radial ......................... 1.5% Hercules ............................ 1.5% Nitto .................................. 1.5% Big O.................................. 1.0% Cordovan .......................... 1.0% Kelly................................... 1.0% Mastercraft........................ 1.0% Sailun................................. 1.0% Sigma................................. 1.0% Others ............................... 5.0%

Brand 2018 Goodyear ........................ 11.0% BFGoodrich...................... 8.0% Michelin............................ 7.0% Bridgestone....................... 6.5% Firestone ........................... 6.5% Cooper .............................. 5.5% General.............................. 5.5% Hankook ........................... 4.5% Toyo................................... 4.5% Yokohama ......................... 5.0% Multi-Mile ........................ 3.5% Falken................................ 2.5% Kumho .............................. 2.5% Pirelli ................................. 2.5% Hercules ............................ 2.0% Maxxis............................... 2.0% Uniroyal ............................ 2.0% Continental....................... 1.5% Cordovan .......................... 1.5% Dunlop.............................. 1.5% Kelly................................... 1.0% Mastercraft........................ 1.5% Nexen ................................ 1.5% Sailun................................. 1.5% Big O.................................. 1.0% Crosswind......................... 1.0% Eldorado ........................... 1.0% GT Radial ......................... 1.0% Nitto .................................. 1.0% Others ............................... 5.0%

Because numbers are rounded to the nearest one-half percent, the total may not equal 100%.

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

Because numbers are rounded to the nearest one-half percent, the total may not equal 100%.

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

WORLD LEADERS IN NEW TIRE SALES (FISCAL YEAR 2018; IN BILLIONS OF U.S. DOLLARS) Tire company Bridgestone Corp.

Groupe Michelin1 Goodyear Tire & Rubber Co. Continental AG Sumitomo Rubber Industries Ltd. Pirelli & Cie SpA Hankook Tire Co. Yokohama Rubber Co. Zhongce Rubber Group Co. Ltd. Cheng Shin Rubber Ind. Co. Ltd.2 Giti Tire Pte. Ltd. Toyo Tire & Rubber Co. Ltd. Cooper Tire & Rubber Co. Kumho Tire Co. Inc.

2018 $26.8 $24.3 $14.2 $13.0 $6.5 $6.2 $6.1 $4.4 $3.8 $3.7 $3.4 $3.0 $2.7 $2.3

2017 $27.0 $23.5 $14.9 $12.7 $6.7 $6.0 $6.0 $4.8 $3.6 $3.7 $3.4 $2.9 $2.8 $2.5

1

Michelin acquired Camso in December; 2018 total includes one month of Camso sales.

2 Cheng Shin does business as Maxxis International.

2018 BRANDS LISTED

BY THE MTD 100 (TOTAL OUTLETS: 6,395)

Rank by number of dealers 1. Michelin 2. BFGoodrich 3. Continental 4. Goodyear 5. Bridgestone 6. Yokohama 7. General 8. Firestone 9. Cooper 10. Uniroyal 11. Hankook 12. Dunlop 13. Pirelli 14. Kelly 15. Toyo

Dealers/ outlets 86/5,414 79/5,264 73/5012 71/4,938 64/4,672 60/3,949 58/4,588 58/2,937 57/4,685 55/2,831 49/4,831 43/4,294 41/4,528 38/2,444 34/3,094

2017 ranking 1 2 4 3 5 7 9 6 8 10 11 12 14 13 15

MTD January 2019

Yokohama

1.3%

Firestone

4.3%

Toyo

1.2%

Pirelli

4.0%

Others*

1.2%

15,000

* “OTHERS” REFERS TO FALKEN, NEXEN AND COOPER.

18

8.4%

17

Hankook

17,500

20

1.4%

16

Dunlop

20

13.8%

15

Bridgestone

20

1.8%

14

Kumho

20

14.4%

13

Continental

20,000

20

2.1%

12

BFGoodrich

20

19.6%

11

Michelin

20

2.5%

10

General

20

24.0%

09

Goodyear

20

2018

08

Brand

20

2018

22,500

07

Brand

25,000

20

(BASED ON 53 MILLION CONSUMER TIRE UNITS, EXCLUDING IMPORTED VEHICLES)

U.S. NEW-CAR FRANCHISES

20

2018 U.S./CANADIAN OE CONSUMER TIRE MARKET SHARE

SOURCE: NATIONAL AUTOMOBILE DEALERS ASSOCIATION

2018 OE U.S./CANADIAN CONSUMER TIRE BRAND SHARE (EXCLUDING IMPORTED VEHICLES) BMW

FORD

HONDA

NISSAN

TOYOTA

Pirelli ................... 33% Continental......... 26% Bridgestone......... 25% Dunlop.................. 9% Michelin................ 5% Hankook ............... 1% Yokohama ............. 1%

Michelin.............. 24% Goodyear ............ 24% Continental......... 20% Hankook ............... 9% Pirelli ..................... 8% General.................. 7% BFGoodrich.......... 4% Bridgestone........... 2% Cooper .................. 1% Toyo....................... 1%

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

Continental......... 29% Michelin.............. 28% Goodyear ............ 19% Falken.................... 6% Toyo....................... 5% BFGoodrich.......... 4% Bridgestone........... 4% Hankook ............... 2% Dunlop.................. 1% General.................. 1% Kumho .................. 1%

Bridgestone......... 26% Michelin.............. 25% Goodyear ............ 12% Continental........... 6% Dunlop.................. 7% BFGoodrich.......... 5% Hankook ............... 5% Toyo....................... 5% Yokohama ............. 4% Firestone ............... 3% General.................. 2%

SUBARU

VOLKSWAGEN

Bridgestone......... 58% Continental......... 27% Goodyear .............. 8% Falken.................... 7%

Continental......... 51% Hankook ............. 31% Bridgestone......... 15% Kumho .................. 3%

CHRYSLER/ FIAT (FCA) Goodyear ............ 42% Michelin.............. 14% Bridgestone......... 13% Firestone ............... 8% Continental........... 5% Kumho .................. 3% Yokohama ............. 3% BFGoodrich.......... 3% General.................. 3% Pirelli ..................... 3% Falken.................... 1% Hankook ............... 1% Nexen .................... 1%

GENERAL MOTORS Goodyear ............ 36% Michelin.............. 20% Bridgestone......... 17% Firestone ............. 13% Continental........... 6% Hankook ............... 4% General.................. 2% Pirelli ..................... 2%

w w w . M o d e r n T i r e D e a l e r. c o m

HYUNDAI/KIA Hankook ............. 40% Kumho ................ 40% Continental......... 10% Nexen .................. 10%

MERCEDES-BENZ Continental......... 31% Pirelli ................... 26% Bridgestone......... 15% Michelin.............. 11% Dunlop.................. 9% Goodyear .............. 8%

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

37

2019 Facts Section: Consumer Buying Habits

WHY CONSUMERS BUY NEW TIRES

TIRE-BUYING EXPERIENCE: RETAIL OUTLET

“WHAT PROMPTED YOU TO BEGIN THE PROCESS OF IDENTIFYING, SELECTING AND PURCHASING NEW TIRES?”

“ON A SCALE OF 1-5, WHERE 1 IS NOT AT ALL SATISFIED AND 5 IS EXTREMELY SATISFIED, HOW SATISFIED ARE YOU WITH THE OVERALL EXPERIENCE OF BUYING TIRES FROM A RETAILER/DEALER’S AUTOMOTIVE SERVICE SHOP?”

Noticed treads were getting low/worn..................... 46% Flat or damaged tire ................................................... 45% My technician pointed out the need ........................ 36% It was time to replace them ....................................... 31% Friend or family member pointed out the need..... 25% Failed inspection......................................................... 16% I replace my tires on a seasonal basis....................... 14% Noticed poor traction in wet or snowy weather..... 10% Tires started to get noisy or cause vibrations in vehicle .... 7%

TIRE-BUYING RESEARCH TOOLS “WHAT SOURCES DID YOU USE TO GET MORE INFORMATION ABOUT THE TIRES YOU WERE GOING TO PURCHASE?” Online searches........................................................... 58% Newspaper ad.............................................................. 31% Visited the retailer/vehicle dealer............................. 27% Friends/family............................................................. 26% Consumer Reports (magazine or online) ................. 25% Newspaper article ....................................................... 19% Radio ad....................................................................... 19% Called tire retailer/vehicle dealer ............................. 18% Magazine ad ................................................................ 18% Direct mail................................................................... 12% Word-of-mouth ............................................................ 8% Other .............................................................................. 1% Did not check any sources to get information.......... 3%

TIME IT TAKES TO BUY TIRES “FROM THE TIME YOU REALIZED OR FOUND OUT YOU NEEDED NEW TIRES UNTIL YOU PURCHASED THEM, HOW MUCH TIME ELAPSED? 17% 2 days 12% 1 day 13% Less than 24 hours

38

16% 3-6 days 14% 1 week to 3 weeks 23% Immediately

4% More than 3 weeks

1% Don’t recall

46% Extremely satisfied 37% Very satisfied

0% Not at all satisfied 4% Slightly satisfied 13% Moderately satisfied

TIRE-BUYING EXPERIENCE: ONLINE ON A SCALE OF 1-5, WHERE 1 IS NOT AT ALL EASY AND 5 IS EXTREMELY EASY, HOW DIFFICULT WAS IT TO FIND TIRES AND MAKE THE PURCHASE ONLINE? 42% Extremely easy 23% Very easy

3% Not at all easy 15% Slightly easy 17% Moderately easy

TIRE-BUYING EXPERIENCE: ‘ONLINE’ INSTALLER “ON A SCALE OF 1-5, WHERE 1 IS NOT AT ALL SATISFIED AND 5 IS EXTREMELY SATISFIED, HOW SATISFIED ARE YOU WITH THE WAY THE TIRE INSTALLER TREATED YOU FOLLOWING YOUR ONLINE PURCHASE?” 54% Extremely satisfied 23% Very satisfied

2% Not at all satisfied 9% Slightly satisfied 12% Moderately satisfied

SOURCE: MTD 2018 CONSUMER SURVEY ON TIRE PURCHASING

MTD January 2019

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2019 Facts Section: Tire Distribution

U.S. CONSUMER TIRE RETAIL MARKET SHARE (SALES DIRECTLY TO THE END-USER) Distribution channel

2018

2017

2016

Independent tire dealers

62.5% 61.5%

61.0%

Mass merchandisers

10.5% 11.5%

12.0%

Warehouse clubs

8.5%

9.0%

9.0%

Auto dealerships

9.5%

9.0%

8.5%

Tire companies/companyowned stores

6.5%

6.5%

7.0%

Miscellaneous outlets

2.5%

2.5%

2.5%

Online tire sellers, which include independent tire dealers like Tire Rack and Simpletire.com, mass merchandisers like Amazon. com, and tire manufacturers like Goodyear, account for 8% of the retail market, up from 6% in 2016.

U.S. CONSUMER TIRE WHOLESALE DISTRIBUTION CHANNEL MARKET SHARE (SALES FROM THE FIRST CHANNEL OF WHOLESALE DISTRIBUTION TO THE NEXT CHANNEL OR END USER) Initial channel

2018

2017

2016

Independent tire dealers

79.5% 79.0%

78.0%

Tire company stores

7.0%

7.0%

7.5%

Miscellaneous outlets

13.5% 14.0%

14.5%

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

FROM ONLINE TO... ?

After buying tires online, consumers take the doit-for-me route at least 75% of the time (some may choose to deliver the tires to their preferred installers personally).

75% Shipped to installer

25% Shipped to consumer directly

SOURCE: MTD 2018 CONSUMER SURVEY ON TIRE PURCHASING

ANALYSIS: TIRE SELLING VS. INSTALLING

Close to 95% of the respondents to the 2018 BrightLine Tire Survey purchased their new tires from the tire installer.

94.4% in 2018

Installer

94.5% in 2017 3.1% in 2018

Online-only retailer

2.8% in 2017 1.8% in 2018

Different in-market retailer

2.2% in 2017 0.6% in 2018

Tire manufacturer

0.5% in 2017

“Based on the results of our 2018 nationwide survey, 10% of all tire buyers pay for their tires online,” says Randy Ladd, owner of BrightLine Marketing LLC. SOURCE: BRIGHTLINE MARKETING LLC (WWW.BRIGHTLINEMARKETING.COM)

COMPANY-OWNED RETAIL STORES IN THE U.S. 2,500 Bridgestone

2,000

40

Warehouse club

2018 2017 2016 2015

Sam’s Club

597

1,000 Goodyear

500

600

671

Nokia/Vianor

655

518

506

470

BJ’s Warehouse Club Inc.

223

221

214

206

20 08

533

20 18

Costco Wholesale Corp.

81

0 20 08

660

1,500

20 18

660

2,047

0

20 08

The number of warehouse clubs in the U.S. has grown only 1.6% since 2015, primarily because Sam’s Club closed more than 60 stores in 2018. In contrast, Costco has steadily increased its store count every year since the turn of the 21st century, from 237 to 533. That’s an increase of 125%.

2,200

20 18

WAREHOUSE CLUB U.S. STORE COUNT

MTD January 2019

INDEPENDENT TIRE DEALER LOCATIONS (BY REGION AND STATE; TOTAL OF 29,000)

New England.................4% Maine .............................12% New Hampshire ............15% Vermont........................... 7% Massachusetts ...............39% Rhode Island ................... 5% Connecticut...................22% Middle Atlantic...........10% New York .......................37% New Jersey .....................21% Pennsylvania .................42% East North Central .....14% Ohio................................31% Indiana ...........................14% Illinois ............................22% Michigan........................20% Wisconsin ......................13%

West North Central ....10% Minnesota......................21% Iowa ................................18% Missouri.........................28% North Dakota .................. 4% South Dakota .................. 5% Nebraska ........................10% Kansas ............................14% East South Central........8% Kentucky........................22% Tennessee.......................34% Alabama.........................28% Mississippi .....................16%

South Atlantic.............22% Delaware .......................... 1% Maryland ......................... 6% Washington, D.C. ........... 0% Virginia ..........................13% West Virginia................... 3% North Carolina..............20% South Carolina ..............10% Georgia...........................18% Florida............................29% West South Central.....14% Arkansas ........................10% Louisiana .......................12% Oklahoma ......................12% Texas...............................66%

Mountain ......................8% Montana........................... 9% Idaho ................................ 9% Wyoming ......................... 4% Colorado........................21% New Mexico...................10% Arizona ..........................23% Utah................................15% Nevada ............................. 9% Pacific..........................12% Alaska............................... 1% Washington ...................14% Oregon ...........................10% California.......................75% Hawaii .............................. 1%

TOP TIRE RETAILERS IN THE U.S. (BASED ON NUMBER OF OUTLETS IN 2018, EXCLUDING FRANCHISES) Walmart Auto Care Centers........... 2,589 Bridgestone Retail Operations LLC...... 2,2001 Monro Inc......................................... 1,179 Discount Tire/America’s Tire......... 1,007 Pep Boys Service & Tire Centers ...... 992

Quick Lane Tire & Auto Center .....800+ TBC Retail Group Inc. ...................... 7322 Goodyear ............................................. 600 Sam’s Club............................................ 597 Costco Wholesale ............................... 533

Mavis Tire Express Services Corp. ... 530 Les Schwab Tire Centers.................... 421 Sears Auto Centers ............................ 2863 BJ’s Wholesale ..................................... 223

1

FIRESTONE COMPLETE AUTO CARE, TIRES PLUS, HIBDON TIRES PLUS AND WHEEL WORKS STORE LOCATIONS. TIRE KINGDOM, MERCHANT’S TIRE & AUTO CENTERS, NTB TIRE & SERVICE CENTERS SEARS ANNOUNCED IT WILL CLOSE AN ADDITIONAL 72 STORES BY THE END OF MARCH 2019.

SOURCE: MTD RESEARCH, BRIGHTLINE MARKETING LLC 2 3

w w w . M o d e r n T i r e D e a l e r. c o m

41

THANKS FOR VOTING OUR CONSUMER TIRES #1 FOR PR

ROFITABILITY

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For what drives you.

2019 Facts Section: Tire Sizes

AVAILABLE PASSENGER CAR SIZES

BY RIM DIAMETER 12-inch: 1 15-inch: 55 18-inch: 65 21-inch: 2 24-inch: 6

13-inch: 13 16-inch: 61 19-inch: 28 22-inch: 7 26-inch: 1

14-inch: 26 17-inch: 59 20-inch: 31 23-inch: 2

There was one 19-inch size added for 2019.

Total P-metric/metric sizes: 357 SOURCE: TIRE & RIM ASSOCIATION

AVAILABLE SIZES

BY LT-METRIC RIM DIAMETER 14-inch: 6 17-inch: 30 22-inch: 16

15-inch: 18 18-inch: 30 24-inch: 8

16-inch: 37 20-inch: 22 26-inch: 3

There were two 18-inch sizes and three 22-inch sizes added for 2019. Total LT-metric sizes: 170 SOURCE: TIRE & RIM ASSOCIATION

AVAILABLE SIZES BY LT HIGH FLOTATION RIM DIAMETER 14-inch: 1 18-inch: 15 24-inch: 5

15-inch: 21 20-inch: 17 26-inch: 3

17-inch: 16 22-inch: 7 28-inch: 2

One 15-inch size, one 17-inch size, one 20-inch size, one 22-inch size, two 24-inch sizes, one 26-inch size, and two 28-inch sizes were added for 2019. Total sizes: 87 SOURCE: TIRE & RIM ASSOCIATION

MOST POPULAR DOMESTIC OE PASSENGER AND LT TIRE SIZES 2017 OE P-METRIC/METRIC

2016 OE P-METRIC/METRIC

Size % of total 225/65R17........................ 3.4% 235/60R18........................ 3.3% P215/55R17 ..................... 2.8% 275/55R20........................ 2.7% 275/65R18........................ 2.7%

Size % of total P215/55R17 ..................... 4.0% P265/70R17 ..................... 3.5% 225/65R17........................ 2.9% P275/65R18 ..................... 2.8% 215/55R17........................ 2.4%

2015 OE P-METRIC/METRIC

2014 OE P-METRIC/METRIC

Size % of total P215/55R17 ..................... 4.1% P265/70R17 ..................... 3.4% P215/60R16 ..................... 3.2% 225/65R17........................ 2.8% 215/55R17........................ 2.8%

Size % of total P215/55R17 ..................... 5.0% P215/60R16 ..................... 3.4% 215/55R17........................ 2.7% P265/70R17 ..................... 2.7% P275/65R18 ..................... 2.6%

2017 OE LIGHT TRUCK (LT)

2016 OE LIGHT TRUCK (LT)

Size % of total LT245/75R17................. 14.7% LT225/75R16................... 9.3% LT275/70R18................... 8.8% LT265/70R18................... 8.0% LT265/70R17................... 7.8%

Size % of total LT245/75R17................. 15.9% LT225/75R16................... 9.7% 235/65R16........................ 8.8% LT265/70R18................... 8.6% LT265/60R20................... 7.8%

2015 OE LIGHT TRUCK (LT)

2014 OE LIGHT TRUCK (LT)

Size % of total LT245/75R17................. 18.6% LT225/75R16................... 9.8% LT265/70R18................... 9.7% LT275/70R18................... 7.9% LT245/75R16................... 7.6%

Size % of total LT245/75R17................. 21.7% LT245/75R16................. 12.0% LT225/75R16................. 11.4% LT265/70R18................. 10.3% LT275/65R18................... 7.8%

P-metric/metric: The top passenger tire size, 225/65R17, did not enter USTMA’s top 10 most popular OE sizes list until 2014, when it debuted in sixth place. In the succeeding years it moved to fourth, third and then first. Light truck: LT245/75R17 has been the No. 1 OE size for the last seven years. It was only the sixth most popular LT replacement size in 2018, however.

TOP U.S. REPLACEMENT TOP U.S. REPLACEMENT PASSENGER TIRE LIGHT TRUCK TIRE SIZES, 2018 SIZES, 2018 1. 225/65R17 2. 205/55R16 3. 215/60R16 4. 215/55R17 5. 195/65R15

44

6. 265/70R17 7. 275/55R20 8. 225/50R17 9. 225/60R16 10. 225/55R17

1. LT265/70R17 2. LT225/75R16 3. LT245/75R16 4. LT265/75R16 5. LT275/70R18

6. LT245/75R17 7. LT285/70R17 8. LT235/85R16 9. LT275/65R18 10. LT235/80R17 MTD January 2019

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2019 Facts Section: Tire Pricing

2018 AVERAGE ADVERTISED TIRE PRICES

2018 ONLINE TIRE PRICING Online tire pricing varies greatly depending on the website. The Fitment Group collected these advertised prices for two specific tire lines.

(IN THE U.S.) Size 215/60R14 235/60R14 205/55R16 215/60R16 215/55R17 235/75R15 275/65R18 LT225/75R16 LT245/75R16 LT245/75R17 31x10.50R15

Major brand $140.53 $147.10 $132.99 $121.87 $148.35 $133.45 $223.33 $167.05 $176.96 $212.82 $181.61

Low-cost $81.14 $99.44 $72.83 $74.16 $81.36 $97.88 $171.33 $115.08 $124.07 $144.42 $132.30

ADVERTISED WEB PRICING, WEEK OF DEC. 3, 2018

Overall $136.59 $127.21 $118.38 $106.89 $129.67 $119.21 $210.76 $147.04 $157.32 $191.77 $163.48

SOURCE: LIZEO AMERICAS LLC (FORMERLY TIRE INTELLIGENCE LLC), WWW.TIRE-INTELLIGENCE.COM

Speed V-rated H-rated T-rated

Low Cost Radial $80.97 $91.88 $105.88

Major $153.66 $144.92 $138.16

2. HANKOOK DYNAPRO ATM RF10, SIZE 235/75R15

Website......................12/2018 bigotires.com............... $203.66 costco.com................... $210.99 dunntire.com............... $204.98 lowtireprice.com......... $212.00 monro.com .................. $202.49 onlinetires.com ........... $200.22 samsclub/com ............. $213.02 simpletire.com ............ $246.97 tirecrawler.com ........... $203.96 tirerack.com ................ $218.80 tirebarn.com................ $197.32 quicklane.com............. $227.53 tireamerican.com........ $198.99

Website......................12/2018 bjs.com ......................... $149.99 discounttiredirect.com ...$95.00 dunntire.com............... $109.98 mavistire.com.............. $110.99 oneclicktires.com........ $110.59 onlinetires.com ..............$86.13 samsclub.com.............. $105.12 simpletire.com ............ $103.97 tirebuyer.com .............. $101.99 tirerack.com ................ $113.25 townfair.com ............... $115.00 walmart.com ..................$86.70 quicklane.com............. $124.64

Not all the websites were set up for selling online. For example, dunntire.com offers up a quote and then requires the customer to schedule an appointment — with no money changing hands online.

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

COURTESY OF VIP INC.

2018 ADVERTISED PRICING BREAKDOWN, 215/55R17

1. MICHELIN LTX AT2, SIZE LT245/75R16

Overall $133.60 $135.89 $127.93

SOURCE: LIZEO AMERICAS LLC (FORMERLY TIRE INTELLIGENCE LLC), WWW.TIRE-INTELLIGENCE.COM

PRICE POINT BREAKDOWN OF SIZE 205/55R16 BY REGION (FROM TIRE PRICES SAMPLED DEC. 2-7, 2018) Region East North Central East South Central Middle Atlantic Mountain New England Pacific South Atlantic West North Central West South Central Nationally priced

OPP $65.91 $72.31 $70.13 $63.32 $77.60 $59.94 $65.20 $64.79 $63.40 $65.88

Value $97.08 $104.26 $94.30 $87.44 $119.68 $83.15 $93.54 $93.93 $91.19 $88.45

Better $112.76 $110.52 $116.35 $101.61 $121.54 $103.16 $113.66 $106.05 $102.33 $106.00

Best $137.22 $140.43 $139.38 $132.06 $141.03 $129.74 $137.62 $138.18 $131.00 $136.24

Winter $129.18 $136.51 $129.72 $124.47 $132.20 $123.46 $126.05 $129.69 $122.25 $134.03

Average $108.43 $112.80 $109.97 $101.78 $112.47 $99.89 $107.21 $106.52 $102.08 $106.12

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

46

MTD January 2019

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2019 Facts Section: Commercial Tire Market

2018 U.S. U.S. TRUCK TIRE IMPORTS FROM REPLACEMENT CHINA, 2018-2011 (IN MILLIONS OF UNITS) MEDIUM/ HEAVY TRUCK TIRE BRAND SHARES 40%

30%

Michelin

14.0%

Bridgestone

13.5%

Goodyear

10.0%

Yokohama

8.5%

Firestone

7.5%

Continental

6.0%

Double Coin

4.0%

Hankook

3.5%

Roadmaster

3.0%

Hercules

2.5%

Sailun

2.5%

BFGoodrich

2.0%

Dayton

2.0%

Dynatrac

2.0%

Falken

2.0%

General

2.0%

Toyo

2.0%

Westlake

2.0%

Aeolus

1.5%

Dynacargo

1.5%

Sumitomo

1.5%

Duraturn

1.0%

Gladiator

1.0%

Kelly

1.0%

RoadOne

1.0%

Samson

1.0%

Others

5.5%

Because numbers are rounded to the nearest one-half percent, the total may not equal 100%. All brands listed own at least 1% of the market.

48

8.2 units

+14.6%

10%

9.4 units

2017

-20.5%

6.3 units

6.3 units

2015

6.5 units

+13.5%

+0.1%

2016

2018

-10%

-20%

5.5 units

+30.1%

8.9 units

20%

0%

(BASED ON 21 MILLION UNITS)

+37.5%

+36.9%

2014

2013

2012

2011

7.8 units

-17.0% SOURCES: U.S. GOVERNMENT, MTD

2018 U.S. MARKET SHARE RETREADED TRUCK TIRES (BASED ON 14.2 MILLION UNITS) Goodyear 24.0%

Michelin/Oliver 21.5%

Bridgestone (Bandag) 44.0%

Marangoni 5.0% Continental 2.0% Others 3.5%

U.S. RETREADING, 2018

REPLACEMENT REAR FARM TIRES

Truck tire units ................21.0 million Retreaded truck tires.......14.2 million Sales (without casings)..... $2.3 billion Average retread cost (without casing)................ $164.64 Average precure price ........... $164.60 Average mold cure price....... $165.72 Average casing cost...................$57.46 % precure units .............................96% Average sales margin....................17% No. of plants, truck tires ...............644 No. of plants, OTR tires ..................18

2018 U.S SHIPMENTS: 775,000 (42% RADIAL) Tire Market brand share BKT...............33.0% Firestone.......23.3% Goodyear .......9.9% Alliance...........9.8% Michelin .........6.7% Titan................5.0%

Tire Market brand share Harvest King ...4.5% Trelleborg.......1.8% Carlisle............1.4% CEAT ..............1.0% Others.............3.6% Total: ..............100%

MTD January 2019

2019 Facts Section: Plant Capacities

NORTH AMERICAN TIRE PLANT CAPACITIES AS OF JANUARY 1, 2019 (IN THOUSANDS OF UNITS) Company/Plant Location/Year Constructed Bridgestone Americas Inc. Aiken, S.C., 2013 La Vergne, Tenn., 1972 Warren County, Tenn., 1990 Bloomington, Ill., 1965 Des Moines, Iowa, 1945 Wilson City, N.C., 1974 Aiken County, S.C., 1999 Joliette, Quebec, Canada, 1966 Monterrey, Mexico, 2007 Cuernavaca, Mexico, 1980 Total:

Non-Union ISO Certified

Passenger per day:

Light truck per day:

Truck per day:

Others per day:

Total

0.0 0.0 0.0 0.0 0.0 35.0 25.5 10.3 8.0 18.8 97.6

0.0 0.0 0.0 0.0 0.0 0.0 10.2 7.3 0.0 6.2 23.7

0.0 6.2 9.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.2

0.03 0.0 0.0 0.29 4.57 0.0 0.0 0.0 0.0 0.0 4.89

0.03 6.2 9.0 0.29 4.57 35.0 35.7 17.6 8.0 25.0 141.39

x

0.0 0.0 0.0

0.0 0.0 0.0

0.0 0.0 0.0

26.0 15.0 41.0

26.0 15.0 41.0

x x

x

9.5 29.0 38.5

3.1 4.0 7.1

0.0 11.9 11.9

0.0 0.0 0.0

12.6 44.9 57.5

x

x x x

7.0 24.0 42.0 73.0

16.0 8.0 0.0 24.0

0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

23.0 32.0 42.0 97.0

9.0 9.0

0.0 0.0

0.0 0.0

0.0 0.0

9.0 9.0

0.0 31.0 14.5 64.5 0.0 0.0 19.0 10.0 139.0

0.0 10.5 11.5 0.0 0.5 0.0 0.0 0.0 22.5

11.0 0.0 0.0 0.0 5.5 0.0 0.0 0.0 16.5

2.0 0.0 0.0 0.0 0.1 13.0 0.0 0.0 15.1

13.0 41.5 26.0 64.5 6.1 13.0 19.0 10.0 193.1

x

x x x

x

Carlstar Group LLC (formerly American Industrial Partners) Jackson, Tenn., 2009 x Clinton, Tenn. (Dico), 1974 x Total: Continental Tire the Americas LLC Sumter, S.C., 2013 Mount Vernon, Ill., 1973, 1988 Total: Cooper Tire & Rubber Co. Findlay, Ohio, 1917 Texarkana, Ark., 1964 Tupelo, Miss, 1984/1960 Total: Giti Tire (USA) Ltd. Richburg, S.C., 2017 Total: Goodyear Tire & Rubber Co. Danville, Va., 1966 Fayetteville, N.C., 1969 Gadsden, Ala., 1928 Lawton, Okla., 1978 Topeka, Kan., 1945 Medicine Hat, Alberta, Canada, 1960 Napanee, Ontario, Canada, 1990 San Luis Potosi, Mexico, 2017 Total:

x

x

x x

x x x x x x x

Hankook Tire America Corp.

Clarksville, Tenn., 2016 Total:

x

11.1 11.1

1.4 1.4

0.0 0.0

0.0 0.0

12.5 12.5

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

x

11.0 11.0

0.0 0.0

0.0 0.0

0.0 0.0

11.00 11.00

40.5 0.0 21.0 28.0 7.0 0.0

3.5 5.5 9.5 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.07

44.0 5.5 30.5 28.0 7.0 0.07

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

50

x x x x x x x

x x x x x

x

x

MTD January 2019

Company/Plant Location/Year Constructed Lexington, S.C., 1981 Lexington, S.C., 1998 Spartanburg, S.C., 1978 Starr, S.C., 2013 Tuscaloosa, Ala., 1945 Bridgewater, Nova Scotia, Canada, 1971 Granton, Nova Scotia, Canada, 1971 Waterville, Nova Scotia, Canada, 1982 Queretaro, Mexico, 2002 Leon, Mexico, 2018 Total:

Non-Union ISO Certified x x x x x x x x x

Passenger per day: 24.0 0.0 0.0 0.0 23.0 11.0 2.0 0.0 6.0 4.0 166.5

Light truck per day: 0.0 0.0 0.0 0.0 7.0 3.0 0.0 0.0 0.0 0.4 28.9

Truck per day: 0.0 0.0 7.0 0.0 0.0 0.0 0.0 4.5 0.0 0.0 11.5

Others per day: 0.0 0.1 0.0 0.01 0.0 0.0 0.0 0.5 0.0 0.0 0.68

Total 24.0 0.1 7.0 0.01 30.0 14.0 2.0 5.0 6.0 4.4 207.58

Pirelli Tire North America Inc. Rome, Ga., (MIRS), 2002 Guanajuato, Mexico, 2011, 2018* Total:

x x

x

1.2 15.0 16.2

0.5 5.0 5.5

0.0 0.0 0.0

0.0 0.0 0.0

1.7 20.0 21.7

Specialty Tires of America Inc. Indiana, Pa., 1915 Unicoi, Tenn., 1997 Total:

x x

x x

0.92 0.3 1.22

0.18 0.5 0.68

0.05 0.05 0.1

2.35 0.25 2.6

3.5 1.1 4.6

6.3 6.3

2.1 2.1

2.3 2.3

5.0 5.0

15.7 15.7

x x x

0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

0.33 11.25 8.1 19.68

0.33 11.25 8.1 19.68

x

21.5 21.5

10.0 10.0

0.0 0.0

0.0 0.0

31.5 31.5

0.0 0.0 0.0

0.0 0.0 0.0

0.0 0.0 0.0

0.07 0.5 0.57

0.07 0.5 0.57

0.0 25.7 25.7

0.0 1.1 1.1

2.9 0.0 2.9

0.0 0.0 0.0

2.9 26.8 29.7

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

15.0 15.0

5.0 5.0

0.0 0.0

0.0 0.0

20.0 20.0

JK Tyre & Industries (formerly CIA Hulera Tornel) Mexico City, Mexico Tultitlan, Mexico Tacuba, Mexico Total:

0.0 7.0 8.0 15.0

1.0 1.5 2.5 5.0

1.0 0.5 0.0 1.5

0.14 0.0 0.0 0.14

2.14 9.0 10.5 21.64

10.0 10.0

7.2 7.2

2.8 2.8

0.0 0.0

20.0 20.0

512.52 42.30 101.80 656.62

105.08 10.30 28.80 144.18

55.90 4.50 4.30 64.7

76.02 13.50 0.14 89.66

749.52 70.60 135.04 955.16

Sumitomo Rubber USA LLC (Sumitomo Rubber North America Inc.) Tonawanda, N.Y., 1923 Total: Titan Tire Corp.

Bryan, Ohio, 1967 Des Moines, Iowa, 1943 Freeport, Ill., 1964 Total: Toyo Tire North America Manufacturing Inc. White, Ga., 2005 Total: Trelleborg Wheel Systems Spartanburg, S.C., 2015 Charles City, Iowa, 2012 Total: Yokohama Tire Corp.

West Point, Miss., 2015 Salem, Va., 1968 Total:

Corporacion de Occidente SA de CV (Cooper Tire) Guadalajara, Mexico, 2005 Total: U.S. totals Canadian totals Mexican totals TOTAL:

w w w . M o d e r n T i r e D e a l e r. c o m

x

x

x

x

x

x

51

2019 Facts Section: Automotive Service

20

$211.83

28

Engine repair/diagnostic/tune-ups

$453.72

20

Exhaust systems

$304.08

12

Ignition and spark

$272.15

14

Mounting and balancing*

$15.95

332

Oil/lubrication

$52.47

214

Shocks/struts

$638.50

16

Tire pressure monitoring systems

$136.42

105

$27.61

35

Visibility (wipers)

*Average price for mounting and balancing is on a per tire basis.

WHERE DEALERS BUY PARTS Automotive jobbers....................34% Retail parts stores .......................27% Warehouse distributors..............19% New car dealers.............................8% Direct from manufacturer...........5% Mail order/internet distributor...3% Import specialty warehouse ........2% Other sources ................................2%

$17.50

$15.00

18

$202.84

Electronic diagnosis

17

Cooling systems

20

12

16

$154.04

20

Chemicals (injection cleaners, detergents, etc.)

$20.00

15

56

20

$424.32

14

Chassis/suspension

20

44

13

$301.17

20

Brakes

$22.50

12

12

20

$295.15

11

Bearings/seals

20

22

10

$180.71

20

Batteries/electrical

09

79

20

$105.27

08

Alignment

$25.00

20

13

07

$542.91

20

Air conditioning

06

Average number of jobs/month

20

Average ticket price

Service

ADVERTISED OIL CHANGE PRICES

20

SERVICE WORK OVERVIEW

RETAIL TIRE DEALERSHIP PROFILE Average number of tire brands per outlet......13 Average number of technicians per outlet.......6 Average number of service bays per outlet......7 At least 50% of techs are ASE-certified.......30% Total sales from automotive service............48% Total profits from automotive service.........47% Tire dealers with one location......................59%

WHY SUPPLIERS ARE CHOSEN Good service .............................................. 89%

WHY DEALERS CHOOSE PARTICULAR PART BRANDS

Stock availability ........................................ 76% Accessible location .................................... 62%

Past experience ...........................58%

Warranties .................................................. 43%

Brand reputation.........................48%

Knowledgeable counter people................ 42%

Warranty ......................................47%

Quality ........................................................ 41%

Price..............................................38%

Brand name(s) ........................................... 40%

Brand availability........................24% Technician recommendation ....14%

52

Reasonable prices ...................................... 82%

Reputation .................................................. 21% Other ..............................................................4% MTD January 2019

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Business Insight

Benchmarks are not a myth IT’S TIME WE FINE-TUNE THE RECIPE FOR SUCCESS BY INCOPRPORATING THE RIGHT INGREDIENTS FOR PROFITABILITY By

Dennis McCarron

54

©GETTYIMAGES.COM/FOTOGRAFIABASICA

A

n article was written a few months ago in a different magazine that did a tremendous disservice to the industry and I’m furious. In the article, the author dismissed the idea of a gross profit benchmark of 60% as a myth and that most shops can’t attain it.

That is patently false, and the reasoning behind his statement shows a complete lack of understanding on how a shop’s financials are built, and how a shop produces net income. Further damaging the industry, the author rails against increasing labor rates that will sustain the shop and allow it to attract the best talent available to the market.

Instead, the suggestion is to essentially let your customers tell you what your labor rate is and how much they should pay you.

Let’s dissect this before my head explodes.

First: If your labor rate is $200/hr., people will complain it should be lower. If your labor rate is $150/hr., people will complain. $100? Complaints. $75? $50? Complaints.

There will always be someone out there who thinks your rate is too high and should be lower. Furthermore, when was the last time a customer even brought up your labor rate?

Two decades ago? If you have someone calling your shop asking what your labor rate is, it’s the shop down the street trying to sniff out what they should charge — not a customer. Today’s consumer, if price is their top priority, is looking at total cost of job, not an individual line item.

In the article, the author states that you charge what the market will bear and to not base it on costs. What??!?

So if I need a technician, and a good technician can demand $30 an hour, I can just charge $50/hr. labor because customers complain? Just because the shade tree guy down the street doesn’t factor in rent and is the cheapest guy around? I don’t have to worry about cash flow and hopefully I can reduce my expenses to nothing so there’s

some net profit at the end of the month?

Who runs a business this way?

Many factors go into setting a labor rate.

How do you define what the market will bear? Sure, major players in the industry can spend a fortune on research and hire a firm to conduct surveys and run tests.

But what is a small business in the tire and automotive sector to do?

You must account for several forces; this is not limited to but mostly concerning your customer demographics, your fixed costs, and how much you need to pay competent people to work on customers’ cars. What is the sense of lowering your labor rate to appease a handful of customers, when that means you can’t pay employees the right wage? You know what the best compliment a shop can ever get is? “I take my car to

‘blank.’ He’s expensive, but worth it.” As a small businessperson, you need to focus your efforts on the customers who understand that doing business is a two-way street.

You provide superior service and exceed expectations, and they pay above average rates for that service and convenience. If a customer wants below average price, point them in the direction of somewhere else.

What’s the old adage? Price, quality and speed: pick two? The only problem with that advice is as a small business, there is no more market for you in the price area.

The big players have that space locked up.

You must compete in quality and speed and focus on customers who align with that philosophy.

There’s no reasonable explanation why any ethical author would tell an industry, MTD January 2019

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Business Insight which has struggled with financial viability since inception, to just pick a price out of thin air based on gut feeling. For sure, a shop in New York City commands a higher rate than one in Norman, Okla. I would not call someone across the country and ask what their labor rate is. Why? Because our costs are different. Their rent is higher.

My electricity is lower. We pay different amounts for various services, and we pay our staff differently. I set my labor rate based on what the business needs to create to remain viable. It’s relative.

But that’s the beauty of percentages.

We can have the Norman, Okla., labor rate at $100/hr. while the shop in NYC is set at $170. In the Oklahoma store the top tech is making $23/hr. while in New York it’s $36 (maybe even higher depending on which borough). Rent is cheaper in Oklahoma, fuel is cheaper… on and on. That’s why I don’t’ compare dollars. It’s precisely why I compare percentages, so I can see those businesses on a comparative level.

For a true understanding of what it takes to run a small business and charge the “right”

prices, let’s take a deep look into how the 60% gross profit metric is created, and then let’s address why striving to get there is so important.

Sixty percent gross profit is driven by much more than labor rates and parts matrixes. Specifically, let’s start with what’s called “mix of business.” Your mix of business is the recipe of ingredients that makes your gross profit what it is. A shop, to even consider a target of 60% gross profit, must start with equal dollars in tire sales, labor sales and parts sales. Dollar for dollar for dollar.

To simplify, let’s just state a third of sales in tires, a third of sales in labor, and a third of sales in parts. Sure, there will always be miscellaneous items, but to keep the article short, let’s assume 33% in each category.

As an example, let’s say a shop is 50% tire sales, 25% in labor and 25% in parts.

Well, if half of your sales are in tires, and tire sales generally account for 20%-25% in gross profit, you will not be able to achieve 60% gross profit. Tire sales margins are too low, and it will drag the overall GP% to closer to 50%.

Please understand, I am not recommending selling fewer tires to balance out your mix of sales. I encourage you to sell more service. Here’s why: The tire and automotive business naturally creates an even need of these services, by dollar. Historically, as tires wear out (which are expensive), a customer will have had several services performed out of requirement or suggestion prior to failure. This is not to be micromanaged, per se. You should not estimate every ticket to a balance of 33% in each category. You should estimate tickets based on customer desire and requirement. This is achieved by asking if a customer wants to have their car inspected, for convenience, while they are getting the service that brought them in the door.

There are multiple ways to manage this.

You can offer a paid inspection which is in depth and has the wheels come off the car so the brake components can be measured and inspected. This also allows you to get a better check of the suspension. If the customer does not want to pay for an indepth inspection, you can inform them of

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Business Insight a “courtesy” check where you check bulbs, filters, fluids — something quick but beneficial to the customer. If the customer does not want this inspection, that’s OK! They either do not trust you yet, or their needs for speedy service outweigh the benefits of an inspection. If a customer doesn’t want an inspection, what are the odds they would purchase something anyway? As a reputable

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shop, you should always allow the customer to have the final say in anything that happens to their car. Our job is to educate and offer.

The only exception to this is the federal law of “Failure to Inform” where without removing any items, something on a car is visibly dangerous like an axle has popped out.

Shops that tend to be “heavy” on tire sales (in reality, they are service light), and

therefore unable to achieve 60% gross profit overall, typically do not offer an inspection consistently. They either don’t do it at all, or they do an inspection without consent (automatic on every car). This is not helpful to the customer (no one likes surprises) and not helpful to the shop (wastes technician time and slows down the flow of vehicles).

Asking and informing of inspections is the only legitimate way to balance the needs of the shop (profitability) with the needs of the customer (professional service at a fair price).

Mix of sales is the first step of the recipe and the ingredient is inspections.

The next step of the recipe is to look at the gross profits of each sales category. As mentioned earlier, 20%-25% gross profit in tires is a baseline. There are plenty of statistics that show nationwide, this is achievable.

Again, if a shop is in a position where they feel they can’t get that margin, I point to a simple fact: If you allow your front door (advertising, price shoppers, the internet) to control your tire sales, then yes, you won’t be in the 20%+ range. The least grossing tire you sell is the one you advertise. The highest grossing tire you sell is from inspections.

You can have an educational conversation with customers on the condition of their tire(s), learn what features and benefits are important to them and recommend the most appropriate tire. Not debate which tire sells for what price.

Labor costs should be 100% gross profit.

Pay technicians out of payroll, as an expense.

Parts must be at or close to 50% gross profit.

At the end of the month (not individual part items), if you are selling your parts for less than 50% you are putting your business at serious risk. With Amazon and other major players looking wide-eyed at the opportunity to get involved in selling parts, your margin will shrink when those players throw their hat into the market. If you are only at 40%, you will go down to 35%. If you end up selling parts for 30% margins, you might as well tell the customer to buy their own parts and you can just install them.

Just kidding, that’s another column for another day. Seriously, you need to make more margins on your parts. Why can every other industry in retail make better margins on parts than we can?

How do you get 50% parts margins?

You guessed it, inspections. Dirty filters, dirty fluids, burned out bulbs: These things are not obvious to a customer, yet essential for safe driving and vehicle longevity. They MTD January 2019

Business Insight also carry very high margins. If you let the door dictate your auto parts sales, you are letting vehicle breakdowns and marketing dictate your sales.

These are not high grossing products generally. You’re not going to make 50% margin on a transmission. Or an alternator on a foreign car. Or a battery. The mix of services, some high grossing, and some low grossing, are what account for your target of 50% parts gross profit margin. Yes, if your market advertises heavily in air conditioning or brakes, your margin on those items will be lower than an area that does not do that.

This is why an inspection is so critical. It brings balance to the recipe. Not too salty, not too sweet.

Tweaking your parts matrix only takes you so far. But if you are not at 50% parts GP, that is not enough to throw your hands up in the air and give up.

If a shop does a professional job for a customer, the shop will balance the needs of the customer with the needs of the shop.

That means pay good wages for talented employees, purchase parts and tires from

reputable distributors, and charge the proper price to perform those services. If you are not charging the proper amounts, you are putting the employment of all the workers at risk. You are putting your own retirement at risk. You will start to make cost-cutting decisions that are detrimental to continuing business.

Sixty percent gross profit on your total sales is a metric that allows a shop to have enough money to first, pay their employees a decent wage as payroll is your first expense.

After paying your employees, you have all the other expenses associated with running a business, and if you manage the business right, there’s enough money left over called net profit. That’s not for the owner to spend.

It’s to reinvest in the business: paint the shop, buy new showroom furniture, purchase the next trailer load of tires. How much gross profit you make directly impacts whether you will be able to pay your expenses and reinvest in your shop.

Please, I beg all of you. This is not an easy life, this tire and automotive aftermarket.

You wake up and it’s dark. You come home

and it’s dark. You see your kids mostly when they are asleep. You unlock the door early when a customer is panicking about a flat on the way to work. You keep the doors open after closing to finish the brake job.

Service advisors are getting screamed at for something they didn’t do. Technicians that do this their whole life have broken bodies by age 57. That’s a lot of sacrifice, from the general service tech to the owner who is scared to death the next worker’s comp claim will put them out of business on any given day.

It’s time we professionalize this industry, have standards, and get repaid for our sacrifices. We can’t just wing it anymore. If you’re not at the percentages you should be, figure out why and make changes. Talk to other owners. Ask questions. Get help.

Send your people out for education on the industry. Send yourself out. Don’t give up. ■ Dennis McCarron is executive director of Dealer Strategic Planning Inc., a company that manages multiple tire dealer 20 Groups in the U.S. (www.dsp-20group.com). To contact McCarron, email him at dennis@dsp-20group.com.

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www.orientepetlas.com 60

MTD January 2019

European Notebook

New improved regulations in European tire safety are on the way By

John Stone

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COURTESY OF NTDA UK

A

s the January edition of Modern Tire Dealer traditionally concentrates on industry facts, it seems like an appropriate time to bring readers up-to-date with the latest developments on European tire labelling and also additional approval provisions that cover the installation of tire pressure monitoring systems (TPMS) in new vehicles.

It is now just over six years since the European Union (EU) launched new legislation that required all tires in Europe to carry performance information labels regarding their fuel efficiency, wet grip and level of road noise generated.

Overall the regulations have worked and all tire producers have delivered tires to their wholesale or retail partners with a label at an acceptable level. Now the EU intends to up its game and increase these regulations by making it mandatory for future tire labels to also include information on snow and ice performance and also for motorists to be actually made aware of tire labels when sold a tire at a retail outlet.

This point is very interesting as currently there is no legal requirement for tire fitters to show labels to potential customers at the point of a sale agreement. It is also extremely relevant to note that future labels will also be “future-proofed” so that other amended regulations, when introduced, will add increased useful information including ratings for mileage, wear as well as a potential indication for retreaded tires.

These extra changes to tire labelling regulations are expected to be introduced in 2020 if agreed by EU parliamentary ministers in Brussels, Belgium.

I have also been made aware of a recent European study commissioned by the European Tyre and Rubber Manufacturers Association (ETRMA) which reveals that currently there are over 78,000 individual labels for car tires alone and the latest EU

New developments in tire labelling and tire pressure monitoring systems will eventually come into force in Europe.

Market Surveillance project has revealed that 11% of the tires tested were incorrectly labelled.

My general opinion on these latest developments for European tire labelling is that it is only right and fair that all motorists buying new tires in Europe should be made fully aware of the label qualities of the product they are purchasing. At the same time, with the winter season being extremely harsh in certain European countries, it is essential that customers when buying tires in particularly “arctic” conditions are made fully aware of what their purchased product is safely capable of.

When it comes to the subject of tire pressure monitoring systems, the EU is again looking to broaden the coverage of type approval upgrades concerning the fitment of tire pressure monitoring systems which will soon cover all small commercial and sport utility vehicles (SUVs). These new vehicle types will now have to be fitted with various safety features including TPMS, intelligent speed assistance, alcohol interlock, driver drowsiness monitoring and emergency stop signals which are part of the new proposed EU regulation. Various leading tire safety organizations in Europe including TyreSafe have stated they wholeheartedly support this innovative new initiative as TPMS has already proven itself as an effective way of

TPMS has already proven itself as an effective way of reducing tire-related accidents on European roadways.

reducing tire-related accidents. The new rules will effectively reflect the very latest technical developments taking place to protect and save lives on European roads.

It has also been reported that the EU is also continuing to study and implement the further development of technical requirements for tire noise, rolling resistance and wet grip performance.

Looking at the continual developments taking place and asking around in the European tire market there is a definite feeling of optimism which has been compounded by these latest announcements on tire labelling and tire pressure monitoring systems.

I have also noticed over the past year or so that with regards to tire labels, many manufacturers have been working toward upgrading the ratings of their tires, meaning that having an impressive tire label rating is now regarded as an important part of a new pattern’s presentation to the market.

Levels of tire safety continue to improve which can only create a positive momentum for the future. ■ John Stone has been working within the global tire industry for the past 28 years. In 2004 he launched his own consulting company, Sapphire Media Service, which caters to business media clients around the globe. Stone also writes for tire and automotive-related publications in Europe, South Africa and Asia.

MTD January 2019

Mergers and Acquisitions

Independents vs. conglomerates WHO’S WINNING THE BATTLE FOR TIRE-BUYING CONSUMERS? By

t seems like every issue of Modern Tire Dealer has an announcement of a new acquisition by Monro Inc., Icahn Automotive Group LLC, Bridgestone Americas Inc. and the like. One would assume by reading these that what I call the company-owned conglomerates are “winning the war” for the hearts and minds of consumers, but I would disagree. I think tire dealers are winning right now.

First, let me define winning. I was taught there are three metrics that matter most in the retail tire business: sales, profits and customer retention. As long as the stores were improving in those three metrics, life was good. So let’s analyze and compare the company-owned store operations to independent tire dealers.

Dealers are winning at sales. Two former clients of mine comprising 15- and 19- store chains averaged around $2 million in annual sales per store. Through published reports and articles I also found the following averages per outlet: Robertson Tire Co. Inc. in Oklahoma averages $1.7 million in its 14 stores; Tireman Auto Service Centers Ltd. in Ohio averages $2.5 million in its 20 stores; Dobbs Tire & Auto Centers Inc. in Missouri averages $2.75 million in its 40 stores; Belle Tire Distributors Inc. in Michigan averages $3.2 million in its 109 stores; and Les Schwab Tire Centers Inc. in Oregon averages $4.5 million in its 421 stores.

Now let’s look at the conglomerates. I estimate Bridgestone’s average annual per store sales are $1.4 million (Goodyear stores are likely about the same). Monro, a chain of 1,181 company-operated tire and muffler stores and 97 franchised locations, averages $957,000 per store. I estimate Pep Boys — Manny, Moe & Jack tire and service centers average around $900,000 each. Just not as good from my perspective. Whether it’s because independent dealers are that much better or that the company-owned stores over-saturate a market (therefore lowering their averages), who knows? It’s likely related to the fact that tire dealer-owners care more and are closer to their businesses. Even within a large independent tire dealer like TBC, I’m betting that franchisee-owners of Big O have higher sales volumes than the NTB stores.

Both independent dealers and company-owned dealerships are growing their store counts, and thus overall sales. But independent dealers are profitably expanding into new areas (perhaps pulled by customer demand?), while company-owned outlets are buying their way in. Big difference.

Who is winning on profits? The market leader in profitability has consistently been Monro. For the last three years running, its operating income as a percent to sales has been running at close to 12% and its EBITDA as a percent to sales is 15% or higher. Although Monro’s per store sales average is about $957,000, the company has a way of achieving about $150,000 in annual EBITDA per store by controlling payroll, benchmarking profit margins, excelling at distribution and controlling outside purchases. If Monro is the market

64

Smart

Independent dealers Complacent

Tire company-owned stores 1980’s

1990’s

2000’s

2010’s

2020’s

leader, then everyone else is not doing as well. The Bridgestone store organization, with all of its field personnel changes the last 5 years, bottomed out and is finally on an upswing after several down years.

Icahn Automotive is operating at a loss.

How do independent dealers stack up on profits? If the business is not run like a private piggy bank, and if the owner is vital, active and excited about the business, I find that independent dealers are doing as well if not better than Monro. Some are averaging $150,000 to $200,000 EBITDA and more per store.

In the retail tire business, payroll, rent and marketing are the largest expense categories. Dealers I know manage these expenses better and have lower advertising expenses by keeping existing customers while attracting new ones with innovative and targeted marketing.

Dealers are winning at customer retention. Keeping a store team stable and productive is one of the best customer retention strategies that you can have. And customer retention is directly related to profits. If stores churn through customers, their customer acquisition (marketing) costs are bound to be higher than independent dealers.

Note my graphic representation of the last four decades. It shows that there are cycles in this business when either Bridgestone and Goodyear stores or independent dealers are comparatively up or down.

In the eighties — in the spirit of full disclosure I worked at Firestone Tire & Rubber Co. from 1982-86 — the independent dealers were on top and the tire company-owned stores were shedding locations to loyal dealers. In the nineties, when I was working for Bridgestone, I saw that start to shift as dealers got complacent and the stores got smarter. I think that peaked in middle of this decade, and the independent dealers are the leaders once again.

Just because independent dealers are winning now does not mean they will win in the long run. Company-owned stores have some key strengths such as brand awareness, financial strength, access to cheap capital, and leverage that comes from having a national footprint.

Over the long run, the stronger balance sheets will win. ■ Michael McGregor is a veteran of the tire and service industry and a partner at Focus Investment Banking LLC. Contact him at michael.mcgregor@focusbankers.com.

MTD January 2019

SOURCE: MICHAEL MCGREGOR

I

Michael McGregor

Focus On Industry

New plant, new plans BKT USA HAS A LOT GOING ON IN 2019 By

Bob Ulrich

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MTD January 2019

COURTESY OF BKT

A

rvind Poddar, chairman and managing director of Balkrishna Industries Ltd. (BKT), was unable to attend his induction into the Tire Industry Association Hall of Fame on Oct. 29 due to a death in the family.

But that didn’t keep him from making a huge announcement with global impact.

“We have a concrete plant to set up a new tire plant in the U.S., generating local employment,” Poddar said in a pre-recorded speech during the 2018 Tire Industry Honors program in Las Vegas.

Following the big reveal, Modern Tire Dealer sat down with Rajiv Poddar, joint managing director, and Minoo Mehta, president of BKT USA Inc. and BKT Tires Inc., to discuss not only the plant, but also the company’s plans for the U.S. market in 2019 and beyond.

“We are in the process of identifying lands,” Joint Managing Director Rajiv Poddar said BKT hopes to announce a U.S. plant locasaid Rajiv Poddar about BKT’s first plant tion soon. Availability of manpower and suitable acreage are determining factors. outside of India. He said negotiating with the state government and closing on the final deal was due to occur which will increase its annual capacity from a projected 350,000 sometime this month. metric tons to 425,000 metric tons.

As to where the plant will be located, Poddar gave no clues, The additional production capacity, along with the new plant in other than to say BKT is looking at “somewhere in the ballpark the U.S., will help BKT take advantage of growth opportunities in of 80 to 100 acres in midwest USA.” Availability of manpower other areas, such as South America and the CIS (Commonwealth also “will be a big deciding factor.” of Independent States), a coalition formed when the Soviet Union T.C. Goel is general manager of the new project. disbanded in 1991.

BKT initially will invest $100 million in the plant, which initially Mehta says supply has not been a problem in the U.S. will be built to produce original equipment “Our ag market share is very high compared and replacement radial agricultural tires. to OTR. In the replacement ag tire market, we Additional phases of the plant’s construction are number one in some segments and a close may add OTR and specialty tires to the mix. number two in some behind Firestone. We The production of bias tires is also not out feel that we have done a good job in getting of the question. the products in the market. But we have to Once the ground breaking begins, Podnow focus on brand awareness, and help the dar said the plant will hopefully be up and end consumers find those products. We have running in two years. to help our dealers in the sellouts.”

The plant will be BKT’s fifth off-highway Continuing to push BKT’s OTR tires is also tire plant, but first outside India. The others are a goal. “We have made inroads,” said Mehta, in Bhuj, Aurangabad, Bhiwadi and Chopanki, “but our goals for OTR tires are very high. We India. Some 2,400 SKUs are produced at the are going to focus on increasing our share in four plants. this segment.”

Poddar said the older Bhiwadi and ChoAlso in 2019, BKT will add a 51-inch panki plants in the northern part of India OTR tire to its giant tire lineup, and enter “We have a concrete plan to set up a are scheduled to undergo a $300 million to new tire plant in the U.S., generating into the tracks segment. In the first quarter $350 million modernization. In addition, the local employment,” said Arvind Podof 2021, it will produce 57-inch tires, added three-year-old Bhuj plant will be expanded, dar in a pre-recorded message.

Poddar. ■

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Focus On Industry

Kumho focuses on independent dealers 3-PART PLAN INCLUDES MORE STABLE PRICING By

Joy Kopcha

K

umho Tire USA Inc. has new ownership, new plans for its product lineup, a new pricing strategy, plus a new streamlined dealer program for 2019. But one thing remains the same — the tire maker says its focus “is on the independent tire dealer channel.”

Shawn Denlein, executive vice president of sales and marketing, said independent dealers remain the biggest force for replacement tire sales in the U.S., and Kumho is committed to growing through its dealer partners.

“Our focus is on the independent tire dealer channel. That’s where we have to stay focused. That’s the core. Not only is it the biggest segment, but for Kumho it’s the best way for us to get out and talk about our brand.”

Denlein himself is part of the “new” at Kumho; he joined the company in April 2018. An industry veteran with time at Yokohama Tire Corp., Hankook Tire America Corp., and most recently Monro Inc. He said Kumho sees an opportunity to grow by making adjustments that help its existing dealers. Among the changes underway is a consolidation of overlapping treads in the company’s tire lineup.

PRODUCT CONSOLIDATION The company already has launched two products — the Crugen HP71 and Ecsta PA 51 — with this goal in mind.

The Crugen HP 71 is a tire for CUVs and SUVs. It replaces the Crugen ML33 and Ecsta STX. The Ecsta PA51 is an all-season ultrahigh performance tire, replacing the Ecsta 4X11 and Ecsta PA31.

Here’s what’s coming next: • In the grand touring tires segment, the Solus TA51 will replace the Solus TA71 and Solus TA31.

• In the performance category, the Ecsta PS72 will replace the Ecsta PS91 and Ecsta PS31.

• For the off-road segment, the Road Venture MT71 will replace the Road Venture MT51 and Road Venture KL71.

Denlein said the consolidation won’t happen all at once, but there will be a steady cleanup through 2021.

“We’re getting rid of five to six product lines and condensing moving forward. Part of this investment that we received from Doublestar allows us to accelerate a lot of the plans that we have.”

THE DOUBLESTAR EFFECT For two years there were questions about the ownership of Kumho, but that was finally settled in July when Qingdao Doublestar Tire Industrial Co. acquired a 45% stake in the Korean tire company.

Denlein said he’s often asked what the acquisition means for Kumho.

The tire maker has maintained its independent management.

“Kumho still operates Kumho. Doublestar operates Doublestar. In the foreseeable future that’s the way it will be.”

Doublestar invested 3.9 billion RMB (between $500 and $600 million) in Kumho and is now the largest stakeholder.

“With Doublestar’s financial investment it’s very positive for

70

“We want to be more connected to the dealer,” said Kumho’s Shawn Denlein.

Harry Choi, left, welcomed NBA champion Kevin Willis to Kumho’s 2018 dealer meeting, where Willis was the featured speaker. At the end of the meeting Choi announced his plans to return to Korea.

Kumho because Kumho can reinvest that money into things that are important to everybody in this room — product, plant and technology — three areas that can move the company forward.”

The deal also is expected to help both companies increase business in China. “The focal point right now is the Chinese market. The synergy in China is the first thing being explored.”

Both companies will benefit, Denlein said. Doublestar gains access to Kumho’s technology, and Kumho benefits from the financial investment by the Chinese tire company.

IMPROVING MARKETABILITY Consolidating the product line is an important element of the company’s bigger focus on marketability. But it’s part of a threeprong approach.

1. Price: In the third quarter of 2018 the company moved away from a pricing strategy that was heavily focused on deals and bonuses.

Denlein said the old model was a transactional-based business.

“We were doing deals, and being very aggressive in pricing. That works short term, but long term the issue is you don’t have a lot of stability in the market. You have peaks and valleys, and then programs get out of line and your margins will start to suffer.”

2. Dealer margins: “We’ve simplified our dealer program.”

Denlein said it was too complex with too many pieces. The system has been streamlined from 10 components to three or four. “That helps us, and helps you because it’s easier to track.”

3. Growing with OE: Kumho has spent 20 years increasing its share of the original equipment market. In the U.S. the first fitment was in 1997 with Mercedes, followed by Hyundai and KIA in 2003 and 2004, respectively. Since then, the company has completed OE orders on 61 vehicles, the latest of which was Kumho’s first fitment with Volkswagen Group of America for the 2018 Atlas SUV. Denlein said Kumho wants to expand existing OE relationships, and focus particularly on Japanese vehicles. ■ MTD January 2019

Focus On Industry

More from the floor

KENDA, ASA AND MOMO SHOWCASE THEIR WARES IN LAS VEGAS By

Bob Ulrich

M

ajor announcements from three companies at the SEMA (Specialty Equipment Market Association) Show in Las Vegas gave the event some additional swagger. Here is what they had to say about their product offerings for 2019.

KENDA KENETICA, THE NEXT GENERATION How do you improve on one of your core products? By improving it in every way.

That’s what American Kenda Rubber Industrial Co. Ltd. did with the Kenetica KR17 at its two-year-old technology center in Green, Ohio. The result is the Kenetica Touring A/S KR217.

The second-generation tire is superior to the more than 10-year-old tire it eventually will replace in steering/ dry handling, ride comfort (including reduced noise), dry braking, wet braking and wet handling. Snow traction was improved dramatically.

Although improving rolling resistance was not specifically targeted by Kenda USA’s engineers, that, too, is improved.

“We optimized the design of the tire to perform at a lighter weight to be competitive from a cost standpoint,” said Dan Shavers, manager of tire development at the tech center. “We focused on reducing weight without giving up any performance.”

Kenda will begin shipThe new tire is backed by a 60,000-mile ping the Kenetica TourA/S KR217 in the limited tread wear warranty and a UTQG ing first quarter of 2019.

(Uniform Tire Quality Grading) rating of 580. That compares to a 50,000-mile warranty and UTQG rating of 500 for the Kenetica KR17.

“Kenda is providing significantly upgraded performance compared to our popular KR17 at a comparable value price point,” added Brandon Stotsenburg, Kenda USA’s automotive vice president.

The Kenetica Touring A/S KR217 will be available in 43 black sidewall sizes ranging from 175/70R13 82H to 235/55R18 100H.

ASA HINTS AT ‘SOMETHING ENTIRELY NEW’ ASA Automotive Systems Inc. used the 2018 SEMA Show to celebrate its 30th birthday and last year’s launch of its TireMaster GTX software. It also took the opportunity to tease tire dealers about its next product.

TireMaster GTX software was designed to give tire and auto service centers real-time visibility into how the company is doing as a whole. Although it can be used by any size dealership, its many features make it particularly useful for larger, multi-purpose dealers.

That was how ASA described it at the 2017 SEMA Show.

“So here we are a year later and we’ve got over 125 locations

72

live on it,” said Executive Vice President Dave Vogel. “And more (are) in the works that are not live yet.”

ASA’s latest software project for tire dealers is “something entirely new,” said President Marc Belanski. The company expects to announce what it is and when it will be available in the first quarter of 2019.

Last year, ASA Automotive Systems Inc. and its parent company, Fog Software Group, completed the acquisition of Pace Software Inc. Pace’s Yes Management software solution is designed to help single- and multi-location automotive service and repair centers grow faster by integrating critical workflow functions from counter to repair bay to inventory and back office.

Fog Software Group Vice President of Business Development Eric Herrmann said there will be more “exciting announcements” coming in 2019.

Fog Software is a division of Constellation Software Inc. The company acquires, manages and builds software companies in a variety of vertical markets, and has 400 companies in its stable.

MOMO TARGETS NORTH AMERICA MOMO tires, through MW Co., are beginning to make headway in North America, especially in the U.S. and Canada. Developing a new all-season tread compound specially formulated for the North American market has helped, says Gianluca Grioni, director of sales.

The silica-enriched Tempo Metereologico Flex rubber polymer compound allows the tread compound to remain flexible under a wider range of climate conditions. It also places a greater emphasis on long tread life and low rolling resistance.

“Our strategy is to try to go to the small wholesaler in different areas and (not) create too “We are in charge of the NAFTA much competition,” said Grioni. region... and then we have some If the regional wholesaler also of the South American countries,” said MW Co.’s Gianluca Grioni. has retail stores — like MOMO distributor Discount Tire Centers in California — so much the better.

For now, interested dealers buy the tires by container load because MW is not yet warehousing MOMO tires. “We are restructuring the company, so I’m sure in the future there’s going to be opportunity, and we are thinking about that.”

Three new designs were recently added to MOMO’s lineup: Forcerun M8 HT, an all-season tire; M-Trail M8 AT, an all-season tire with an all-terrain tread pattern; and Outrun M20, a summer high performance tire.

MOMO tires are named after founder Gianpiero Moretti and Monza, a town in the Province of Milan, Italy. They are produced in Indonesia, Hungary and China. ■ MTD January 2019

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CAUTION: The TPMS may not function properly if the tire type and size are mixed.

Make sure to use the same size and type of tire.

Instead of directly measuring the pressure in each tire with pressure sensors, the TPMS on this vehicle is controlled by a VSA modulator-control unit and it monitors and compares the rolling radius and rotational characteristics of each wheel and tire while driving to determine if one or more tires are significantly under-inflated.

Low tire pressure will cause the low tire pressure/TPMS indicator to come on and a message to appear on the multiinformation display.

TIRE PRESSURE MONITOR WARNING INDICATORS NOTE: The low tire pressure/TPMS indicator blinks for about one minute, and then stays on under the following conditions: • A compact spare tire is used.

• There is a heavier and uneven load on the tires, such as when towing a trailer, than the condition at calibration.

• Snow chains are used.

CAUTION: If the low tire pressure/ TPMS indicator comes on even when the tires are properly inflated and the TPMS has been calibrated, see the appropriate manufacturer service information.

If the system detects low tire pressure in any of the four tires, the low tire pressure/ TPMS indicator comes on, as well as the message indicator. It will keep being turned on until calibration starts.

If a problem in the system is detected, the VSA indicator comes on, and CHECK SYSTEM message (TPMS) on the MID is displayed, and the low tire pressure/ TPMS indicator comes on after blinking for about 75 seconds.

TPMS RESET PROCEDURES NOTE: Whenever the pressure has been adjusted on one or more tires, tires have been rotated, or one or more tires have been replaced, the TPMS must be calibrated.

NOTE: If the system detects low tire MTD January 2019

COURTESY OF AMERICAN HONDA MOTOR CO. INC.

Figure 1: Identifying the tire pressure monitoring system (TPMS) button and information display indicator.

pressure in any of the four tires, the low tire pressure/TPMS indicator comes on, as well as the message indicator. It will keep being turned on until calibration starts.

TPMS CALIBRATION PROCEDURE The calibration begins when the TPMS switch is pressed. The calibration is completed after driving at 31 to 62 mph (50 to 100 km/h), steadily without much acceleration or deceleration, for about 18 minutes. Full functionality of the system cannot be performed properly if the calibration is not completed.

1) Make sure the tires are inflated to the specified tire pressure listed on the doorjamb label.

NOTE: The vehicle must be stopped with the transmission in neutral (M/T) or P or N (A/T, CVT).

2) Turn the ignition switch to ON (II), or press the engine start/stop button to select the ON mode.

3) Press the TPMS switch (A) for 3 seconds (see Figure 1).

NOTE: If the indicator does not blink, check the TPMS switch.

4) When the calibration successfully begins, the indicator (B) blinks twice. NOTE: During this period, if the ignition is turned on and the vehicle is not moved within 45 seconds, you may notice the low tire pressure/TPMS indicator comes on briefly.

This is normal and indicates that the calibration process is not yet complete.

5) The calibration process finishes automatically. It requires approximately 30 minutes of cumulative driving at speeds between 30 to 60 mph (48-97 km/h).

Torque specifications Component Wheel nut 1

Ft.-lbs.

80

w w w . M o d e r n T i r e D e a l e r. c o m

(N.m) (108)

75

Same Solid TPMS Tool New and Exciting Features! ®

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TPMS TPMS columns on demand Tire Pressure Monitoring System (TPMS) columns are presented in each issue of Modern Tire Dealer, courtesy of Mitchell 1. Here is a rundown of the columns in 2018, available on www.moderntiredealer.com in the digital editions found at the bottom of our home page.

All of our TPMS columns are available on demand, covering well over 100 makes and models. Simply type in TPMS in the search bar.

January Porsche 911, vehicle model years 2006-2017

July Mercedes-Benz C-Class (204) – 2008-2015

February Cadillac CTS, model years 2008-2015

August Chevrolet Cobalt 2008-2010, Pontiac G5 2008-2009, 2010 Pontiac G5 (Canada) and Pontiac G6 2008-2010

March Volkswagen: 2004-2006 Phaeton and 2004-2017 Touareg April Dodge Grand Caravan, model years 2011-2017 May Kia Sedona 2006-2014 June 2007-2014 Mazda3 and Mazda2 vehicles

6) See “Calibration completion check.”

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NOTE: The calibration check process will be interrupted if the vehicle moves. If the indicator does not go off after 2 seconds, keeps blinking, or stays on when the vehicle is in the ON mode, see the appropriate manufacturer service information.

CALIBRATION COMPLETION CHECK Check if calibration is completed by doing the following:

1) Stop the vehicle and shift into neutral (M/T) or P or N (A/T, CVT) position.

2) Turn the ignition switch to LOCK (0), or press the engine start/stop button to select the OFF mode.

3) Turn the ignition switch to ON (II), or press the engine start/stop button to select the ON mode and wait to see the low pressure indicator come on for 2 seconds and then off.

4) Do not drive the vehicle and wait for 45 seconds as is.

5) If the calibration is completed, the indicator does not come on.

If the calibration is not yet completed,

September 2011-2018 Ford Edge and Lincoln MKX October Volvo S-Series 2005-2015 November Toyota Corolla 2008-2018, and Corolla iM 2008-2017 December Fiat 500 Series 2012-2018

then the indicator will come on for 2 seconds and then go off.

DEMOUNTING/MOUNTING PROCEDURES NOTE: This vehicle is equipped with an indirect TPMS. The vehicle is not equipped with tire pressure sensors mounted on the wheels, so there is no need for mount or demount instructions.

NOTE: Whenever the pressure has been adjusted on one or more tires, tires have been rotated, or one or more tires have been replaced, the TPMS must be calibrated. See “Reset procedures.”

CAUTION: The TPMS may not function properly if tire type and size are mixed.

Make sure to use the same size and type of tire. ■ 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.

MTD January 2019

Products Midtronics has a new battery and electrical system analyzer The new CPX-900 Battery and Electrical Analyzer from Midtronics evaluates reserve capacity, a measure of a battery’s ability to sustain the electrical loads required by a vehicle over time. Midtronics says the CPX-900 is built with integrated Wi-Fi, which enables easy sharing of battery test results with customers via email. Cloud-based storage of battery testing data and analytical reporting is available with a subscription to the Midtronics Battery Management Information System (BMIS). The clamp cables and the optional built-in printer module are both field-replaceable, resulting in less tool maintenance downtime.

MIDTRONICS INC. www.midtronics.com

Ranger LS43B balancer pinpoints wheel weight locations The LS43B wheel balancer by Ranger is designed to optimize wheel weight placements with BendPak’s Laser-Spot technology. BendPak says the laser line clearly indicates outboard and inboard weight placements for balances within hundredths of an ounce.

The Ranger LS43B handles wheels up to 43 inches in diameter. BendPak says average cycle time is just seven seconds, making it one of the fastest balancing machines ever built. Exclusive 3D Quick-Touch LaserSpot technology pinpoints the locations where operators should place the minimal amount of weight that achieves a perfect balance at the 6 o’clock position.

BENDPAK INC. www.bendpak.com

Ford adds Motorcraft remanufactured 3.5L gas turbochargers Ford Motor has added 3.5L remanufactured gas turbochargers to its Motorcraft product line. The vehicles covered are F-150, Super Duty, Transit, Expedition and Navigator. The company says they are the only Ford-approved turbochargers available for Ford and Lincoln applications. Motorcraft 3.5L remanufactured gas turbochargers are competitively priced and feature an OEM-quality balancing process to help minimize noise and vibration. Motorcraft 3.5L remanufactured gas turbochargers are packaged with all necessary gaskets for ease of installation.

FORD MOTOR CO. www.motorcraft.com

Drive-over tread depth tool measures edge wear Hunter Engineering has released its next-generation drive-over tire tread depth measuring tool, Quick Tread Edge. Edge wear detection capability is a new feature that provides a greater analysis of overall tire condition. The company says Quick Tread Edge enables service providers to better identify tire wear on the “edge” of every tire to provide a complete summary of a tire’s overall tread depth for customers. Quick Tread Edge can be installed as a standalone unit with two mounting options or integrated in a flush mount configuration with the Quick Check Drive touchless alignment inspection system.

HUNTER ENGINEERING CO. www.hunter.com

Raybestos expands caliper coverage Brake Parts has added part numbers to its premium Element3 new plated brake calipers and Raybestos R-Line remanufactured calipers, expanding coverage for popular domestic and import nameplate applications. The company says that with 100% new components, no core return and lower warranty rates, Raybestos Element3 new plated calipers provide hassle-free installation and optimal performance. Raybestos R-Line plated calipers are premium quality, remanufactured calipers designed to function and fit like OE and deliver continued functionality and high-quality appearance through an extended life.

BRAKE PARTS INC. www.raybestos.com

78

Greenball introduces Centennial Navpoint HTX The new Centennial Navpoint HTX from Greenball is a versatile all-season tire for light trucks and sport utility vehicles (SUVs).

Designed as a superior highway terrain tire, the Navpoint HTX is prepared to take on adverse weather or road conditions while providing a smooth and comfortable ride on clear, weather-free roadways, according to Greenball. Performance siping allows the tread lugs to flex and expand for greater road contact and responsiveness. The Centennial Navpoint HTX will be available in spring 2019. Visit the company’s website for more information and sizes.

Greenball Corp. www.greenball.com

MTD January 2019

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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

80

ADVERTISER

PAGE

WEBSITE

31 Incorporated

57

www.31inc.com

Aftermarket Auto Parts Alliance Inc.

47

www.myplace4parts.com

Alliance Tire Group

71

www.atgtire.com

American Omni Trading Company

63

www.american-omni.com

AUTEL

53, 74

www.autel.com

Autopromotec

77

www.autopromotec.com

Bartec USA

76

www.bartecusa.com

BendPak Inc. Ranger Products

19

www.bendpak.com/laser

BKT USA Inc.

11

www.bkt-tires.com

Blackburn OEM Wheel Solutions

69

www.blackburnwheels.com

CEAT Specialty Tyres Limited

35

www.ceatspecialty.com

Continental Tire

25

www.continentaltire.com

DSP 20 Group

79

www.dsp-20group.com

Falken Tires

31

www.falkentire.com

Greenball Corporation

73

www.greenball.com

GRI Tires

56

www.gritires.com

Hennessy Industries Inc.

61

www.coatsgarage.com

Hunter Engineering Company

58

www.hunter.com

Independent Tire Dealers Group

55

www.itdgusa.com

JS Products

24

www.supply.jsproducts.com

Kenda Tire USA

IBC

automotive.kendatire.com

Kumho Tire USA Inc.

29

www.kumhotireusa.com

Linglong Americas Inc.

7

www.linglongtire.com

Marangoni Tread N.A.

49

www.na-marangoni.com

Maxxis International—USA

17

www.maxxisaccelerate.com

Mr. Tire

27

www.kmtire.com

Nexen Tire America Inc.

IFC

www.nexentireusa.com

Nitto Tire U.S.A. Inc.

OBC

www.nittotire.com

Nokian Tyres Inc

65

www.nokiantires.com

Oriente Tire USA LLC

60

www.orientepetlas.com

Sailun Tires

9

www.gosailun.com

Schrader Performance Sensors

75

www.schradersensors.com

Sentury Tire Americas

21

www.delintetires.com

Sumitomo Tire

42-43

www.sumitomotire.com

Sumitomo Tire

5

www.sumitomotrucktires.com

Toyo Tires

15

www.toyotires.com

TR Wholesale Solutions

39

www.trwholesalesolutions.com

Travelstar Tires

18

www.travelstartires.com

Vredestein Tyres

45

www.vredestein.com

West Creek Financial

23

www.westcreekfin.com/mtd

ZAFCO International

13

www.zafco.com

ZC Rubber America Inc.

59

www.arisuntires.com MTD January 2019

Advertising information (330) 899-2200 ext. 2217

MTD Classifieds USED TIRES FOR SALE

USED MEDIUM TRUCK TIRES

Japanese original truck tires: 275/80R22.5 11R22.5 6-8 millimeters of tread remaining

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Advertising information (330) 899-2200 ext. 2217

MTD Classifieds TOOLS & EQUIPMENT Tire Dealer Tools & Equipment

www.ezliftconveyors.com

Air Tools • Battery Chargers Compressors • Hose Reels Impact Sockets • Jacks Lube Equip • Tire Equip

For FREE Catalog Call 800-772-0863 www.wesbrooksinc.com

2019 ADVERTISING DEADLINES

March Issue closes February 12th

April Issue closes March 12th

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May Issue closes April 10th

June Issue closes May 10th

July Issue closes June 11th

August Issue Floor to Floor tire storage made safe, fast, and reliable with this conveyor!

E-ZLIFT has been serving major tire retailers for over 30 years!

Length selection guide and prices: Floor to Floor Distance

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82

closes July 10th

September Issue closes August 12th

October Issue closes September 3rd

November Issue closes September 27th

December Issue closes November 12th

MTD January 2019