Modern Tire Dealer - January 2020

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The Industry’s Leading Publication January 2020, Volume 101, Number 1

F E AT U R E S 20 28

DEPARTMENTS 2 Publisher’s Notes

But wait — there’s more! Musings on Ulrich, Manges and M&A activities

4 Editorial

End of the line for me: But not for you, the independent tire dealer

6 moderntiredealer.com

News and navigation tools for MTD’s website

8 Industry News

The road less taken: Toyo exec talks dealer strategy, the ‘Amazon effect,’ and more

18 Numbers That Count

Relevant statistics from an industry in constant motion

27 Your Marketplace

Dealers report continued unit sales improvement

60 Mergers and Acquisitions

Know your customer: Pick your target — and don’t be all things to all people

62 Business Insight

The art of the interview: Obtain as much info as possible, up front

64 Business Insight

Conflict unavoidance: Conflict with employees can be healthy. How will you manage it?

Focus on Dealers 68 Mobile and agile: One-man tire installation service builds customer base with fast, ‘on-the-spot’ service

28 30 32 34 36 38 40 42 44 48 50 52

Full speed ahead

Analyst John Healy talks M&A, the future of tire distribution, the health of ATD, the impact of Amazon, tire manufacturing investment in the U.S. and more

54th annual Facts Section

Overview

Tire shipments Market share Tire distribution Tire sizes Tire pricing Commercial tires Plant capacities Automotive service Store demographics Beyond North America Dealers list top challenges for new year Technician recruitment tops list of concerns

73 TPMS

Lexus RC F, RC 200T, RC 300 and RC 350

78 Products 80 Ad Index 82 Classified

52 68

©GETTYIMAGES.COM/ERIKONA

Modern Tire Dealer is a member of:

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

20 1

P u b l i s h e r ’s N o t e s

But wait – there’s more!

MUSINGS ON ULRICH, MANGES AND M&A ACTIVITIES By

Greg Smith

I

’ve always enjoyed watching infomercials on television. It doesn’t matter what the product is, I enjoy watching how the salesperson makes me think it will solve every problem in the universe, and I must order it today.

Plus, I always wait for the great phrase, “But wait — there’s more!”

Most of us think Ron Popeil from Ronco invented the saying, what with his wide array of gadgets. But Ed Valenti is actually given credit from his infamous “Ginsu Knives” days.

Even as I write these Publisher’s Notes in the waning days of 2019, I’m reminded of “But wait — there’s more!”

BUT WAIT — THERE’S MORE: BOB ULRICH

2019 was truly a roller-coaster year for all of us at Modern Tire Dealer. Even as we celebrated our 100th anniversary and had great fun sharing industry history with you in our magazine, I also knew that it would be a transitional year for us.

Bob Ulrich, MTD’s long-time editor, had told me several years ago about his tentative retirement plans. Naturally, I ignored him.

Mid-year, he came to my office and confirmed the date: January 2020. We both joked that he probably should never have said anything about his plans in this era of “by-the-book” HR policies.

But, after 34 years of working closely together to make sure that MTD is the best of the best, let’s just say we threw out the policy manual and kept the news to ourselves. At the same time, the search was on to find his perfect replacement.

Bob made life easy for me after he was named editor in 2000. He was already deeply ingrained in the industry, and he understood how it operated, right down to understanding the multitude of personalities and their interactions within this highly vertical business.

On top of everything, he passionately cared about the industry and the role that MTD played within it. In all of the years Bob and I have worked together, I can almost count on one hand those times when we had major disagreements. Even better, after the disagreements, we moved on and never looked back.

Bob is “the best of the best.”

work for several companies on the public relations side of the business. Even after he had left, people would ask about Mike.

They wanted to know how he was doing and almost always would end their question with, “Mike’s a great guy.” This happened so often that it was a standing joke between Bob and me. It was as though neither of us mattered. People wanted Mike.

After talking with Mike, it didn’t take long to realize that he would be the perfect person to take over as editor of MTD. When I announced that Mike would be joining the magazine and ultimately taking over as editor when Bob retired, I knew I had made the right decision when Bob did his impersonation of Tiger Woods’ fist pump, with a loud “Yes!” For the past several months, both Bob and Mike have been working together to ensure a seamless transition. Mike and his highly skilled team are definitely poised to move MTD forward, utilizing a wide variety of platforms. Even better, Mike knows the industry and its many subtle nuances, which allows him to present to you the best possible information about it.

MIKE AND HIS HIGHLY SKILLED TEAM ARE DEFINITELY POISED TO MOVE MTD FORWARD, UTILIZING A WIDE VARIETY OF PLATFORMS.

BUT WAIT — THERE’S MORE: MIKE MANGES

As I began the search for a new editor, several highly qualified candidates came to mind. Then, I heard Mike Manges was available.

Mike had previously worked for MTD before moving on to

2

BUT WAIT — THERE’S MORE: MERGERS AND ACQUISITIONS

The year-end announcement by Les Schwab Tire Centers Inc., the nation’s fifth largest independent tire store chain, that it was for sale may have initially come as a shock to many, but it shouldn’t have.

It’s a continuation of M&A activity that’s been rampant for quite some time. As a friend of mine has told me, the cost of money right now is cheap. And money is plentiful.

There’s no doubt that many more of the large distribution players, whether on the wholesale or retail side of the industry, will be involved in M&A activity in 2020. My guess, however, is that many executives are going to watch the structure and dollar amount that Les Schwab commands very closely.

Ultimately, whenever a deal of this size takes place, new companies form and start their rise in the market. And it begins anew.

BUT WAIT — THERE’S STILL MORE!

Coming full circle, an announcement like Les Schwab’s is one of those events that always allowed Bob Ulrich and me to guess who would be interested in purchasing the company and why.

In fact, truth be told, we’d also conjecture who might be next on the M&A list and why. And that’s something I’ll miss.

Mike, as you’re reading this, be prepared: You’re in the bullpen. ■ If you have any questions or comments, please email me at greg.smith@bobit.com.

MTD January 2020

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Editorial

End of the line for me

BUT NOT FOR YOU, THE INDEPENDENT TIRE DEALER By

Bob Ulrich

4

COURTESY OF WOODY ROGERS/TIRE RACK

B

rand loyalty, which among auto owners is very great, is very weak in the tire field. Only 30% of the respondents bought the same make of tires they owned last.” Those statements are very telling, and clearly emphasize just how influential tire dealers are.

The “respondents” mentioned above are vehicle owners, which raises the question, what are they responding to?

Would you believe the 1957 Look Magazine National Automobile and Tire Survey? It’s true. At a time when retreaded tires made up one-fourth of all replacement passenger tire purchases — the Look survey was very thorough — consumers relied on their local tire dealers for help.

Perhaps the survey was the start of the 70/30 Rule, which asserts that from start to finish, tire dealers influence the tire purchase 70% of the time. The other 30% of the time the customer specifically walks in and asks for a brand (more on that later).

I find myself thinking a lot about you as I get ready to retire.

The following Modern Tire Dealer mission statement has been my direction in life for more than 34 years: “to help independent retail, commercial and wholesale tire dealers increase their profitability.”

You certainly have done a great job of doing it on your own.

According to MTD’s 2020 Facts Section (see page 34), 63% of the replacement consumer tires purchased in the U.S. are sold by independent tire dealers. No other distribution channel accounts for more than 10%.

Despite ever-increasing competition, you continue to be the dominant force in the aftermarket when it comes to selling tires. You are more than 29,000 dealers strong, and nearly 60% of you are single-store owners! You are the main reason why the 70/30 Rule rules.

Industry data supports the 70/30 Rule. Our tire dealer surveys have corroborated its validity for years. J.D. Power & Associates, Goodyear Tire & Rubber Co., Cooper Tire & Rubber Co. and many others have, at one time or another, announced similar findings.

A 2005 survey from Virginia Polytechnic Institute and State University puts the percentage of consumers who ask for a tire brand at the point of sale at 30% or less. And the good news gets even better.

The 70/30 Rule does not take into account the influence you have on those customers asking for a specific brand. How many of them either switched to another brand or a different type of tire?

At the 2011 Goodyear Dealer Conference in Texas, Jack Winterton, then chief customer officer for Goodyear’s North American Tire consumer business, said it all while addressing the dealers in attendance. “With 85% of tire purchases directly influenced by you, our reputations — yours and Goodyear’s — are intently connected.”

Up close and personal: This was my signature move when I attended a ride-and-drive. I call it the “beached whale.”

That is pretty powerful testimony about your influence on not only the tire-buying process, but also the dealer-supplier relationship.

With more brands and programs than ever available to you, I don’t see your influence and leverage waning anytime soon.

According to the 2016 J.D. Power & Associates U.S. Original Equipment Tire Customer Satisfaction Study, Gen X and Gen Y consumers appear to be even less likely to replace their OE tires with the same brand than older vehicle owners.

As I finish up my 228th and final editorial for Modern Tire Dealer, I know my confidence in your professionalism and ability has never been stronger.

I will miss you.

The late Charles Krauthammer, the well-respected journalist and political columnist, once commented on his career by paraphrasing British playwright Tom Stoppard: “You put words together all your life, and every once in a while you get them in the right order and give the world a nudge.”

When I heard those words in 2018, I remember thinking they would be appropriate for my last editorial. But unlike Krauthammer, my world is made up of independent tire dealers. I just hope I put the words in the right order enough to help grow your businesses and make your lives easier, because that was my job.

And truly my pleasure. ■ MTD January 2020

ModernTireDealer.com

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Tire Dealer on Facebook and Twitter. You’ll find breaking news alerts and exclusive content, including photos and news bits when the MTD editors are on the road. Follow MTD and tag along for the journey!

Bob.Ulrich@bobit.com Executive Editor: Mike Manges, ext. 2213 Mike.Manges@bobit.com Managing Editor: Lori L. Mavrigian, ext. 2216 Lori.Mavrigian@bobit.com

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Big names make big news Big names in the tire industry were making big moves in the waning days of 2019.

Goodyear Tire & Rubber Co. bought Raben Tire Co., and Les Schwab Tire Centers went up for sale with a selling price expected to be at least $3 billion (see page 10 for more information). Bridgestone Americas Inc. named a new CEO, president and COO, Paolo Ferrari. Here’s our top 10 items from last month, and keep track of what’s happening on www.moderntiredealer.com.

1. Goodyear buys Raben Tire Co. 2. Les Schwab Tire Centers is for sale 3. Ferrari will succeed Knapp to lead Bridgestone Americas 4. MTD exclusive: Toyo truck tire exec talks distribution, the Amazon effect and more 5. Bridgestone to demonstrate airless tire, proactive technology 6. ‘Blue Ocean’ thinking: Not just for Elon Musk and Tesla 7. Goodyear to keep Raben Tire name 8. TBC opens NTB ‘shop of the future’ 9. Hundreds accept voluntary layoffs at Goodyear’s Gadsden plant 10. MTD exclusive: New year to bring challenges for trucking industry

Vincent.Taroc@bobit.com Graphic Designer: Jeff Polman, (310) 533-2460 Jeff.Polman@bobit.com Production Manager: Karen Runion, ext. 2210 Karen.Runion@bobit.com

SALES South and Texas: Greg Smith 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 (706) 344-1388, mobile (619) 990-5536 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.

6

MTD January 2020

Industry News

The road less taken

TOYO EXEC TALKS DEALER STRATEGY, THE ‘AMAZON EFFECT,’ AND MORE

W

hen it comes to its commercial truck tire business, Toyo Tire U.S.A. Corp. has taken a slightly different route than some of its bigger competitors — sometimes due to necessity and in other cases, by choice.

Fewer than 10 years ago, Toyo was bundled into a domestic manufacturing joint venture, the Mount Vernon, Ill.-based GTY plant, with Continental Tire the Americas LLC and Yokohama Tire Corp.

Toyo formally exited the arrangement in early 2011. (The GTY factory had the capacity to produce 7,300 truck tires per day, according to MTD research.)

“In that plant, we had a lot of production,” Michael Graber, Toyo’s vice president of sales, told MTD during the 2019 Specialty Equipment Market Association (SEMA) Show. “We had big volumes. After that venture went away, there was a big dip in our commercial tire sales.”

A multi-year “rebuild” of Toyo’s North American commercial truck tire business ensued. Fast forward to early 2019, and Toyo opened distribution and sales of its consumer products in the northwestern U.S. Les Schwab Tire Centers has retained exclusive rights to Toyo brand truck tire distribution in Oregon and Washington, but Toyo brand truck tires are now available to dealers in other states in that region.

And all the while, Toyo has stayed away from pursuing national accounts, preferring to sell through its dealer network. “We’re squarely in the local fleet segment.”

In this exclusive interview, Graber, who joined Toyo in 2013 and most recently served as its director of sales for commercial tires, discusses the tire maker’s dealer strategy, life after GTY, and one challenge that all truck tire manufacturers are facing: how to adapt to the rise in last-mile deliveries generated by the “Amazon effect.”

MTD: Les Schwab Tire Centers has retained exclusive rights to Toyo truck tire distribution in Oregon and Washington. What is Toyo doing to expand its truck tire dealer network in other parts of the northwest, and across the U.S., in general?

8

“We’ve made excellent progress rebuilding our commercial business,” says Michael Graber, Toyo’s vice president of sales (far right), pictured with Roy Bromfield, CEO and president (far left) and Tim Chaney, vice president of marketing.

Graber: We’d prefer not to talk about the specifics of our commercial channels of distribution strategy, but broadly speaking, we have sought to partner throughout the United States with outstanding independent commercial servicing dealers and the distributors who supply them. We position our truck tire offering as the “leading value alternative” for both dealers and the fleets they serve, providing excellent products that consistently perform and retread well.

Moreover, we want our dealers to be able to sell their customers Toyo tires at a fair price while earning strong margins, and for our sales team to be regarded as assets for our dealers in servicing these customers.

MTD: During the 2019 SEMA Show, you mentioned that Toyo’s commercial tire business has returned to levels the company hasn’t seen since 2011, when Toyo was still part of the GTY joint venture plant with Continental and Yokohama.

How did Toyo “rebuild” its commercial tire business, post-GTY? Graber: Toyo leadership, both in the U.S. and in Japan, recommitted to the U.S. market in 2013 and we’ve made excellent progress rebuilding our commercial business in the U.S. since then. We’ve historically been known for our excellent technology and high manufacturing quality and have leveraged that, refreshed and broadened our product offering, and most importantly, listened to our customers to meet their needs.

We are pleased with where we are today and see a bright future for the Toyo commercial business.

MTD: Does Toyo have plans to pursue big fleet customers in the near-term?

Graber: At this time, and for the foreseeable future, our focus remains on serving our dealers and distributors and continuing to find a solid fit for Toyo within their product screens.

MTD: Over the last few years, we’ve seen a dramatic rise in the number of last-mile deliveries and shorter haul routes due to the “Amazon effect.” How is Toyo addressing this trend within its product lineup?

Graber: Last-mile deliveries and the shorter haul routes resulting from the increase in e-commerce deliveries are one of the largest challenges to tire development today. Toyo has developed several tire options targeting the challenges created by these new routes.

Looking ahead to 2020, Graber says that the “evolution in Toyo truck tire products is in line with changes in market needs.

Hub-and-spoke e-commerce distribution requires new super-regional designs, and improved durability for low rolling resistance tires that deliver solid returns for large and small operators. Toyo will expand our offering to meet the market demand for these products.”

— Mike Manges MTD January 2020

Industry News

Bites Sullivan Tire adds warehouse Sullivan Tire Co. has expanded its wholesale-distribution footprint with the opening of a new warehouse in Concord, N.H. Michael Smith, manager of Sullivan’s wholesale center in Auburn, N.H., will oversee the Concord facility. The dealership’s wholesale division employs 135 people across five states in New England.

Tire Discounters expands Tire Discounters Inc. now has more than 125 locations with the recent opening of three stores in Indiana and an outlet in Kentucky.

The Indiana stores are located in the towns of Fishers, Whitestown and Greenwood. The Kentucky store is located in Independence.

General partners with Jeep Continental Tire the Americas LLC’s General brand will be the official tire partner of Jeep Jamboree USA, a program of off-road adventure weekends for Jeep owners and enthusiasts.

First tire for Cooper-Sailun JV Cooper Tire & Rubber Co. and Sailun Vietnam Co. Ltd. have produced their first tire at ACTR, the tire makers’ new joint venture facility located near Ho Chi Minh City, Vietnam. Cooper owns 35% of ACTR, which will produce radial medium truck and bus tires for global markets. The facility is expected to be operational and producing tires on a commercial level by early 2020.

At full capacity, the plant is expected to produce about two million units annually.

VW picks Continental for EV Volkswagen has selected Continental to provide tires for its ID.3 electric car.

Both the Continental EcoContact 6 summer tire and the Continental WinterContact TS 850 P winter tire were “adapted” to suit the vehicle’s requirements. The products feature the tire maker’s ContiSeal Technology, which closes tire punctures in the tread area.

BKT likes Monster Jam Five years after becoming the official and exclusive tire sponsor of Monster Jam, Balkrishna Industries Ltd. (BKT) is extending the partnership through 2026. Beyond live events on dirt tracks, the Monster Jam brand extends into the home with products, content and merchandise, acording to BKT officials.

10

L

Les Schwab goes on the market

es Schwab Tire Centers Inc., the fifth largest independent tire dealership in the United States, is up for sale. The board of the 492-location, Bend, Ore.-based company and its shareholders, who are all relatives of its founder, the late Les Schwab, have hired Goldman Sachs Group Inc. to find a Les Schwab Tire Centers, which has nearly 500 locations, is up for sale. Its founder, the late Les buyer.

The sales process is expected to Schwab, was MTD’s 2000 Tire Dealer of the Year. take several months. An Oregon-based media outlet, The Oregonian, reports that the company expects a selling price of at least $3 billion.

Les Schwab Tire Centers reported $1.8 billion in retail sales as of September 2019.

The dealership’s shareholders, who represent the fifth generation of the Schwab family involved in the business, believe that new ownership will offer the best option for its long-term viability.

“After careful review and consideration, we concluded a new ownership group will help ensure future opportunity for our wonderful employees and secure continued success for the company as it grows,” they said in a statement. “We believe a new owner — one with deep experience and resources — will carry forward the Les Schwab vision far into the future.”

Les Schwab Tire Centers employs more than 7,000 people throughout Oregon, Washington, Alaska, Idaho, Montana, California, Nevada, Utah, Colorado and Wyoming. The company also operates three truck tire retreading plants and has a network of member-dealers. It sells the Continental, Dean, Federal, Hankook, Cooper, Bridgestone, Mastercraft, Toyo and Pirelli brands.

In addition to being the fifth largest tire store chain in the U.S., according to the Modern Tire Dealer 100, Les Schwab Tire Centers holds the fourth spot on MTD’s ranking of independent commercial tire dealers in the U.S. and is No. 11 on MTD’s list of the country’s largest retreaders.

P

Ferrari, Ishibashi poised to take top roles

aolo Ferrari is the new CEO, president and chief operating officer of Bridgestone Americas Inc., succeeding Gordon Knapp, who will transition out of his role before retiring in March.

Ferrari, who joined Bridgestone in 2016, most recently served as executive vice president, executive officer and global digital strategic officer of Bridgestone Corp. and board member, CEO and president of Bridgestone Europe. He also served as chairman of Bridgestone Americas’ board. He is a former chairman and CEO of Pirelli North America and CEO of Pirelli Latin America.

In addition, Shuichi “Shu” Ishibashi is poised to take over as CEO and representative officer of Bridgestone Corp.

The company’s board of directors recently

FERRARI

ISHIBASHI

proposed the change, which is subject to approval at the next Bridgestone board meeting in March.

If approved, Ishibashi will succeed Masaki Tsuya.

A 42-year Bridgestone veteran, Ishibashi currently serves as the Tokyo, Japan-based tire maker’s vice chairman and representative executive officer.

MTD January 2020

SR 47

All-Steel casing Extra-long tread life Outstanding cut and puncture resistance Extra mileage Designed for hard and rocky surfaces

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Industry News

Bites Vredestein is the focus Apollo Tyres Ltd. is launching a marketing campaign to promote the quality of its Vredestein Quatrac and Vredestein Wintrac lines. The campaign will involve the dealer network, and will include online digital ads to highlight the Vredestein product line.

Toyo, Bridgestone sell stock The 11-year-old alliance between Toyo Tire Corp. and Bridgestone Corp. will continue, but the two tire makers have agreed that each will sell 50% of the stock it holds in the other company. For Toyo, that means selling more than 1.9 million shares of Bridgestone stock on the Tokyo Stock Exchange for an expected return of 4 billion yen. Bridgestone holds 10 million shares of Toyo’s stock, or nearly 6.5% of the smaller tire maker’s outstanding shares.

Pirelli is OE on Aston Martin Pirelli & Cie SpA has been selected as the exclusive tire supplier for the new Aston Martin DBX. The P Zero, Scorpion Zero and Scorpion Winter products will be available for the DBX.

Vehicle sales to dip this year Light vehicle sales will drop 1.2% in 2020, according to the National Automobile Dealers Association’s (NADA) recently published new vehicle sales forecast.

NADA expects new light vehicle sales will total 16.8 million units.

Cooper says to ‘Tread Wisely’ Cooper Tire & Rubber Co. is promoting its Tread Wisely tire and vehicle safety campaign for teenagers and young adults.

The free Tread Wisely mobile app features videos showing how to check tire pressure and perform other tire safety checks.

Besancon will keynote Bruce Besancon, vice president of OTR sales for Yokohama Tire Corp., will talk about the future of OTR tires during his keynote address at the 65th annual Tire Industry Association (TIA) Off-the-Road Tire Conference Feb. 19-21 in Indian Wells, Calif.

Michelin to cut C02 output Groupe Michelin says all of its plants will emit zero carbon dioxide by the year 2050.

The drive will include using more renewable energy and “eliminating coal.”

12

G

Goodyear buys Raben Tire

oodyear Tire & Rubber Co. has acquired Evansville, Ind.-based Raben Tire Co. from affiliates of Palladium Equity Partners LLC for an undisclosed sum.

Goodyear announced the deal on Dec. 16, saying the acquisition will help it “win and grow in the rapidly changing tire business by making it easier for consumers and fleets to buy and recommend Goodyear tires.”

Raben Tire, which was founded in 1952 by Henry “Butch” Raben, has nine retail outlets, 10 commercial-only outlets and 11 combined retail/commercial locations throughout the Midwest.

It also operates three retread plants Raben Tire Co.’s senior management team in September 2002, when Tom Raben (second row, second from far left) and two wholesale was named MTD’s Tire Dealer of the Year. distribution facilities.

The dealership holds the No. 37 spot on the 2019 Modern Tire Dealer 100, which was published last July. Affiliates of Palladium had owned the company since 2014.

After the transaction was announced, Goodyear told MTD that Raben Tire will continue to operate under its own name “for the immediate future.”

“The acquisition was a stock deal and includes all of Raben Tire’s businesses,” noted a Goodyear spokesperson, who confirmed that Raben Tire locations “will become part of Goodyear’s company-owned network.”

Raben Tire’s management team “remains in place and is working with Goodyear on an integration plan.”

The Akron, Ohio-based manufacturer has nearly 800 company-owned commercial and retail tire and auto service centers across the U.S. and Canada.

In addition to Goodyear-brand products, Raben Tire carries the following brands: Kelly, Dunlop, Michelin, BFGoodrich, Pirelli, Continental, General, Yokohama and Kenda, according to MTD research.

Nexen presents vet with custom Jeep Nexen Tire America Inc. has presented its third custom vehicle, a 2019 Jeep Wrangler, to a United States military veteran, retired Army Sgt 1st Class Ken Cates, as part of its Nexen Hero campaign. Cates, who served in the military for 26 years, now works as CEO of the Fort Hood (Texas) Area Habitat for Humanity chapter, which has built 26 houses for disabled and homeless veterans.

“We wanted to open the Nexen Hero campaign to all veterans this year and of the thousands of entries, Ken’s story of perseverance, his 26-year career and his ongoing commitment to his community really stood out,” says John Hagan, Nexen’s Retired U.S. military veteran Ken Cates took home a custom Jeep Wrangler with executive vice president of sales.

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Industry News

Bites Goodyear trims workforce

Linglong plant targets 2.4 million units

Goodyear Tire & Rubber Co. has accepted buyout applications from 740 employees at its passenger tire plant in Gadsden, Ala., as part of its plan to curtail production of less profitable segments of the tire market.

Bridgestone expands GCR Bridgestone Americas Inc. has acquired Tires Inc., a two-store commercial tire dealership in the state of Washington, and has added the company to its GCR Tires & Service network.

‘Shop of the future’ opens TBC Corp. has opened its NTB Tire & Service Centers “shop of the future” in Greer, S.C. The 9,000-square-foot store features eight service bays, including a designated bay with “the latest digital equipment, including drive-over laser readers that test tires’ tread depth and read three positions on each tire.”

DeSalle retires from Hoosier After more than three decades at Hoosier Racing Tire Corp., John DeSalle, the company’s president, is retiring. DeSalle began his career with Hoosier in 1988 and became president in 2016 when Hoosier was acquired by Continental Tire the Americas LLC.

More than 600 guests attended Shandong Linglong Tire Co.’s recent global partner conference event in China. The company discussed its new truck tire plant.

During its recent global partner conference event in Jingmen, China, Shandong Linglong Tire Co. shared details about its new Hubei Linglong Tire Co. Ltd. radial truck tire plant.

The plant is Linglong’s fourth domestic manufacturing facility and will produce 2.4 million truck and bus tires a year at peak capacity. It also manufactures offthe-road tires and passenger tires, and “will effectively promote the company’s transformation and upgrading to intelligent

Kal opens OTR retread plant Kal Tire’s new OTR tire retreading plant in Cananea, Mexico, is the company’s sixth OTR tire retreading and repair facility. The plant is strategically located as 30% of Mexico’s mines are located in Sonora, the state where Cananea is situated. It is Kal Tire’s first retread plant to use a robot for skiving and tread grooving.

GT returns to Formula Drift The GT Radial brand from Giti Tire (USA) Ltd. is returning to Formula Drift in 2020. GT will compete on a new extreme performance tire which to be made at the company’s plant in Richburg, S.C. The brand last competed in Formula Drift in 2014-16.

Ascot welcomes Eastmen Tire Ascot Supply Corp. has added Butler, Pa.-based Eastmen Tire Supplies Inc. as its newest and 14th member. Eastmen distributes tire service tools and equipment to tire dealerships.

14

S

production and high-end products,” according to Linglong officials.

Linglong Chairman Wang Feng told attendees that the company will accelerate the construction of other projects while striving for early completion of the Hubei plant.

Meanwhile, Shandong Linglong will continue to advance its “5+3 Global Layout” strategy, which calls for the establishment of five manufacturing plants in China and three plants outside of the country.

Delinte rebrand targets younger consumers

entury Tire USA Inc. is rebranding its Delinte brand with the goal of reaching younger tire buyers.

“The Delinte brand speaks directly to a younger demographic looking for their first replacement tires,” says Maxwell Wee, Sentury’s executive vice president.

“Through our rebranding process, we have found that this particular demographic considers accessorizing their cars to be an important part of their social lives.”

Sentury will partner with various social media influencers “to tap into a community of young drivers who range from extreme sport enthusiasts to off-road weekend warriors,” say company officials.

The rebranding initiative will encompass a new ad Sentury Tire USA Inc.’s new ad campaign will campaign with print ads that “will include the new include print ads and Delinte look and feel, with messaging focused on is designed to reach the ‘relentless’ state of mind. ‘Relentless quality for younger tire buyers. relentless drivers.’”

In addition, as part of the rebranding, Sentury will launch its “Staggered Collective” campaign this year. The initiative will focus on ultra-high performance, staggered fitments for passenger cars and SUVs. MTD January 2020

Industry News

Sam Senuk will lead retail store expansion at Jack Williams Tire

Dates Feb. 19-21 Tire Industry Association’s Off-the-Road Tire Conference, Renaissance Indian Wells Resort & Spa, Palm Springs, Calif.

(800) 876-8372 www.tireindustry.org

Feb. 19-22 Mobile Air Conditioning Society Training Event & Trade Show, Gaylord Opryland Resort, Nashville, Tenn.

(215) 631-7020 www.macsw.org

Feb. 24-26

F

ormer Monro Inc. executive Sam Senuk is the new vice president of retail for Jack Williams Tire Co. Inc. In this role, he will oversee the company’s 36 retail tire and auto service locations and lead the dealership’s future expansion efforts.

“The addition of appointing a vice president of retail is to assist in expanding our retail footprint, while remaining family-owned and operated,” says Bill Williams, chairman, Jack Williams Tire.

Senuk joins the company with over 30 years of automotive and retail experience, having held leadership positions at both Monro SENUK and TBC Corp.

At Monro, Senuk most recently served as senior vice president of store operations.

Jack Williams Tire marked its 90th year in business in 2019. “Our plan for the next decade is to expand both our retail and wholesale locations through acquisitions and ground-up locations,” says Scott Williams, president and chief operating officer.

Automechanika Riyadh, Al Faisaliah Hotel, Prince Sultan Grand Hall, Riyadh, Saudi Arabia +971 4 389 4500 www.automechanikariyadh.com

Feb. 24-27 American Trucking Associations’ Technology & Maintenance Council Annual Meeting, Georgia World Congress Center, Atlanta, Ga. (703) 838-1763 https://tmcconnect.trucking.org

March 3-6 The Work Truck Show, Indiana Convention Center, Indianapolis, Ind. (800) 441-6832 www.worktruckshow.com

Advance Auto Parts buys DieHard brand Advance Auto Parts Inc. has acquired the DieHard brand from Transform Holdco LLC (“Transformco”) for $200 million.

The deal allows Advance Auto Parts to sell DieHard batteries and extend the DieHard brand into other automotive and vehicular categories.

In addition, the transaction gives Trans-

TIA partners with TRMG and adds two training programs

March 19-20 Northwest Tire Dealers Association Convention, Holiday Inn Airport, Portland, Ore. (509) 948-2433 www.nwtiredealers.org

March 20-21 North Carolina Tire Dealers Association Expo/Trade Show, Hilton Raleigh North Hills, Raleigh, N.C. (877) 784-0111 www.nctda.com/convention

March 26-28 Mid-America Trucking Show, Kentucky Fair & Exhibition Center, Louisville, Ky. (502) 899-3892 www.truckingshow.com

16

formco, which is the parent company of Sears and Kmart, the ability to sell DieHard brand batteries through its existing channels, pursuant to a supply agreement with Advance Auto Parts.

Advance Auto Parts operates 4,891 stores throughout the United States, Canada, Puerto Rico and the U.S. Virgin Islands.

T

he Tire Industry Association (TIA) is partnering with a retreading authority and releasing two new training programs in its ongoing efforts to improve tire safety.

TIA’s new partner is the Tread Rubber and Tire Repair Materials Manufacturers Group (TRMG).

Through the partnership, TRMG will make its 18 retread and repair recommended practices available to the industry through TIA’s website at www. tireindustry.org.

TRMG membership is comprised of the top retread, repair and equipment manufacturers in North America.

The recommended practices address a variety of subjects related to retreading

and tire repair, and will be available for download for use in training or other educational pursuits.

TIA has also added two training programs to its Online University.

The new 100-Level Intro to Automotive Tire Service (ATS) is aimed at industry professionals who do not service tires but need to know the basics of the tools, procedures and guidelines for servicing passenger and light truck tire and wheel assemblies.

TIA also offers a Certified ATS program at the 300 and 400 levels. The course provides comprehensive, in-depth instruction on recommended procedures and includes an exclusive module on tire conditions analysis. ■ MTD January 2020

©GETTYIMAGES.COM/NASTASSIA_BAS

318 million

Number of tires produced by Lego per year — more tires than any other tire manufacturer.

SOURCE: WWW.INTEGRATIRE.COM

1914

31,842

The year Vogue Tyres of Chicago invented the whitewall tire.

It had a carbon black tread melded with a zinc white sidewall.

Whitewalls were originally on both sidewalls because cars had open fenders and you could see both sides of the tires as cars drove by.

SOURCE: ASE (NATIONAL INSTITUTE FOR AUTOMOTIVE SERVICE EXCELLENCE). WWW.ASE.COM

©GETTYIMAGES.COM/NASTASIC

COURTESY OF VOGUE TYRE & RUBBER CO.

Number of medium/truck technicians in the U.S. in 2018.

SOURCE: WWW.PERFORMANCEPLUSTIRE.COM

40% / 38% / 22%

©GETTYIMAGES.COM/METAMORWORKS

The percent of American cars powered by steam, electricity and gasoline, respectively, in 1900.

SOURCE: WWW.FACTSLIDES.COM

©GETTYIMAGES.COM/JITALIA17

18

©GETTYIMAGES.COM/ANTONIO_DIAZ

NumbersThatCount

Relevant statistics from an industry in constant motion

90%

50%

Percent of cars in the world that were Fords in 1924.

SOURCE: WWW.LOUWMANMUSEAUM.COM

Percent of auto accidents that could be eliminated with a widespread embrace of self-driving vehicles. Up to $190 million in damages and health costs and thousands of lives could be saved per year, too, according to a report by McKinsey & Co. SOURCE: WWW.WSJ.COM

MTD January 2020

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Industry analysis

Full speed ahead ANALYST JOHN HEALY TALKS M&A, THE FUTURE OF TIRE DISTRIBUTION, THE HEALTH OF ATD, THE IMPACT OF AMAZON, TIRE MANUFACTURING INVESTMENT IN THE U.S. AND MORE By

N

obody can say that 2019 was a quiet year for the North American tire industry. And the new year is already shaping up to be equally actionpacked as tire manufacturers, distributors and dealers continue to jockey for position in an increasingly unpredictable marketplace.

In this exclusive interview, John Healy, a managing director and research analyst with Cleveland, Ohio-based Northcoast Research Holdings LLC and author of MTD’s monthly Your Marketplace column, analyzes the year that was and discusses what 2020 will hold.

MTD: What was the most significant trend that emerged last year and how did that impact independent tire dealers?

Healy: To us, the story of 2018 seemed to be changes in distribution. In 2019, it seems like it was all about changes in manufacturing and where manufacturers built their product and installers sourced their inventory.

We noted major changes at companies like Cooper Tire & Rubber Co. This year, like other (tire makers), Cooper began to realign its manufacturing footprint in Asia with truck and bus radial (TBR) production moving from China to Vietnam. Goodyear Tire & Rubber Co. also made announcements of change, with modernization plans in facilities in Europe, as well as initial efforts at the company’s Gadsden, Ala., facility.

While some manufacturers were making changes, others were making announcements of new facilities. We saw new facility openings by Nokian Tyres plc and Bridgestone Americas Inc., as well as expansion plans by companies like Toyo Tire U.S.A. Corp. and Continental Tire

20

Mike Manges

the Americas LLC. Frankly, almost every tire manufacturer that we keep our eyes on made some sort of meaningful change to its production approach as the industry looks to bring down costs and also be closer to the end-market consumer, as the global trade landscape continues to be complicated.

MTD: When it comes to mergers and acquisitions, what do you foresee happening at the tire manufacturer, wholesale-distribution and retail levels in 2020? Do you see more tire makerdriven wholesale-distribution alliances, joint ventures, etc., like National Tire Wholesale (Michelin North America Inc. and Sumitomo Corporation of Americas) and TireHub (Bridgestone and Goodyear), forming? What about independent, wholesale distributor-driven partnerships like Tire Distributors of America LLC, which is owned by Max Finkelstein Inc. and Treadmaxx Tire Distributors Inc.?

Has the wholesale-distribution channel reached a mergers and acquisition saturation point?

Healy: As it relates to mergers and acquisitions, we expect a mixed level of activity in 2020. As it relates to distribution alliances, we expect more stability than action on that front as alliances continue to be shaped and strategies going to market are firmed up and implemented. From our perspective, most of the alliances formed over the last two years are still in early stages of integration and customer acquisition/retention. We think it will be at least another year before more meaningful changes take place in the distribution world.

That said, we expect merger and acquisition activity at the tire dealer level to remain robust. We continue to see a very active

Monro Inc., including this year’s efforts to move westward in terms of expansion efforts. Beyond Monro, there are multiple private equity groups which appear visible in their interests in assets. Looking to 2020, with an election on the horizon and another successful year in 2019, we think it’s reasonable that dealers might look to be more willing sellers than in years past.

MTD: Is there still a place for the smaller wholesale-distributor in today’s landscape? Why? Healy: Without a doubt. From our perspective, two items still ring true today: people do business with people, and tires are sold more than they are bought. We view the choice to have your vehicle serviced is driven by two factors: price and confidence in the work. Given this, while large retailers or mega- dealer bases might be able to beat independents on price, there is no reason that they should consistently win on service levels. We believe treating the customer right and having a staff that is well- trained at the point of sale is key to winning for independents. Giving customers the information they need to confidently buy a tire is the ultimate goal, and we believe independents can do this as well as the big guys.

MTD: Monro continues to populate its geographic white space with strategic acquisitions. The company also is transitioning select locations to what it calls a more “tire-oriented” banner. What are your thoughts on Monro’s growth and branding strategy, particularly the chain’s push into the western U.S.? Do you think a point will arrive when Monro will ease off the accelerator when it comes to acquisitions?

MTD January 2020

Healy: Acquisitions have been a significant part of the growth strategy at Monro, and we do not see this changing. Over the past three years, Monro has spent roughly $230 million and completed the acquisition of 168 stores. This compares to around $360 million spent and 289 stores opened over the prior five-year period. So yes, the pace of acquisition has moderated some and the assets that have been acquired have pivoted a bit towards larger proprieties.

As it relates to what assets might be the most of interest to Monro, it’s always hard to tell. Recent efforts to establish itself in the western region (of the U.S.) seem logical as the company continues to move towards where the car population resides. That said, Monro is not forgetting about its business in the east. The acquisition of Free Tire Service in May 2018 was an example of a sizeable, quality operation acquired by Monro, which fits in nicely with existing operations. These types of acquisitions are still likely very much of interest to the company.

MTD: Greenbriar Equity Group/GB Auto Service has emerged as a big player, having made a number of high-profile independent tire dealer acquisitions over the last two years. Is the independent tire dealer market ripe for more private equity group activity?

Healy: Independent tire dealers, in our view, remain quality unique strategic assets. We expect acquisitions of dealers will continue to remain at a robust level as we believe private equity buyers look to expand and fill in geographical gaps as they build out scale.

From a big picture standpoint, servicing fleets as it relates to mobility offerings remains a strategic goal for a number of outfits. Having more geographical reach to be where the cars are located is a requirement.

Additionally, the economics of tire dealerships are still rather sound and can be enhanced with sourcing power and branding. Given this, scale and fit are always priorities for acquirers.

MTD: Amazon.com added tire installation to its check-out process in 2018 and since then has partnered with three retailers – Monro, Pep Boys – Manny, Moe & Jack and Sears Auto Centers – to build its nationwide installer network. Will we see independent tire dealers enroll w w w . M o d e r n T i r e D e a l e r. c o m

as Amazon installers? What impact will Amazon have on our industry, both in the new year and long-term?

Healy: Theoretically, the potential is there for this to happen. Look at how Amazon is partnering with local level support for last-mile delivery. Getting the product to the customer and, in this case, the tires on the vehicle, is essential.

While we have not yet seen Amazon expand its direct partnerships with independent retailers, we do believe the potential exists. Do we see it happening in 2020? Our first reaction is, ‘Probably not,’ but we do see the potential for it over the long run.

Overall, we view the impact (of Amazon), to date, as very modest. Multiple times this year, we spent time surveying large retail outfits that have partnered with Amazon for installation. The results of our survey work would indicate that the average Sears location continues to do maybe five to 10 installations per week, with Monro and Pep Boys locations in the low single digits.

While we would be naive to think share

‘WE EXPECT ACQUISITIONS OF DEALERS WILL CONTINUE AT A ROBUST LEVEL.’ will not shift online in time, we believe over the long-term that the economics of tire installation will be unchanged as installers earn more on the installation process.

MTD: Cooper and Sailun Vietnam Co. Ltd.’s joint venture in Vietnam recently produced its first truck tire. This past summer, China Manufacturers Alliance LLC announced that its Double Coin truck tire plant in Thailand had reached full capacity. During the 2019 Specialty Equipment Manufacturers Association Show, many Asian tire manufacturers touted the fact that their products are not made in China. Will companies continue to move truck tire production to other low-cost, southeast Asian countries due to tariffs imposed on Chinese-made truck tires? What other impacts will tariffs have on the truck tire market?

Healy: The situation and corresponding

behavior of manufacturers continues to be rather fluid as it relates to China and tariffs. Over the last 18 to 24 months, the situation relating to tariffs has caused a meaningful level of sourcing changes, not just for tires but all facets of manufacturing.

We estimate that approximately 12 million tires being produced in China have shifted to other regions as manufacturers look to adapt profitability economics to the evolving global trade environment.

We are hopeful that the U.S. and China will agree to a longer-term economic framework that upholds the integrity of research and development, and the concepts of free and equitable trading. But to answer the question directly, we think that changes were made in 2019 and the benefits of these adjustments will be achieved in 2020.

Moving production from one country to another is not an easy, quick, or inexpensive undertaking. We believe recent changes in production flows will likely remain in place, even after a trade deal is struck.

We see vacated capacity in regions like China as being filled over the long run to service emerging demand growth in the region, as well as in parts of Europe.

Overall, we see global demand for tires growing modestly in mature markets and more robustly in emerging markets, as well as the size of tire fitments increasing, which reduces capacity. We see regions across Asia, including China, as areas where this capacity will likely be sourced.

MTD: Nokian recently opened its first-ever plant in the U.S. Toyo plans to expand annual production at its Bartow County, Ga., plant by more than one million tires.

Continental’s new plant in Mississippi will start making truck tires in 2020. However, other tire makers have put investments in U.S. manufacturing plants on-hold for now. Will more off-shore-based tire manufacturers continue to invest in North American production facilities in 2020 or will we see more pullbacks?

Healy: Looking at 2019, we saw two major items: growth in the U.S. replacement tire market, and sourcing of tires globally become more complicated. We believe over the long run that emerging markets in Europe, Latin America, and Asia, which have been pockets of tire production, will increasingly become consumption markets, as well.

In the long run, we expect that the car

21

Industry analysis population, miles driven, and the demand for tires in these markets will all outpace that of the more mature U.S. market.

We think a developing/continuing trend will likely be to produce products closer to where (companies) are selling product.

Given this, and what could be a revival in manufacturing in the U.S., we see not only internationally domiciled, but also U.S.domiciled, operators looking to have their U.S. production (located) in North America.

MTD: From your perspective, what is the overall health of American Tire Distributors Inc. (ATD) and its position in the marketplace, one year after bankruptcy?

And how has ATD’s Tire Pros program been impacted by the last few years that ATD has experienced?

Healy: The situation at ATD has gone from critical to stable, and to now improving. We hear good things from dealers about service levels at ATD and hear from manufacturers that ATD is an important partner in their distribution.

As it relates to ATD’s Tire Pros program,

TRIANGLE TIRE USA

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MTD: Several tire manufacturers announced price hikes in 2019. Are these price increases sticking, and if so, why? Will tire makers continue to see

‘WE HAVE SEEN MIXED REACTION TO RECENT PRICE HIKES, FROM MANUFACTURERS AND AT RETAIL.’ an increase in raw material and other costs in 2020?

Healy: At a high level, we would (place) price actions over the last 12 months or so in two buckets: those relating to raw material-based increases on replacement consumer tires and those relating to TBR tires, as they related to tariffs. Largely

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our sense is that their business has continued to make improvements and strides. Locations have grown roughly by 3% compared to 2018.

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speaking, we believe most of the price actions introduced in the fall of 2018 and early 2019 have been passed through dealers and absorbed by the customer.

That said, recent price hikes in the fall of 2019 appear to be less consistent than those that were introduced in the prior year. We have seen fewer manufacturers approach the market and have seen some modest increases in commentary from dealers on year-end bonuses/incentives, which may erode some of the price hikes.

MTD: How have dealers responded to the latest wave of price increases?

Healy: We have seen mixed reaction to recent price hikes, both from manufacturers and at retail. Given that raw material prices have shown some level of abatement over the past six months and two rounds of price actions have occurred over the last 18 months, we would not be surprised if we are in a holding pattern.

We track key input costs to make a basic replacement tire. Our raw material tracker suggests that input costs in holding raws

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Industry analysis steady for 2020 would result in a raw material tailwind of 3.3% for tire manufacturers.

The biggest item that would make us move to a view that additional price actions are on the horizon for 2020 is if raw material prices move higher.

At this point, it’s too early to tell how they will move as the global environment remains uneven and demand trends, by geography, are mixed.

MTD: With the next U.S. presidential election less than one year away, what should independent tire dealers look — and listen — for during the upcoming election cycle?

Healy: Outside of weather conditions and unplanned maintenance needs, the health of the consumer is the driving force to automotive related spending. That will be key as we move into 2020. As we look at the last few election cycles, we note a trend of mixed results that show relatively no correlation between the industry and the lead-up to an election.

In assessing the 2016 time frame, we note replacement tire shipments for the industry were up 2.4% for the year, while increasing 6.1% in the three months leading up to the election.

In assessing the 2012 time frame, we note that replacement tire

‘ONLY 7% OF TIRE PURCHASES ARE DONE OVER THE WEB.’ shipments for the industry were down 1.9% for the year, while decreasing 2.7% in the three months leading up to the election.

From this limited sample, it appears that the months preceding the election are a magnification of the trend seen for the whole year.

Given this, we would urge dealers to watch the customer closely!

MTD: Let’s say you both retail and wholesale tires. If you only have time to pay attention to one thing that will affect your business in 2020, what is it and why?

Healy: Knowing the needs of your customer is always key to serving them well. I would closely monitor how the world of e-commerce is shaping trends in the tire retailing business. It would be naive to think that tires will not be a category that will be shaped in the future by factors relating to e-commerce.

Currently, we estimate 42% of tire buyers do research online for tires before purchasing, but only 7% of tire purchases are done over the web. We see this as a function of tires being sold and not bought — meaning the counter rep at the dealer’s location has a huge influence on the buying decision. Customers are still getting comfortable with the idea of buying tires online and having them installed at a physical location.

Will this be the case in five years? That’s hard to know. We think it’s more likely than unlikely.

We think tire dealers should contemplate a future business analysis of how they can win by selling and installing tires, while also a scenario where are tires are bought online and dealers are utilized more for service and installation needs.

MTD: Thanks for the insights, John. ■

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MTD January 2020

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

Dealers report continued unit sales improvement By

John Healy

O

ur recent conversations with dealers leave us with the view that retail sell-out trends showed stability in November, with a slight drop in momentum from October. From a volume standpoint, surveyed dealers saw unit sales improve by roughly 1% to 2% compared to the prior year’s period, which was still the fourth highest observed growth rate in our tire demand index for the year.

RAW MATERIAL COSTS CONTINUE TO FALL

Looking at the recent trajectory of raw material costs, the cost of raw materials to make a common replacement vehicle tire fell 2.3% on a year-over-year basis in November, while increasing 0.8% from October. This is rather notable as this marks the fifth consecutive month that our raw material index has declined on a year-over-year basis, which last occurred in April 2018.

Raw material costs fell approximately 5.6% year-over-year through the fourth quarter of 2019. Holding current spot prices flat would yield a 4.2% year-over-year decrease in input costs during the fourth quarter to “build a tire,” or minus 1.3%, from 3Q 2019 to 4Q 2019.

However, notable movements lower in raw material cost pressures have begun to subside. Raw material prices were projected to fall 4.4% year-over-year during the fourth quarter of 2019, while sequentially

decreasing 1.5% from 3Q 2019 to 4Q 2019.

In assessing raw material price movements, we note that carbon black has begun to see its cost pressures subside on a year-overyear basis, as price decreases of 3.8% is the second month in the row that prices have fallen for the input, after a 1.5% decrease that started the trend in October. This decreased pricing has continued the massive turnaround for carbon black, as pricing had been in double digit, year-over-year growth mode for each month, going back to the beginning of 2018.

Natural rubber prices rose 18% yearover-year in November, while showing more moderate gains (a 5% increase) on a monthly basis from September. Crude oil prices have experienced notable cost pressures since peaking back in April, with double digit, year-over-year growth in the months leading up to November. Lastly, synthetic rubber costs have remained negative for eight straight months year-overyear and price pressures on reinforcement items (cord, fabric and other components) continue to track negative year-over-year at an upper to mid-single-digit rate.

Although tire industry profit levels are often held hostage by raw material cost inflation, weather patterns, and competitive dynamics (supply/demand, capacity additions, etc.), we believe that the market continues to strengthen and that the outlook remains healthy for dealers and wholesalers.

In fact, we note that the majority of individuals in the dealer community with whom we have spoken last month have an

Snapshot of dealers’ PLT tire volumes (year-over-year change) Aug ’18

Sep ’18

Oct ’18

Aug ’19

Sep ’19

Oct ’19

Average

Increase

41%

51%

32%

64%

38%

50%

41%

Flat

42%

17%

44%

29%

39%

30%

30%

Decline

17%

32%

24%

7%

23%

20%

29%

Total

100%

100%

100%

100%

100%

100%

100%

SOOURCE: NORTHCOAST RESEARCH ESTIMATES

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

upbeat outlook for volume trends going forward, driven by the following factors: 1. Continued expansion of the car parc, including an uptick in the number of cars entering the first replacement cycle; 2. The ongoing belief that there is a modest amount of pent-up demand on the sidelines from deferred maintenance, especially given the lackluster results throughout 2017 and most of 2018; 3. Continued upward trajectory of miles driven, and; 4. A solid economic backdrop that has created a healthy, confident consumer. As such, we expect sell-out trends in 4Q19 and 2020 to become more aligned with this level of GDP growth.

SELLOUT LEVELS REMAIN ELEVATED

Recent dealer commentary suggests that consumer demand for passenger/light truck replacement tires rose in November, compared to the prior year’s period. The net number of respondents indicating they saw an increase in demand year-over-year was 25% versus November 2018’s 36.6% of contacts who reported that they experienced growth.

We note that our tire demand index was down 8.5% year-over-year, and down 3.8% from October. But we continue to hold the perspective that volumes are becoming more closely aligned with the current level of GDP growth as our dealer contacts have still seen an impressive 17 straight months of positive volume growth.

This view is reinforced due to a more stable industry backdrop that sees raw material cost pressures declining and we continue to expect mix trends to improve throughout the rest of the year. ■ 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.

27

2020 Facts Section: Overview

INDUSTRY SNAPSHOT MARKET SHARE, SHIPMENTS, PRICING AND MORE: MTD’S FACTS ISSUE DETAILS THE STATE OF OUR INDUSTRY AS 2020 BEGINS

By

Mike Manges

M

ay you live in interesting times” isn’t just an old expression. It aptly sums up the state of the North American tire industry at the dealer, wholesale-distribution and manufacturer levels as 2020 begins.

DEALERS: MORE M&A

Last year was marked by intensified merger and acquisition activity at the independent tire dealer level, which remains the strongest tire distribution channel, representing 63% of all consumer tire retail sales.

Monro Inc. continued to aggressively expand its footprint with the acquisition of 14 locations in Nevada, nine locations

in California and four locations in Idaho, all of which bring an estimated $45 million in annualized sales to the Rochester, N.Y.-based chain and are expected to close during the third quarter of Monro’s fiscal 2020 year. Monro also closed on the acquisition of eight locations in Louisiana, giving it 20 locations in that state.

Greenbriar Equity Group LP acquired 18 stores in Texas that operated under the Lamb’s Tire & Automotive Service banner, giving Greenbriar more than 80 outlets in the southwestern U.S. Over the last two years, the firm has acquired Evans Tire & Service Centers (18 stores); Ramona Tire Inc. (17 stores); Tire Works Total Car Care (15 stores); and other chains.

U.S REPLACEMENT TIRE SALES, 2019-2016 (IN BILLIONS OF DOLLARS)

In 2019, the U.S. replacement tire market was worth $43.2 billion.

Tires

2019

2018

2017

2016

Passenger

$28.2

$26.9

$25.5

$24.9

Light truck

$5.7

$5.4

$5.3

$5.1

Truck

$6.9

$7.5

$6.8

$6.3

OTR

$1.8

$1.8

$1.7

$1.6

Farm

$.592

$.622

$.535

$.512

Leeds West Groups boosted its footprint with the acquisition of six stores in New Mexico. Goodyear Tire & Rubber Co. made headlines when it acquired Evansville, Ind.-based Raben Tire Co. from private equity group Palladium Partners LLC for an undisclosed sum. The deal gives Goodyear nine retail-only stores, 10 commercialonly outlets, 11 combined retail/commercial stores, three retread plants and two wholesale-distribution facilities that all operate under the Raben Tire banner.

And in one of the most significant developments to hit the independent tire dealer channel in several years, the board of Les Schwab Tire Centers Inc. put the 492-location dealership up for sale. Gold-

U.S. TIRE SALES MARGINS

Tire segment

2019

2018

2017

Retail passenger

30.0%

24.2%

24.8%

Retail light truck

25.3%

22.8%

24.6%

Commercial light truck

21.3%

21.2%

20.5%

Medium/heavy truck

15.4%

15.6%

16.8%

Wholesale passenger

13.5%

12.2%

11.7%

Wholesale truck

8.8%

11.3%

19.4%

All figures in this 16-page Facts Section are Modern Tire Dealer figures unless otherwise noted.

28

MTD January 2020

man Sachs Group Inc. has been hired to find a buyer for the chain, which operates throughout 10 western states and is the fifth largest independent tire dealership in the U.S., according to the 2019 Modern Tire Dealer 100.

The reported asking price? At least $3 billion. (Les Schwab generated $1.8 billion in retail sales as of September 2019.)

More merger and acquisition activity is expected in 2020, according to John Healy, author of MTD’s monthly Marketplace column and managing director and research analyst with Cleveland, Ohio-based Northcoast Research Holdings LLC. “Independent tire dealers, in our view, remain unique strategic assets,” Healy states in his exclusive look at what’s to come in 2020, which starts on page 20 of this issue of MTD. “We expect acquisitions of dealers will continue to remain at a robust level as we believe private equity buyers look to expand and fill in geographical gaps as they build out scale.”

WHOLESALE: HOLDING STEADY

The independent wholesale-distribution channel continues to evolve.

TireHub LLC, the joint venture that Bridgestone Americas Inc. and Goodyear established in 2018, entered two new markets last year: Minnesota and South Carolina.

Meanwhile, Michelin North America Inc. and Sumitomo Corporation of Americas continued to shore up their National Tire Wholesale joint venture, which also was formed in 2018.

And American Tire Distributors Inc. (ATD) began its road to recovery, which included a mid-2019 senior leadership realignment, after emerging from bankruptcy. “The situation at ATD has gone from critical to stable, and to now improving,” Healy notes.

TIRE MAKERS: BACK TO THE U.S.A.

Tire manufacturers Continental AG, Nokian Tyres plc and Toyo Tire USA Corp. announced significant investments in their U.S.-based manufacturing capabilities that will come to fruition in 2020.

Continental is investing $1.4 billion in what will be its “first new plant dedicated to truck tires in the world” in Mississippi.

The facility will start making truck and bus tires for the U.S. market later this year. In a bid to double its North American sales over the next several years, Nokian will soon begin production at a new plant in Tennessee that will ultimately manufacture four million passenger and light truck tires a year when operating at full capacity.

And Toyo is expanding annual production at its plant in Georgia by more than one million tires. Target capacity for the facility will be between 12.5 and 13 million tires a year, mostly light truck tires.

Not all tire makers are following suit, however. Balkrishna Industries Ltd. has put its plans for a U.S. OTR tire plant on hold due to sufficient, existing capacity at the company’s other factories. Goodyear is trimming its Gadsden, Ala., plant workforce by nearly 750 employees as part of the firm’s plan to curtail production of tires for declining segments of the market.

OTHER TRENDS

Continental is on the move. Tire manufacturers continue to jockey for position on a global scale. Bridgestone Corp. and Groupe Michelin maintained the number one and number two positions, respectively, on MTD’s World Leaders in New Tire Sales list (page 32), with estimated, full-year global sales of $26.7 billion for Bridgestone versus $27.4 billion in 2018, and an estimated $25.3 billion in sales for Michelin, up from $24.6 billion the previous year.

NEW P-METRIC AND LT TIRE SIZES/SKUS IN 2020 (NOT INCLUDING TEMPORARY SPARES)

P155/65R13 XL 315/60R20 315/45R22 LT255/60R18 LRC/D/E 34x11.50R20LT LRE 33x12.50R24LT LRE/F

SOURCE: TIRE & RIM ASSOCIATION

195/50R17 305/55R22 315/45R24 LT265/50R20 LRE 33x13.50R20LT LRF 35x12.50R24LT LRE/F

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

265/60R20 265/50R22 XL LT275/80R18 LRE LT295/50R22 LRD/E 42x13.50R20LT LRC 38x13.50R24LT LRE/F

For the first time, Continental AG’s estimated total global sales ($12.9 billion) could eclipse Goodyear’s estimated total global sales ($12.5 billion) if the two companies’ year-end 2019 sales totals match MTD’s projections.

Rounding out the global “top five,” Sumitomo Rubber Industries Ltd.’s estimated annual sales for 2019 will have remained flat at $6.9 billion, according to MTD projections.

Chinese imports plummet. Aggressive tariff actions by the U.S. government contributed to a massive 94% decline in the number of passenger and light truck tire imports from China. As offshore tire manufacturers have shifted production to other low-cost Asian countries, Thailand has climbed to the top of the U.S. Consumer Tire Importer list (page 30.)

Slightly more than 45 million consumer tire units were shipped from Thailand in 2019, up from 40.5 million units during the preceding year and a 10-million unit jump from 2017.

Consumer tire imports from Mexico, Vietnam, Japan, Taiwan, Chile and Brazil also increased. Countries that saw declines in total imports to the U.S. from 2018 to 2019 include Canada and Indonesia.

Imports from South Korea stayed flat at 19.3 million units.

Price hikes are holding. Several tire manufacturers announced price increases, which “were largely achieved,” according to Healy. “From our perspective, given the healthy levels of demand, dealers were able to pass these price hikes along to the customer without meaningful erosion, in terms of demand. It appears the industry continues toward working to achieve better profits on a per-tire basis.”

In 2019, the average price for a replacement passenger tire in the U.S. was $124.23.

THE REST OF THE WORLD

This edition of MTD’s annual Facts Issue also includes two never-before-seen pages: one that is an extension of our traditional Automotive Service section and provides detailed automotive aftermarket shop demographics, and another that provides shipment numbers and brand market share breakdowns for three regions outside of North America: Europe, the Middle East and Africa; Central and South America; and the Asia-Pacific region, including China and India. ■

29

2020 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

2019

222.7

45.1

2019

32.0

5.9

2019

18.9

6.5

2018

217.0

47.0

2018

31.1

5.6

2018

21.0

6.2

2017

209.3

46.0

2017

30.8

5.4

2017

19.2

5.7

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

U.S. PASSENGER TIRE IMPORTS, 2019 (IN MILLIONS OF UNITS)

U.S. CONSUMER TIRE IMPORTS, 2019 (IN MILLIONS OF UNITS)

Country

2019

2018

% change

Country

2019

2018

% change

Thailand

37.4

33.8

+10.6%

Thailand

45.1

40.5

+11.3%

South Korea

17.3

16.7

+3.6%

South Korea

19.3

19.3

+0%

Mexico

13.9

11.8

+17.8%

Canada

15.8

16.1

-1.8%

Canada

12.4

11.9

+4.2%

Mexico

15.5

13.2

+17.4%

Indonesia

12.0

12.8

-6.2%

Indonesia

14.0

14.7

-4.7%

Vietnam

9.7

8.5

+14.1%

Vietnam

11.9

10.6

+12.2%

Japan

8.7

7.9

+10.1%

Japan

11.0

9.7

+13.4%

Taiwan

8.4

8.1

+3.7%

Taiwan

9.0

8.7

+3.4%

Chile

5.6

4.6

+21.7%

Chile

6.2

5.0

+24%

Philippines

3.6

2.8

+28.5%

Brazil

4.3

4.2

+2.3%

Germany

3.2

3.2

+0%

Brazil

3.1

3.4

-8.8%

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 94% to 3.4 million units.

U.S. TRUCK TIRE IMPORTS, 2019 (IN MILLIONS OF UNITS)

30

Country

2019

2018

% change

2019

2018

% change

Thailand

4.5

2.4

+87.5%

Country South Korea

0.6

0.4

+50%

China

3.2

9.2

-65.2%

Spain

0.5

0.3

+66.6%

Canada

1.7

1.5

+13.4%

Germany

0.4

0.4

+0%

Japan

1.4

1.3

+7.7%

Brazil

0.4

0.3

+33.3%

Vietnam

0.6

0.3

+100%

India

0.3

0.1

+200%

MTD January 2020

2020 Facts Section: Market share

2019 U.S. REPLACEMENT PASSENGER LT TIRE TIRE BRAND BRAND SHARES SHARES (BASED ON 222.7 MILLION UNITS)

(BASED ON 32 MILLION UNITS)

Brand 2019 Goodyear ........................ 12.0% Michelin ............................ 9.5% Bridgestone....................... 7.0% Firestone ........................... 7.0% BFGoodrich...................... 4.5% Continental....................... 4.5% Cooper .............................. 4.5% Falken ................................ 3.5% Hankook ........................... 3.5% Yokohama ......................... 3.5% General.............................. 3.0% Kumho .............................. 3.0% Multi-Mile ........................ 2.5% Nexen ................................ 2.5% Pirelli ................................. 2.5% Toyo ................................... 2.5% Sumitomo ......................... 2.0% Uniroyal ............................ 2.0% GT Radial ......................... 1.5% Hercules ............................ 1.5% Kelly................................... 1.5% Nitto .................................. 1.5% Primewell .......................... 1.5% Sailun................................. 1.5% Big O.................................. 1.0% Cordovan .......................... 1.0% Dunlop .............................. 1.0% Mastercraft........................ 1.0% Sentury .............................. 1.0% Sigma ................................. 1.0% Others ............................... 6.5%

Brand 2019 Goodyear ........................ 11.0% BFGoodrich...................... 8.0% Michelin ............................ 7.0% Bridgestone....................... 6.5% Firestone ........................... 6.5% Cooper .............................. 5.5% General.............................. 5.5% Toyo ................................... 5.0% Yokohama ......................... 5.0% Hankook ........................... 4.0% Multi-Mile ........................ 3.5% Falken ................................ 3.0% Kumho .............................. 2.5% Pirelli ................................. 2.5% Continental....................... 2.0% Hercules ............................ 2.0% Maxxis ............................... 2.0% Uniroyal ............................ 2.0% Cordovan .......................... 1.5% Kelly................................... 1.5% Nexen ................................ 1.5% Sailun................................. 1.5% Big O.................................. 1.0% Dunlop .............................. 1.0% GT Radial ......................... 1.0% Kenda ................................ 1.0% Mastercraft........................ 1.0% Nitto .................................. 1.0% Others ............................... 6.5%

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%.

32

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 2019; IN BILLIONS OF U.S. DOLLARS)

Tire company Bridgestone Corp.

Groupe Michelin Continental AG Goodyear Tire & Rubber Co. Sumitomo Rubber Industries Ltd. Pirelli & Cie SpA Hankook Tire Co. Yokohama Rubber Co. Zhongce Rubber Group Co. Ltd. Cheng Shin Rubber Ind. Co. Ltd.1 Giti Tire Pte. Ltd. Toyo Tire & Rubber Co. Ltd. Cooper Tire & Rubber Co. Kumho Tire Co. Inc.

2019 $26.7 $25.3 $12.9 $12.5 $6.9 $6.0 $5.9 $4.5 $4.0 $3.5 $3.4 $3.0 $2.6 $2.1

2018 $27.4 $24.6 $13.4 $13.1 $6.9 $6.1 $6.1 $4.7 $3.8 $3.6 $3.2 $3.0 $2.8 $2.3

Cheng Shin does business as Maxxis International.

1

2019 BRANDS LISTED

BY THE MTD 100 (TOTAL OUTLETS: 6,833)

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

Dealers/ outlets 83/5,826 78/5,997 75/5,571 75/5,474 68/5,892 62/5,130 61/3,353 59/4,365 59/3,273 54/5,007 50/5,307 43/4,610 41/4,950 38/2,731 36/3,630

2018 ranking 1 3 2 4 5 7 8 6 10 9 11 12 13 14 16

MTD January 2020

Dunlop

1.4%

Pirelli

4.4%

Nexen

1.4%

Firestone

3.6%

Others*

2.4%

15,000

* “OTHERS” REFERS TO FALKEN (1.2%), TOYO (1.2%) AND COOPER.

19

7.6%

18

Hankook

17,500

20

1.8%

17

Yokohama

20

13.2%

16

Bridgestone

20

1.9%

15

Kumho

20

15.0%

14

Continental

20

2.1%

13

BFGoodrich

20

19.6%

12

Michelin

20,000

20

2.5%

11

General

20

23.1%

10

Goodyear

20

2019

09

Brand

20

2019

22,500

08

Brand

25,000

20

(BASED ON 59 MILLION CONSUMER TIRE UNITS, EXCLUDING IMPORTED VEHICLES)

U.S. NEW-CAR FRANCHISES

20

2019 U.S./CANADIAN OE CONSUMER TIRE MARKET SHARE

SOURCE: NATIONAL AUTOMOBILE DEALERS ASSOCIATION

2019 U.S./CANADIAN OE CONSUMER TIRE BRAND SHARE BY VEHICLE MODEL (EXCLUDING IMPORTED VEHICLES)

BMW

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

FCA (FIAT CHRYSLER AUTOMOBILES)

Goodyear ............ 37% Michelin .............. 14% Bridgestone......... 13% Firestone ............... 7% Continental........... 5% Yokohama ............. 5% Falken .................... 4% BFGoodrich.......... 3% General.................. 3% Nexen ................... 3% Hankook ............... 2% Kumho .................. 2% Pirelli ..................... 2%

FORD

Goodyear ............ 24% Michelin .............. 24% Continental......... 20% Hankook ............. 10% Pirelli ..................... 8% General.................. 7% BFGoodrich.......... 4% Bridgestone........... 2% Toyo ....................... 1%

GENERAL MOTORS

Goodyear ............ 38% Michelin .............. 22% Bridgestone......... 14% Firestone ............. 12% 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

HONDA

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

HYUNDAI/KIA

Hankook ............. 41% Kumho ................ 30% Nexen .................. 19% Continental......... 10%

MERCEDES-BENZ

Continental......... 32% Pirelli ................... 26% Bridgestone......... 14% Michelin .............. 11% Dunlop .................. 8% Goodyear .............. 8% Cooper .................. 1%

NISSAN

TOYOTA

SUBARU

VOLKSWAGEN

Continental......... 29% Michelin .............. 28% Goodyear ............ 18% Falken .................... 6% Bridgestone........... 5% Toyo ....................... 5% BFGoodrich.......... 4% Hankook ............... 2% Dunlop .................. 1% General.................. 1% Kumho .................. 1% Bridgestone......... 57% Continental......... 27% Goodyear .............. 8% Falken .................... 6% Yokohama ............. 2%

TESLA

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

Bridgestone......... 25% Michelin .............. 25% Goodyear ............ 12% Dunlop .................. 7% Continental........... 6% Hankook ............... 6% BFGoodrich.......... 5% Toyo ....................... 5% Yokohama ............. 4% Firestone ............... 3% General.................. 2% Continental......... 46% Goodyear ............ 15% Kumho ................ 14% Hankook ............. 11% Falken .................... 9% Bridgestone........... 5%

VOLVO

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

33

2020 Facts Section: Tire distribution

U.S. CONSUMER TIRE RETAIL MARKET SHARE

TIRE MANUFACTURER JOINT VENTURE WHOLESALE OUTLETS IN THE U.S.

(SALES DIRECTLY TO THE END-USER)

61.5%

Mass merchandisers

10.5% 10.5%

11.5%

Warehouse clubs

8.5%

8.5%

9.0%

Auto dealerships

9.5%

9.5%

9.0%

Tire company-owned stores

6.0%

6.5%

6.5%

Miscellaneous outlets

2.5%

2.5%

2.5%

Online tire sellers, which include independent tire dealers like Tire Rack and Simple Tire, mass merchandisers like Amazon, and tire manufacturers like Goodyear, account for 8.5% 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

2019

2018

2017

Independent tire dealers

79.0% 79.5%

79.0%

Tire company stores

8.0%

7.0%

7.0%

Miscellaneous outlets

13.0% 13.5%

14.0%

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

2019 2018

NTW

2019 2018

Warehouse club

2019 2018 2017 2016

Sam’s Club

599

597

660

660

Costco Wholesale Corp.

546

533

518

506

BJ’s Warehouse Club Inc.

219

223

221

214

83 1111

0

30

60

90

144

120

150

144 FACILITIES ACROSS THE U.S. AT THE TIME OF THE MICHELIN NORTH AMERICA INC. AND SUMITOMO CORPORATION OF AMERICAS JOINT VENTURE ANNOUNCEMENT.

ANALYSIS: TIRE SELLING VS. INSTALLING More than 94% of the respondents to the 2019 BrightLine Tire Survey purchased their new tires from the tire installer.

94.2% in 2019

Installer

94.4% in 2018 3.7% in 2019

Online-only retailer

3.1% in 2018 1.5% in 2019

Different in-market retailer

1.9% in 2018 0.6% in 2019

Tire manufacturer

0.6% in 2018

“Younger respondents were more likely to buy from online tire retailers, a different in-market retailer or from the tire manufacturer,” says Randy Ladd, owner of BrightLine Marketing LLC. SOURCE: BRIGHTLINE MARKETING LLC (WWW.BRIGHTLINEMARKETING.COM)

COMPANY-OWNED RETAIL STORES IN THE U.S. 2,000

The number of warehouse clubs in the U.S. has grown only 2.4% 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 546. That’s an increase of 130%.

71

1

2,500

WAREHOUSE CLUB U.S. STORE COUNT

34

TireHub

Bridgestone 2,200 2,047

1,500 1,000

Goodyear

500 0

580

671 Nokia/Vianor 11

12

20 09

63.0% 62.5%

20 19

Independent tire dealers

20 09

2017

20 19

2018

20 09

2019

20 19

Distribution channel

MTD January 2020

2020 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: 7

13-inch: 14 16-inch: 61 19-inch: 28 22-inch: 10 26-inch: 1

14-inch: 26 17-inch: 60 20-inch: 33 23-inch: 2

One 17-inch size, two 20-inch sizes, three 22-inch sizes and one 24-inch size were added for 2020. Total P-metric/metric sizes: 365.

SOURCE: TIRE & RIM ASSOCIATION

AVAILABLE LTMETRIC SIZES BY RIM DIAMETER 14-inch: 6 17-inch: 30 22-inch: 17

15-inch: 18 18-inch: 32 24-inch: 8

16-inch: 37 20-inch: 23 26-inch: 3

Two 18-inch sizes, one 20-inch size and one 22-inch size were added for 2020. Total LT-metric sizes: 174.

SOURCE: TIRE & RIM ASSOCIATION

AVAILABLE LT HIGH FLOTATION SIZES BY RIM DIAMETER 14-inch: 1 18-inch: 15 24-inch: 8

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

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

Three 20-inch sizes and three 24-inch sizes were added for 2020. Total LT high flotation sizes: 93.

SOURCE: TIRE & RIM ASSOCIATION

MOST POPULAR DOMESTIC OE PASSENGER AND LT TIRE SIZES 2018 OE P-METRIC/METRIC

Size % of total 225/65R17........................ 4.1% 235/60R18........................ 3.8% 275/55R20........................ 3.5% 235/45R18........................ 3.3% 235/40R19........................ 3.0%

2017 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%

2016 OE P-METRIC/METRIC

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

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

2018 OE LIGHT TRUCK (LT)

Size % of total LT245/75R17 ................. 13.1% 235/65R16 LRC............. 11.8% LT275/70R18 ................. 10.3% LT275/65R18 ................... 8.6% LT225/75R16 ................... 8.3%

2017 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%

2016 OE LIGHT TRUCK (LT)

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)

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

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 fourth most popular LT replacement size in 2019, however.

SOURCE: USTMA

TOP U.S. REPLACEMENT TOP U.S. REPLACEMENT PASSENGER TIRE LIGHT TRUCK TIRE SIZES, 2019 SIZES, 2019 1. 225/65R17 2. 205/55R16 3. 215/55R17 4. 215/60R16 5. 195/65R15

36

6. 275/55R20 7. 265/70R17 8. 225/50R17 9. 235/60R18 10. 235/65R17

Three sizes dropped out of the top 10: 225/60R16, 225/55R17 and 225/60R17.

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

6. LT265/75R16 7. LT235/80R17 8. LT285/70R17 9. LT235/85R16 10. LT275/65R18

One size, 35x12.50R20LT, nearly made the top 10.

MTD January 2020

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0000 0000 0000 0000 Maxxis Authorized Dealer

2020 Facts Section: Tire pricing

2019 AVERAGE ADVERTISED TIRE PRICES

2019 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 $139.54 $151.88 $143.50 $136.52 $161.73 $148.48 $244.97 $190.00 $195.74 $229.17 $206.45

Low-cost $102.64 $100.58 $80.40 $72.40 $81.78 $94.27 $162.95 $111.52 $123.71 $154.43 $132.13

ADVERTISED WEB PRICING, WEEK OF DEC. 9, 2019

Overall $137.83 $143.97 $123.44 $113.48 $134.81 $123.03 $219.74 $155.73 $165.52 $200.81 $171.39

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

2019 ADVERTISED PRICING BREAKDOWN, 215/55R17 Speed V-rated H-rated T-rated

Low Cost Radial $79.72 $98.37 $100.33

Major $174.18 $151.39 $142.83

Overall $141.71 $137.18 $128.34

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

MICHELIN LTX AT2, SIZE LT245/75R16

GOODYEAR WRANGLER ATS, SIZE 265/70R17

Website Price americantiredepot.com ... $185.99 autotire.com ................ $242.99 bigotires.com ............... $213.29 canadiantire.com ........ $263.49 costco.com ................... $215.99 dunntire.com............... $199.98 fleetfarm.com .............. $223.99 grismertire.com .......... $199.99 hogantire.com ............. $223.00 kentowery.com ............ $238.99 mavistire.com .............. $206.00 monro.com .................. $235.32 mrtire.com ................... $225.89 ntb.com ........................ $217.77 samsclub.com .............. $224.07 simpletire.com ............ $223.99 sullivantire.com .......... $231.00 tireamerica.com .......... $204.99 thetirechoice.com ....... $209.24 thetireman.com........... $229.00 tirecrawler.com ........... $207.01 tirerack.com ................ $225.72 tireseasy.com ............... $235.00 townfairtire.com ......... $228.00

Website Price americantiredepot.com ... $121.99 belletire.com ................ $159.00 bigotires.com ............... $140.14 discounttiredirect.com .... $129.96 dunntire.com............... $152.99 fleetfarm.com .............. $151.99 flynnstire.com ............. $166.98 fountaintire.com ......... $254.99 goodyear.com .............. $154.00 hogantire.com ............. $156.00 jackwilliamstire.com.... $138.95 mavistire.com .............. $148.89 rabentire.com .............. $147.00 ntb.com ........................ $149.58 samsclub.com .............. $148.76 simpletire.com ............ $129.96 sullivantire.com .......... $162.00 tireamerica.com .......... $110.00 tirecrawler.com ........... $129.58 tirekingdom.com ........ $135.24 tirerack.com ................ $155.97 tires.com ...................... $145.95 thetireman.com........... $135.98 townfair.com ............... $158.00

Not all the websites were set up for selling online. For example, some of them offer up a quote and then require the customer to schedule an appointment â&#x20AC;&#x201D; with no money changing hands online.

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

PRICE POINT BREAKDOWN OF SIZE 205/55R16 BY REGION (FROM TIRE PRICES SAMPLED DEC. 5-12, 2019)

Region East North Central East South Central Middle Atlantic Mountain New England Pacific South Atlantic West North Central West South Central Nationally priced

OPP $65.79 $70.13 $70.53 $64.18 $74.10 $61.37 $67.26 $64.95 $65.88 $85.67

Value $93.71 $101.87 $93.13 $83.62 $98.52 $81.75 $93.43 $86.98 $90.26 $97.20

Better $114.58 $113.80 $120.65 $108.28 $125.67 $107.62 $112.13 $107.67 $107.77 $109.42

Best $137.60 $141.25 $140.30 $132.84 $148.39 $130.44 $136.46 $134.24 $133.95 $137.70

Winter $128.82 $135.91 $130.46 $127.95 $121.07 $127.27 $126.63 $128.50 $125.27 $146.06

Average $108.10 $112.59 $111.02 $103.38 $113.55 $101.69 $107.18 $104.47 $104.63 $115.21

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

38

MTD January 2020

SumitomoTruckTires.com.

For what drives you.

2020 Facts Section: Commercial tire market

2019 U.S. U.S. TRUCK TIRE IMPORTS FROM REPLACEMENT CHINA, 2019-2012 (IN MILLIONS OF UNITS) MEDIUM/ HEAVY TRUCK TIRE BRAND SHARES (BASED ON 18.9 MILLION UNITS)

Brand

2019

Bridgestone

13.5%

Michelin

13.5%

Goodyear

10.0%

Yokohama

8.5%

Firestone

7.0%

Continental

6.0%

Double Coin

4.0%

Hankook

3.0%

Roadmaster

3.0%

Hercules

2.5%

BFGoodrich

2.0%

Dynatrac

2.0%

Falken

2.0%

General

2.0%

Sailun

2.0%

Sumitomo

2.0%

Toyo

2.0%

Dayton

1.5%

Westlake

1.5%

Aeolus

1.0%

Gladiator

1.0%

Kelly

1.0%

Others

10.5%

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.

40

50% 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% -70% -80%

+41.5%

+30.1%

9.2 units

+14.6%

2019

2018

2017

2016

9.4 units

6.5 units

7.8 units

2015

8.2 units

+0.1%

+13.5%

6.3 units

6.3 units

2013

2012

2014

-17.0%

-20.5%

3.2 units

-65.2%

SOURCES: U.S. GOVERNMENT, MTD

2019 U.S. RETREADED TRUCK TIRE MARKET SHARE (BASED ON 14.5 MILLION UNITS) Goodyear 24%

Michelin/Oliver 22.5%

Bridgestone (Bandag) 44%

U.S. RETREADING, 2019

New truck tire units ........18.9 million Retreaded truck tires .......14.5 million Sales (without casings) ..... $2.4 billion Average retread cost .............. $165.90 Average mold cure price ....... $165.07 Average pre-cure price .......... $165.93 Average casing price .................$62.80 % precure units .............................97% Average sales margin....................20% No. of plants, truck tires ...............650 No. of plants, OTR tires ..................17

Marangoni 5.5% Continental 2% Others 2%

REPLACEMENT REAR FARM TIRES 2019 U.S SHIPMENTS: 685,750 (43.1% RADIAL)

Tire Market brand share BKT ...............32.8% Firestone .......23.9% Goodyear .......9.8% Alliance.........10.3% Michelin .........6.9% Titan ................5.0%

Tire Market brand share Harvest King..4.4% Trelleborg .......1.5% Carlisle ............1.1% Ceat .................1.0% Others .............3.3% Total ...............100%

MTD January 2020

INDEPENDENT but never alone...

www.na.marangoni.com

2020 Facts Section: Plant capacities

NORTH AMERICAN TIRE PLANT CAPACITIES AS OF JAN. 1, 2020 (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:

ISO certified

x

x x

x x x x x x x

x x

Carlstar Group LLC Jackson, Tenn., 2009 Clinton, Tenn. (Dico), 1974 Total:

x x

x x

Continental Tire the Americas LLC1 Sumter, S.C., 2013 Mount Vernon, Ill., 1973, 1988 Total:

x x

x

x

x x x

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.2 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

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 0.33 4.57 0.0 0.0 0.0 0.0 0.0 4.93

0.03 6.2 9.0 0.33 4.57 35.0 35.7 17.6 8.0 25.0 141.43

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

12.5 30.0 42.5

1.0 4.0 5.0

0.0 10.3 10.3

0.0 0.0 0.0

13.5 44.3 57.8

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

15.0 15.0

0.0 0.0

0.0 0.0

0.0 0.0

15.0 15.0

0.0 31.0 14.5 64.5 0.0 0.0 19.0 16.4 145.4

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 16.4 199.5

Hankook Tire America Corp.

Clarksville, Tenn., 2016 Total:

x

12.6 12.6

1.3 1.3

0.0 0.0

0.0 0.0

13.9 13.9

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

37.5 0.0 25.5 36.7 8.7 0.0 26.5

3.4 9.5 10.7 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 0.0 0.0 0.07 0.0

40.9 9.5 36.2 36.7 8.7 0.07 26.5

Michelin North America Inc. Ardmore, Okla., 1969 Dothan, Ala., 1979 Fort Wayne, Ind., 1961 Greenville, S.C., 1975 Greenville, S.C. (C3M), 1996 Piedmont, S.C. (Tweel), 2014 Lexington, S.C., 1981

42

Nonunion

x x x x x x

x

x

1 CONTINENTAL’S NEW TRUCK AND BUS TIRE PLANT IN CLINTON, MISS., IS EXPECTED TO START PRODUCTION IN MID-2020 AND WILL RAMP UP PRODUCTION THROUGH 2024.

2 MTD ESTIMATES CAPACITY AT GOODYEAR’S GADSDEN PLANT TO BE UNCHANGED FROM PRIOR YEARS; HOWEVER, THE PLANT’S CAPABILITY TO PRODUCE TO CAPACITY IS SEVERELY CHALLENGED DUE TO AN ESTIMATED TWO-THIRDS REDUCTION IN WORKFORCE FROM FULL EMPLOYMENT LEVELS FOLLOWING LAYOFFS IN 2019, INCLUDING 740 VOLUNTARY LAYOFFS REPORTED BY GOODYEAR IN A FORM 8-K/A FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOV. 21, 2019.

MTD ESTIMATES THE WORKFORCE TO BE APPROXIMATELY 635 EMPLOYEES AS OF JAN. 1, 2020.

Company/plant location/year constructed 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:

Nonunion x x x

ISO certified x

Passenger per day: 0.0 0.0 0.0 19.7 14.1 2.7 0.0 6.0 4.0 181.4

Light truck per day: 0.0 0.0 0.0 5.5 4.0 0.0 0.0 0.0 0.4 33.5

Truck per day: 0.0 6.4 0.0 0.0 0.0 0.0 7.0 0.0 0.0 13.4

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

Total 0.1 6.4 0.01 25.2 18.1 2.7 7.5 6.0 4.4 228.98

x x x x

Nokian Tyres plc3 Dayton, Tenn., 2019 Total:

x

x

1.7 1.7

1.1 1.1

0.0 0.0

0.0 0.0

2.8 2.8

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

7.3 7.3

2.7 2.7

2.3 2.3

5.0 5.0

17.3 17.3

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

36.5 36.5

10.0 10.0

0.0 0.0

0.0 0.0

46.5 46.5

0.0 0.0 0.0

0.0 0.0 0.0

0.0 0.0 0.0

0.07 0.5 0.57

0.0 25.7 25.7

0.0 1.1 1.1

3.0 0.0 3.0

0.0 0.0 0.0

3.0 26.8 29.8

0.0 0.0

14.2 14.2

3.8 3.8

0.0 0.0

18.0 18.0

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

552.82 46.10 93.20 692.12

108.18 11.30 38.00 157.48

53.80 7.00 8.10 68.9

76.06 13.50 0.14 89.70

790.86 77.90 139.44 1008.20

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

x

x

x

x

x

JK Tyre & Industries (formerly CIA Hulera Tornel) Mexico City, Mexico Tultitlan, Mexico Tacuba, Mexico Total: Corporacion de Occidente SA de CV (Cooper Tire) Guadalajara, Mexico, 2005 Total: U.S. Totals Canadian Totals Mexican Totals TOTAL:

x

x

0.07 0.5 0.57

NOKIAN TYRES IS SCHEDULED TO BEGIN PRODUCTION OF PASSENGER AND LIGHT TRUCK TIRES AT ITS DAYTON, TENN., FACTORY IN EARLY 2020. THIS YEAR, IT EXPECTS TO MAKE APPROXIMATELY 1 MILLION TIRES THERE. BY 2023, FULL CAPACITY IS EXPECTED TO REACH 4 MILLION TIRES PER YEAR. 3

43

2020 Facts Section: Automotive service

WHY DEALERS CHOOSE AUTO PART BRANDS Past experience................................58% Brand reputation.............................48% Warranty ..........................................47% Price ..................................................38% Brand availability ............................24%

HOW DEALERS COMPENSATE THEIR TECHNICIANS Salary and commission 37%

Salary only 11%

Technician recommendation .......14%

WHY DEALERS CHOOSE SUPPLIERS Good service ...............................89% Reasonable prices .......................82% Stock availability .........................76% Accessible location .....................62% Warranties ...................................43% Knowledgeable counter people ......42% Quality .........................................41%

Commission only 8%

Hourly 44%

INDEPENDENT TIRE DEALERSHIP PROFILE Average number of tire brands per outlet 13

At least 91% of techs are ASE-certified 12%

Average number of technicians per outlet 6

Total sales from automotive service 48%

Average number of service bays per outlet 7

Total profits from automotive service 47%

At least 51% of techs are ASE-certified 30%

Tire dealers with one location 59%

Brand names ...............................40% Reputation ...................................21% Other ..............................................4%

AUTO PARTS SUPPLIERS: MARKET SHARE 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%

44

MTD January 2020

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2020 Facts Section: Automotive service

SERVICE BAYS PER OUTLET Number of bays

% of dealers having

1

2%

2

8%

3

9%

4

13%

5

7%

6

12%

7

9%

8

12%

9

5%

10

7%

11

2%

12

4%

13

1%

14

2%

15

0%

Over 15

7%

SERVICE WORK OVERVIEW Average number of jobs/ month

Service

Average Average Average Average ticket annual annual profit price sales profit margin

Air conditioning

13

$542.91

$84,694 $33,031

39%

Alignment

79

$105.27

$99,796 $59,878

60%

Battery/electrical

22

$180.71

$47,707 $16,220

34%

Bearings/seals

12

$295.15

$42,502 $17,851

42%

Brakes

44

$301.17

$159,018 $81,099

51%

Chassis/suspension

56

$424.32

$285,143 $119,760

42%

Chemicals (injection cleaners, detergents, etc.)

12

$154.04

$22,182

$8,207

37%

Cooling systems

20

$202.84

$48,682 $23,367

48%

Electronic diagnosis

28

$211.83

$71,175 $30,605

43%

Engine repair/diagnostics/ tune-ups

20

$453.72

$108,893 $49,002

45%

Exhaust systems

12

$304.08

$43,788 $15,325

35%

Ignition and spark plug

14

$272.15

$45,721 $17,831

39%

Oil/lubrication

214

$52.47

$134,743 $45,813

34%

Shocks/struts

16

$638.50

$122,592 $45,359

37%

Tire pressure monitoring systems (TPMS)

105

$136.42

$171,889 $72,193

42%

Visibility (wipers)

35

$27.61

$11,596

47%

$5,450

The average price of mounting and balancing a tire is $15.95. The average number of mounting/balancing jobs per month per tire dealer is 332.

SOURCE: MTD 2018-19 AUTOMOTIVE SERVICE SURVEY

AUTOMOTIVE PARTS AND SERVICE SALES: LIGHT VEHICLE DEALERS VS. INDEPENDENTS, 2007-2022*

MARKET SHARE

SALES

(BY PERCENTAGE)

75% 67.6

(IN BILLIONS OF DOLLARS)

69.6 69.8 69.9 70.1 70.1 70.0 69.9 70.0 70.0 69.9 69.9

$250

65%

$200

55%

$150

45%

$100

35% 32.4 25%

2007

30.4 30.2 30.1 29.9 29.9 30.0 30.1 30.0 30.0 30.1 30.1 2012

2013# 2014# 2015# 2016# 2017# 2018# 2019*

Dealership Share Notes: # Estimate; * Forecast

2020*

2021*

Independent Share

SOURCE: 2020 AUTO CARE FACTBOOK, AUTO CARE ASSOCIATION/AASA CHANNEL FORECAST MODEL

46

2022*

178.3 165.8 171.7

186.1

207.0 214.3 194.2 200.0

221.7 228.5

236.1

140.6 94.9 98.2 101.9 85.8 88.9 91.9 82.9 79.6 76.6 67.3 72.5 74.2

$50 $0

2007

2012

2013# 2014# 2015# 2016# 2017# 2018# 2019*

Dealership Sales

2020*

2021*

2022*

Independent Sales

Notes: # Estimate; * Forecast

SOURCE: 2020 AUTO CARE FACTBOOK, AUTO CARE ASSOCIATION/AASA CHANNEL FORECAST MODEL

MTD January 2020

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 II 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

©2019 Toyo Tire U.S.A. Corp.

2020 Facts Section: Store demographics

TOTAL AUTO PARTS, ACCESSORIES, AND TIRE STORE EMPLOYEES

NUMBER OF WOMEN EMPLOYEES IN TIRE DEALERSHIPS

(U.S. ONLY, IN THOUSANDS)

580.0

!&" !%"

575.0 570.0

!$"

565.0 560.0 568.9 555.0

20 19 18 17

!!"

15

18.1

16

Ap

Oc t-1 8 No v18 De c18 Ja n19 Fe b19 M ar -1 9

This graph represents the total number of people employed within this segment of the industry, including sales, distribution, human resources and other functions.

This graph represents the total number of women employed within this segment of the industry, across a wide range of functions.

SOURCE: U.S. BUREAU OF LABOR STATISTICS/WWW.TIRETALENT.COM

PROPORTION OF SUPERVISORY EMPLOYEES AT TIRE DEALERSHIPS

21

!#"

Oc t-1 8 No v18 De c18 Ja n19 Fe b19 M ar -1 9 Ap r-1 9 M ay -1 9 Ju n19 Ju l-1 9 Au g19 Se p19 Oc t-1 9 No v19

550.0

23.1

22

Ju l-1 9 Au g19 Se p19 Oc t-1 9

585.0

23

24

Ju n19

599.1

#""

ay -1 9

590.0

#'"

r-1 9

595.0

M

600.0

(U.S. ONLY, IN THOUSANDS)

25

SOURCE: U.S. BUREAU OF LABOR STATISTICS/WWW.TIRETALENT.COM

TOTAL EMPLOYEES IN TIRE DEALERSHIPS (U.S. ONLY, IN THOUSANDS)

210 205.0

205 200 195 190

This chart represents the total number of people employed at tire dealerships.

SOURCE: U.S. BUREAU OF LABOR STATISTICS/ WWW.TIRETALENT.COM

189.5

185

17%

83%

Ju l-1 9 Au g19 Se p19 Oc t-1 9

Oc t-1 8 No v18 De c18 Ja n19 Fe b19 M ar -1 9 Ap r-1 9 M ay -1 9 Ju n19

180

GENDER ANALYSIS OF THE TIRE BUYING PROCESS

According to BrightLine Marketing, men decide which brand to purchase and retailer to frequent more often than women when buying tires.

Production and Nonsupervisory Supervisory This graph represents the ratio between supervisory and non-supervisory (total quantity of employees, in the thousands) at tire dealerships SOURCE: U.S. BUREAU OF LABOR STATISTICS/WWW.TIRETALENT.COM

48

61.7%

38.3%

2019

59.6% 40.4%

2018

59.5% 40.5%

2017

40.5%

2016

Male

60.4%

60.3%

59.5%

39.7%

2015

39.6%

2014

61.3%

38.7%

2013

Female

SOURCE: BRIGHTLINE MARKETING LLC (WWW.BRIGHTLINEMARKETING.COM)

MTD January 2020

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2020 Facts Section: Beyond North America

TIRE SALES

BY MANUFACTURER (IN BILLIONS OF U.S. DOLLARS)

Top regional companies

Global sales in 2019

Bridgestone Corp..........................................................$26.7 Groupe Michelin ..........................................................$25.3 Continental AG.............................................................$12.9 Goodyear Tire & Rubber Co. .....................................$12.5 Sumitomo Rubber Industries Ltd. ...............................$6.9 Pirelli & Cie SpA .............................................................$6.0 Yokohama Rubber Co....................................................$4.5

©GETTYIMAGES.COM/AF-STUDIO

SOURCE: MODERN TIRE DEALER ESTIMATES

REGIONAL MARKET SHARE AND ANALYSIS EUROPE, MIDDLE EAST AND AFRICA (EMEA) Passenger/light truck tire shipments — OE and replacement (2019): 535 million Market share leaders (based on volume and shipments): 1. Continental 2. Michelin 3. Goodyear Analysis: Preliminary estimates for the EMEA region point to a decline in combined replacement and original equipment shipments, with a sharper decline (-5%) in the OE channel. No significant recovery for OE is forecast for 2020. However, the replacement segment is expected to experience modest growth.

The leading tire manufacturers, by volume of shipments, are Continental, Michelin and Goodyear, although there are players with significant regional strengths, including Nokian in Russia, and Sumitomo Rubber Industries in the Middle East and Africa. Domestic players in Russia (Nizhnekamskshina) and Iran (Barez) are strong in their home markets but have little exposure elsewhere.

SOURCE: ASTUTUS RESEARCH (HTTPS://CONTENT.ASTUTUSRESEARCH.COM)

50

ASIA-PACIFIC Passenger/light truck tire shipments — OE and replacement (2019): 620 million

SOUTH/CENTRAL AMERICA (EXCLUDING MEXICO)

Market share leaders (based on volume and shipments):

Passenger/light truck tire shipments — OE and replacement (2019): 90 million

1. Bridgestone 2. Sumitomo Rubber Industries 3. Yokohama

Market share leaders (based on volume and shipments):

Analysis: Initial estimates for shipments in the Asia-Pacific region predict a 1% decline for full-year 2019, with a modest increase in the replacement segment offset by a decline in OE demand. A modest increase in demand is forecast for 2020.

The OE market in China should bottom out, with a more substantive increase in replacement demand. In Japan, both the OE and replacement segments are expected to show a small decline in 2020.

The three leading Japanese tire manufacturers are the largest players in the AsiaPacific region, aided by a strong showing in their domestic market — and in the case of Bridgestone, strong positioning across the region. The South Korean manufacturers (Hankook, Kumho and Nexen) still dominate their home market and are also strong in China, especially at the OE level. While the largest Chinese tire manufacturers have grown strongly in global export markets, they are also gaining share at home.

1. Pirelli 2. Bridgestone 3. Goodyear Analysis: Passenger and light truck tire shipments, both replacement and OE, in South and Central America increased by 1%, based on preliminary estimates. While economic turmoil has hit Argentina, the Brazilian market is expected to grow in 2020.

Pirelli, Bridgestone and Goodyear lead the passenger/light truck tire market in South and Central America, significantly ahead of their key competitors. The penetration of premium (and higher rim diameter) tires in the market remains limited. For Pirelli in particular, the business mix is significantly different to other regions as the company reduces volume to focus on higher-margin business. The downturn in Argentina’s tire market has had a major impact on domestic tiremaker Fate, which is the only significant, independent player in the region. ■ MTD January 2020

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Dealers look to 2020 he notes. “And that’s true at every single position at every tire store you can find. I have 16 bays. I’m the only person at the sales counter, and I have two full-time guys in the back.”

One performs tire work and oil changes. The other handles miscellaneous mechanical duties.

“I give them 10 cars a day and that’s their limit. If two or three unscheduled walk-ups come in, we’re buried for the whole day. And if one of my guys is off work — say, for a vacation — we’re paralyzed.

“You can only push so many cars through a certain-size shop with so many people,” he says. “If we can get two cars done in an hour, we’re doing well.”

Employee retention is another challenge, according to Spitale.

“It doesn’t matter what you pay. If someone else finds out you have a good guy, they’ll try to steal him — and it’s usually a car dealer, who will offer them the world.”

There are several new and used car dealerships near ParrishMcIntyre’s Akron location.

Cliff Ehlers runs Midwest Tire Co. Inc., a single-location dealership in Omaha, Neb. Employee retention has never been a problem for the company, which celebrated its 75th anniversary in 2019.

“I have two technicians who have been with me for 20 years,” says Ehlers.

However, two of the four technicians who work at Midwest Tire are in their late-50s. Another is older. “I’m not having a problem holding onto tire changers. But finding new alignment and brake techs is tough.”

Hiring techs away from local car dealerships isn’t an option.

“Some dealerships send their techs off to school and then lock them down on contract,” he says.

And traditional advertising methods have been ineffective.

Ehlers believes the inability to find technicians is a generational issue. “A lot of people today aren’t interested in working on cars or working with their hands,” says Ehlers. “And a lot of schools have dropped their vocational tech programs.

“We also work Saturdays. A lot of kids want to work five days a week and then play on the weekend. But Saturday is an important day for us. We work from 7:30 until noon, and I tell them, ‘We’ll get you out of there at 12.’”

That often isn’t enough for them, he concedes.

Ehlers predicts that finding qualified technicians — or even locating inexperienced workers who are open to learning a new trade — will continue to be his biggest issue in 2020.

Chris Voss, owner of Performance Tire & Auto, a single-store dealership in Burlington, Wis., agrees that the employment pool “isn’t what it once was.”

Like Ehlers, she also recognizes that employee expectations have shifted.

However, Voss says she is “very cautious about labeling the issue as generational in nature. I have some incredibly dedicated young people here.”

Two of the dealership’s service writers are in their early 20s.

Two technicians are in their late 20s. “All of them work hard,” says Voss. “I wouldn’t trade them for the world.”

Voss started with the dealership, which derives 70% of its overall revenue from auto service work, 28 years ago. For most of that time, six-day work weeks were the norm.

“I’m the only person at the sales counter, and I have two full-time guys in the back,” says Mike Spitale, general manager of Parrish-McIntyre Tire Co.’s Akron, Ohio, store. (Pictured, ParrishMcIntyre Technician Matt Clapper.)

By

MTD staff

DEALERS LIST TOP CHALLENGES FOR NEW YEAR TECHNICIAN RECRUITMENT EMERGES AS BIGGEST CONCERN

W

hat’s the most significant challenge facing independent tire dealers as the new year starts? MTD recently posed that question to several randomly selected dealers in different parts of the country.

Issues like employee recruitment and retention, scheduling, facility expansion, SKU management and inventory forecasting were cited — with the technician shortage emerging as most dealers’ primary concern. Here’s what they had to say.

HELP WANTED (AND NEEDED)

Mike Spitale, manager of Parrish-McIntyre Tire Co. in Akron, Ohio, says finding employees will be his top challenge in 2020.

“Our biggest problem is we don’t have enough qualified people,”

52

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Dealers look to 2020 But many of her employees, regardless of age, now place a higher premium on their personal time. In response, Voss recently moved to a five-day week, closing her company’s doors on Saturday.

“For decades, it’s been a six-day industry. I think that some of us, as owners, have to step back and realize” that times have changed.

“We used to staff solely based on customers’ expectations,” she says.

“We are now putting our employees a little before our customers.”

Voss reports that clients have accepted the reduction. “Our customers are very loyal. They told us, ‘If this is what your employees need, we support it.’”

Looking ahead to the new year, “we’re sticking with our reduced-hours plan.”

A UNIVERSAL PROBLEM

Recruitment is an issue for dealers both small and large — including Mike Toumayan’s two Big O Tire stores in Southern California and McCarthy Tire Service Co. Inc., whose network extends throughout the northeastern United States.

Business has been growing steadily at Toumayan’s locations. But he says employing more technicians would make additional growth possible. Both of his stores have six bays and eight employees, including two technicians at each location.

Toumayan says that while he is not understaffed, the populations of the cities where he does business — San Clemente and Temecula — are increasing. Additional technicians would enable the stores to serve more customers.

54

“Having more hands on vehicles can get the customers back on the road faster,” he says.

In the meantime, Toumayan — who runs day-to-day operations at his dealership — is doing “whatever is necessary,” including servicing vehicles. (Nicole, his sister, handles administrative duties.)

Toumayan, who grew up in San Clemente, says he’s been able to build a loyal customer base doing service work “that is really necessary” for customers.

“We’re very particular about what we focus on. We’re not in it to get everything we can from a car.”

Adding employees and increasing bay turns is one part of Toumayan’s plans for 2020.

Because he grew up in Southern California, Toumayan also wants to do more for the people of San Clemente and Temecula, especially members of the military.

Back east, Modern Tire Dealer’s 2019 Tire Dealer of the Year, John McCarthy Jr., president of McCarthy Tire Service Co. Inc., says recruitment will be a top priority and challenge for the year ahead.

“It’s finding qualified teammates who want to come to work every day and start a career. Retention of those same teammates is an issue.”

The search for good workers also feeds into another one of the company’s biggest challenges for 2020.

McCarthy Tire Service operates 10 retread plants, and McCarthy says “our plants are at capacity right now.” The company is looking at all available options to increase capacity, whether it’s investing in new equipment or creating flexible work shifts.

The dealership could add production shifts, “but it’s a matter of finding people,” McCarthy says. “I think we’d have better luck with split shifts or extending shifts.”

This time of year, retread employees already are working nine- or 10-hour shifts, says McCarthy, who adds that no one in the company’s retread plants is working only 40 hours a week.

Like his counterparts at other dealerships, Jamie Tancre, general manager of Troy’s Tire Pros and Automotive in Mead, Wash., expects that finding good technicians will continue to be a challenge in 2020.

Tancre, who is a master mechanic, performs all diagnostic work at the dealership, which has four two-post racks and an alignment rack.

He says there is a huge shortage of employees for automotive work in his town, which is about 20 miles west of the Idaho border.

Although the labor market in his area is extremely tight, Tancre was able to hire a young technician with some basic auto service skills about a year ago. He is paying for additional training and says his new technician “has grown immensely, and I’m really hoping that he sticks with us.”

Don Mead, CEO of Callaghan Tire Inc. in Bradenton, Fla., is following suit by making significant investments in leadership development for high-potential employees at his company.

“The biggest challenge we will have in 2020 is acquiring and developing talented people to take the organization to the next level,” he says.

Callaghan Tire recently presented its first-ever training program that focused on fostering the leadership talent “that will be running this place in 5, 10 and 15 years.”

The company, which employs 177 people, operates 10 truck MTD January 2020

Dealers look to 2020 and see it through. We don’t want this training to be individual events. We want it to be part of a well-thought-out plan.”

Another group of employees will complete the program in early 2020. Over the next 12 to 18 months, their core training will be supplemented with courses on other topics, such as emotional intelligence and finance basics.

Mead says the curriculum includes creating a plan for every participant to become an effective leader.

In addition to leadership development training, Callaghan Tire plans to continue several pilot programs involving light mechanical service and other disciplines that started in 2019.

“Sometimes you have little things in your business that you treat like a hobby,” says Mead. “Now we are treating them like key growth initiatives and profit drivers.”

SPACE AND SKU MANAGEMENT

The new year presents opportunities, too, according to McCarthy. His leadership team is looking at solutions to the lack of

PHOTO BY MICHAEL TOUEY, HALIBUT BLUE LLC

tire service centers, five industrial/material handling tire service centers, two retread plants and one retail service center.

Mead says one of his greatest responsibilities is to position Callaghan Tire for sustained performance, and the biggest variable when it comes to performance is people.

“You can have great strategies, but if you don’t have good people to execute them and a good culture that lets those people grow, develop, act and respond, it doesn’t matter.”

Sixteen employees from different levels and areas of the organization were selected for the initial training session.

Salespeople, service center managers, operations managers and office managers, as well as Callaghan Tire’s leadership team, completed the two-day program, which was provided by a third-party company and is used by major corporations and the U.S. military.

Mead says it’s the foundation of the company’s leadership development curriculum.

“We’re trying to build a quality program

In addition to increasing the capacity of its 10 retread plants in the new year, McCarthy Tire Service Inc. is concentrating on expense control. John McCarthy Jr., MTD’s 2019 Tire Dealer of the Year, says insurance rates — auto, general liability and umbrella coverage — are all going up “in a big way, and every dealer I’ve talked to is saying the same thing. It makes you look at everything.”

space at the company’s headquarters in Wilkes-Barre, Pa. There have been plans to retrofit and remodel about a third of an old brick warehouse into a modern corporate home. But the costs didn’t make sense.

McCarthy says his team is looking at ways to transform the company’s current

IMPROVE YOUR by

YIELD WWW.GRITIRES.COM

56

TEL: +1 737 231 0670

MTD January 2020

Dealers look to 2020 home base into a better facility. But what form that will take is still up in the air.

One thing he does know is that McCarthy Tire Service will continue to expand its mobile mechanical services for trucks.

“We’ve grown our fleet of mobile mechanical trucks, and we’re planning to do that again in 2020.”

More than 1,000 miles west of Wilkes-

Barre, in Fargo, N.D., Dakota Wholesale Tire Inc. doesn’t have much control over what General Manager Antahn Volk considers to be the regional wholesaler’s biggest challenge: inventory.

Dakota Wholesale Tire serves tire dealers in North Dakota, South Dakota and Minnesota.

“There are so many different sizes and

the proliferation of SKUs is so vast, you think you have enough (inventory) and then suddenly you have a run on one particular size and you can’t keep up,” he says.

Volk cites 265/65R18 as one example of a size that “everybody seems to be wanting.”

A couple of manufacturers have had it available, he says, while others have struggled to keep up with demand.

Dakota Wholesale Tire is working on its forecasting abilities so it can better coordinate with tire manufacturers on what’s needed in its market.

More than half of the company’s business is tied to passenger and light truck tires,

“I have some incredibly dedicated young people here,” says Chris Voss, owner of Performance Tire & Auto, a singlestore dealership in Burlington, Wis. That includes Brandon Fredrick, Automotive Service Excellence-certified master tech, age 27 (left) and Andy Hannula, age 26, assistant service manager.

but it also sells commercial, lawn and garden, ST radial, farm and light industrial off-the-road tires.

In mid-2019, the wholesaler invested in and installed a new inventory management system that Volk says will help it spot trends more quickly.

“It’s part of improving ourselves for our customers,” he says.

“We compete with all the national names in our markets, so we have to stay as up to speed on things as we can. If you’re consistent in what you do, customers appreciate that.

“That’s how we differentiate ourselves,” he adds. “We take care of the people who take care of us.” ■

58

MTD January 2020

Mergers and Acquisitions

Know your customer

PICK YOUR TARGET – AND DON’T BE ALL THINGS TO ALL PEOPLE By

Michael McGregor

In the December edition of MTD, Michael McGregor discussed how dealers can capture a bigger piece of the automotive service pie by offering managed auto care. This month, he looks at how dealers can segment their managed care customers into easily targetable groups.

They look for convenient locations close to work or home, and often seek a turnaround time of less than a day. It’s no surprise that people in this segment have the highest household income.

Many are older and retired.

A third consumer segment, which I call “trusted shop,” consists now your customer. This is important in any business, of people who are more likely to come to you because they like whether you are selling tires, or you are in my line of the personal service and attention you can provide. They also work, investment banking. place high value on trust and quality. For this group, the more In marketing managed car care, it’s also important to you advertise a price or provide coupons, the more you will turn know your customer so you have a better understandthem off. ing of who you prefer to do business with and who you want to You might even offend them with discounts or a message avoid. You can do this informally by just talking to the customer that is centered around price. They’re the opposite of the priceor more formally, through market research. It can be as simple sensitive consumer. or as sophisticated as you’d like.

Will you offer more full-service car care with its higher cost The purpose is to gain an understanding of people’s behaviors, structure to attract loyal “customers” or will you offer more tirewants and preferences and then group them into targetable related and undercar services, knowing that you’ll appeal more consumer segments, so you can spend your valuable marketing to the price-sensitive and less loyal “shoppers?” And where do dollars transmitting the right message to the right people. “trusted shop” consumers fit into the equation?

If you are looking to appeal to everyone, I can tell you right When we offered managed car care, we targeted customers who now, just promote: liked the convenience of full-service car care and the perceived value of having their auto service needs • reliable technicians; handled for one predictable monthly fee.

SPEND YOUR VALUABLE MARKETING • staff customers can trust; But here’s what was best about this group: • work done right the first time, and; three-fifths were women, they mostly owned DOLLARS TRANSMITTING • great customer service. used cars, fewer were married, fewer owned THE RIGHT MESSAGE TO their own homes, and more were gainfully Those things are like mom and apple pie. employed.

THE RIGHT PEOPLE. Everyone loves them.

They were an easily identifiable group.

But you might want to drill down deeper They needed and loved us. to see which consumer segments are more attractive to you and To market managed car care, once you segment customers which ones match your vision for your business. according to their wants, preferences and behaviors, you can In the aftermarket, there are “shoppers” and there are “cusdecide which group you want to target. Then, think of how tomers.” Shoppers tend to seek out different service providers changing the traditional six “Ps” of marketing — product, price, for different needs. They shop based on price and still try to do place, promotion, people and process — will appeal to more more of their own work, if they can. members of your targeted group.

In the shopper segment, you’ll find more young men with less Don’t try to be all things to all people. Pick one group and be income, older men who have more time than money, and those all things to that one group. with a slightly lower household income.

Don’t worry too much about alienating the other groups. The They are less loyal to any single operator and are more likely aftermarket is so fragmented and messy that you’re going to get to be swayed by deals. some of all the rest of them in your store anyway.

Customers, on the other hand, tend to be more loyal. They But picking up more share of your targeted group can do prefer full-service locations for the convenience, quality and wonders for your business’ bottom line. ■ trust they seek.

While not as price-sensitive as shoppers, customers still Michael McGregor is a partner at Focus Investment Banking LLC seek value for the money. They expect competitive prices, but (focusbankers.com/automotive/tire-and-service). He advises and not necessarily the lowest prices. assists multi-location tire dealers on mergers and acquisitions. For more information, contact him at michael.mcgregor@focusbankers.com.

A full range of services, to them, implies one-stop shopping.

K

60

MTD January 2020

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Business Insight

The art of the interview

OBTAIN AS MUCH INFO AS POSSIBLE, UP FRONT By

Dennis McCarron

T

he repair wasn’t done right.” Ever hear this from a customer? About 75% of the time, this statement results in the dreaded service “comeback.” That leaves 25% of your customer base that doesn’t even give you a chance to even make things right.

This is an expensive problem. Out of control, it could quickly lead to the collapse of your dealership, especially if you factor in online reputation, plus the fact that an estimated 20% of dissatisfied customers cite poor treatment from employees as a reason to never return to an auto service outlet. And I assume those two factors are related to each other. But why?

Most technicians are pretty good at what they do. Yet when we see a comeback, we often assume that a technician has made a mistake. And sometimes he did. I’ve seen my share of bent backing plates or a mistake in the reassembly of parts. But these things aren’t common.

When looking at comebacks, you have to trace the problem all the way to the root cause. And in my opinion, the root cause is most commonly — but not exclusively — rushing through what we call “the interview”.

The interview is the early-on discovery segment of the sales process. It’s when a good advisor slows down the rush to get to the “sell part” of the process and takes enough time to understand everything he or she can possibly know about the customer’s problem.

Take a common customer complaint, like squealing brakes.

When did the squealing noise start? When is it heard? Only in the morning? When the car is in reverse gear? All the time?

I’m not a fan of rapid-fire, close-ended questions. But a summarizing inquiry, such as, “Tell me about the conditions when the noise occurs,” with some follow-ups, will often suffice.

Asking the right questions will give you a better understanding of what your store is dealing with and could help craft a real solution for the customer.

I know that the main objection to asking multiple questions early in the process is lack of time. Maybe there’s a long line of customers? Maybe the phone is constantly ringing? None of those things are good enough reason to short-change the person standing right in front of you.

This person has already made the commitment of bringing his or her vehicle to you. He or she has made a mental decision to spend at least a pre-specified amount of money with you to solve the vehicle’s problem. To rush through this crucial step is wrong on every level.

If you spend just a few minutes asking some probing questions of the customer about their needs, you will have proven that you listened, which is step one of earning trust. If you commit

62

Left unchecked, comebacks can severely damage your bottom line. Make sure repairs are done right the first time.

to listening, then the customer will commit to hearing what you have to say when you present your findings.

The technician also needs as much information as possible to correctly do his or her job.

Never in my life have I heard a tech complain that too much information was collected on an inspection or diagnostic. Never.

Many times, comebacks are also the product of a push for results at the end of the day. Some techs, under intense pressure, make the gut call to take a shortcut so that they will meet the demands of the environment, the due time on the ticket, or the next car to be serviced.

They are not bad techs. They are just coping with the demands imposed upon them.

Most techs come to work to do a good job. Sometimes they get in over their heads, time-wise or skill- wise. And without all the information they need, techs can spend too much time trying to fill in the blanks.

Once you get behind in even a slightly busy store, this problem will snowball.

The solution? There are times in the selling process where we need to “pump the brakes” and slow down.

Make an effort this month to really listen to your customers.

Pay attention to your store’s service advisors, too. Are they taking enough time to collect the necessary information?

If not, walk them through some scenarios and have them practice slowing down. I promise you: Your business will operate more efficiently if you properly “interview” your customers. You have to make time for it. ■ Dennis McCarron is a partner at Cardinal Brokers Inc., a leading broker in the tire and automotive industry (www.cardinalbrokers.com). To contact McCarron, email him at dennis@cardinalbrokers.com.

MTD January 2020

Business Insight

Conflict unavoidance

CONFLICT WITH EMPLOYEES CAN BE HEALTHY. HOW WILL YOU MANAGE IT? By

Mike Townsend

In the September 2019 issue of Modern Tire Dealer, Mike Townsend discussed the importance of building the right kind of trust with your employees. In this article — the second installment in a five-part series about steps you can take to build the best possible team at your dealership — Townsend looks at the benefits of what he calls “healthy conflict,” and how effective management of conflict can help further your efforts.

N

ow that you’ve established the right kind of trust with your employees, let’s look at something that you, as a leader, will — at some point — contend with when dealing with subordinates: conflict.

Virtually every quote I’ve ever read about conflict is negative. People avoid conflict, especially in business.

Maybe the reason is because there is a perception that conflict Today’s employees want to be enabled, engaged and energized. leads to unhappy results. People end up with hurt feelings. Morale can suffer, as a result. You can even lose good employees due to when you disagree with a suggested change that an employee feels unmanaged conflict. should happen, it is critical that the employee understands why it Yes, conflict can be unhealthy. Sometimes it can hurt you. But can’t happen. And it’s critical to ensure that employee is on-board some forms of conflict can benefit your business. with your plan for the business, moving forward.

So, what is healthy conflict? How do you manage healthy Most employees will not let you know that they are disapconflict? And when should you experience it? pointed. Great managers will know how to recognize this unspoken Let me know if this scenario sounds familiar. A manager — or emotion, reassure the employee that his or her contributions even another respected employee — proposes something that are valued and leave the door open for further discussion, all needs to change in your dealership’s day-to-day operation. This before the employee goes back to his or her daily routine. This person feels safe about proposing the new idea and knows that is “intentional” conflict resolution. you will strongly consider the suggestion The danger of not being intentional is without an immediate, knee-jerk “No.” that it creates employee disengagement. To SOME FORMS OF CONFLICT CAN The person also is comfortable in the enable, engage and energize, you must provide knowledge that you will carefully consider answers to all of the following questions: BENEFIT YOUR BUSINESS. the new concept. And if the idea is rejected, How? Who? What? Where? When? Why? he or she knows that you will provide a valid If it helps, think of healthy conflict reason that doesn’t discourage or belittle. management as a game of ping-pong. You know you are on the Think about it in the terms of the sales process. You present right track if you are unafraid to let the employee hit a few slams what you believe is an obvious solution to a customer’s problem. across the net.

That customer immediately shoots down your suggestion without Once you have gained the right kind of employee trust and are a valid reason. If you’ve been in this situation before, you know comfortable with managing healthy conflict, you will be ready to how demoralizing it can be. discuss — and work through — what you and your employees This is where many leaders begin to lose an employee’s trust will commit to during the change. and can unintentionally cause that well-meaning employee to And that’s the topic of the next installment in this series. ■ become disengaged.

THE THREE E’S

Today’s employees want to be enabled, engaged, and energized. As you work toward this goal, you will have disagreements with your employees from time to time. It’s a natural part of the process. How you handle those disagreements is what’s important. As an example,

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Mike Townsend is owner of Townsend Strategies, a sales and leadership training and marketing firm. He has 30 years of sales experience, 13 of them in the tire industry. As a Six Sigma black belt and professional trainer, Townsend says he “has witnessed every scenario and heard every objection in the retail tire environment across every state in the U.S.” For more information, call (865) 318-4588 or (800) 319-8552, or email Townsend at mike@townsendstrategies.com.

MTD January 2020

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Nominate a Candidate for MTD’s 28th Tire Dealer of the Year Award

WE WANT TO HEAR FROM YOU! Established in 1993, Modern Tire Dealer’s Tire Dealer of the Year Award is the oldest and most prestigious honor of its kind. Each year, Tire Dealer of the Year candidates are evaluated in five categories: 1. BUSINESS SUCCESS 2. MARKETING SKILLS 3. MANAGEMENT SKILLS 4. INDUSTRY KNOWLEDGE 5. COMMUNITY INVOLVEMENT Do you know an independent tire dealer who excels in these areas?

Nominate him or her today!

DEADLINE FOR ENTRIES IS MAY 29, 2020.

In addition to the recognition of his or her peers – and the tire industry – the winner will be featured in the September 2020 edition of Modern Tire Dealer and online. Plus, MTD will make a cash donation to the charity of the award winner’s choice.

DON’T MISS YOUR CHANCE TO RECOGNIZE AN OUTSTANDING TIRE DEALER!

I am very honored and humbled at being named Tire Dealer of the Year by MTD. This award is as much about our great team as it is about me. Our success at McCarthy Tire Service is due to their hard work and dedication.”

– John McCarthy Jr., McCarthy Tire Service Inc. and 2019 Tire Dealer of the Year Award winner

THE MOST PRESTIGIOUS TIRE INDUSTRY AWARD!

TO NOMINATE, GO TO:

https://www.moderntiredealer.com/tiredealeroftheyear For more information, contact MTD Editor Mike Manges at mike.manges@bobit.com

Focus on Dealers

“I’ve had customers mow their lawns, cook dinner, wash their boat or play catch with their kids while I work in their driveway,” says Jeremy James, owner of Tires To Your Spot.

Mobile and

agile ONE-MAN TIRE INSTALLATION SERVICE BUILDS CUSTOMER BASE WITH FAST, ‘ON-THE-SPOT’ SERVICE

By

J

Mike Manges

eremy James says he “knew nothing” about servicing tires until several years ago. “I had never taken a tire off a rim in my life,” says the 38-year-old, Leesport, Pa. resident.

Having spent most of his career running manufacturing plants, James also had zero experience selling tires.

As the sole proprietor of a thriving mobile tire installation service, Tires To Your Spot, he has since become an expert at both.

He also serves as the company’s accountant, tire procurer, installation scheduler, marketing director and manager of new business development.

Working out of a fully equipped truck, James installs consumer tires on up to five vehicles a day, mainly at customers’ homes or offices. He also replaces tires on tow-behind trailers.

“I offer everything from mounting and balancing to old tire disposal,” he says.

James reinvests most of his revenue.

This strategy has paid off in steady growth, he reports.

In fact, he is so confident in his company’s continued success that he plans to roll out a Tires To Your Spot franchise program within the next year, with the goal

68

of having 50 franchises in place by 2025.

“Mobile installation is the future of the tire business,” says James. “It’s convenient and cost-effective for the customer, as well as the person who’s providing the service.”

INHERENT ADVANTAGES

The idea for Tires To Your Spot was born out of an under-whelming tire buying experience that James suffered through several years earlier.

A single father, James — accompanied by his then- three-and-six-year-old sons — drove his vehicle to a local tire store on a Saturday afternoon for what he thought would be a quick, simple replacement of four tires.

The facility took three hours to complete the job.

“I had a lot of time to think while I was waiting,” he says. “I said to myself, ‘I can’t be the only person in this situation. Why doesn’t someone bring tires to customers, instead? There could be a huge market for that kind of service.’”

It took a while for James, who had always wanted to run his own business, to flesh out his newly conceived enterprise.

After accumulating enough capital, he bought a second-hand box truck. As

budget allowed, he filled it with new tire mounting and balancing machines. He also added a generator, air compressor, jacks, tools and other pieces of equipment.

Then he arranged everything inside the truck to ensure an efficient workflow, which required some experimentation.

“My initial investment was more than $100,000” — all self-funded, says James.

While a significant outlay for him, it was much less than what opening a traditional, brick-and-mortar tire dealership would cost.

James soon realized that “going mobile” presented other advantages, with the need for minimal tire inventory topping the list.

“I only inventory tires for the next 24 hours of jobs,” with each tire already assigned to a customer, he says.

“Another advantage is the customer you are helping is your only customer at that moment, so when you arrive, they know their vehicle is getting worked on — not someone else’s vehicle. At a brick-andmortar store, the customer has to wait for his turn in the queue.”

James’ next order of business was letting customers know that Tires To Your Spot existed. He handed out promotional literature and created a Facebook page.

MTD January 2020

He says social media is a particularly effective marketing tool. “I do run some discounts on Facebook periodically.”

However, not every marketing method works equally well. “Manufacturer rebates are something that can help drive business, but if the customer isn’t ready for new tires during rebate time, it can be a hard sell.

“Convenience is the biggest thing I promote,” he says. “Convenience is king.

We ensure that the customer has zero down-time (due to) either the loss of a vehicle for a day or lost hours sitting in a store.

“The biggest challenge has been getting someone to give me a try. After that, it’s a slam dunk. People rave about the experience we provide and will even post about it on social media.”

‘THE FUTURE OF THE TIRE BUSINESS’

According to James, there’s more to mobile tire installation that scheduling an appointment, traveling to a customer’s location and replacing a set of tires.

“A typical job consists of a customer

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

contacting me through my website or my Facebook page or by calling my cell number,” he says. “They provide details about their car and tires, including tire size.”

Most of his customers don’t have a brand or product preference. “I’ll provide them with three options and let them choose.

After a tire is selected, we discuss a time and location for installation. After that is all set up, I order tires, which are delivered to my location with 24 hours.”

James sources tires from a handful of local distributors, some of whom offer Saturday delivery. Most of the tires that he mounts range from 15 inches to 22 inches in diameter.

“I don’t do any low-profile tires,” he says. “I try to hit the biggest segment of the consumer tire market.”

Standard installations take an hour to complete and are usually performed at customers’ homes or at their places of employment — as long as a safe, flat surface is available.

“If the surface is too steep, then it becomes a safety issue,” he says. “If that’s

the case, I just ask the customer to move their car to another location.”

When it comes to customers, James purposely casts a wide net.

“I service everything from 25-year-old Oldsmobiles to brand new vehicles coming out with their first set of tires. I’ve done performance light truck tires and sports car tires, all the way down to economy brands. I don’t target customers based on their vehicle type or bank account.

“The biggest challenge associated with each job is getting a schedule that fits their need, while not creating a conflict between that and my existing schedule.”

And he uses an all-inclusive pricing model. (James accepts payment via cash, credit card, check or PayPal.) “I can’t stand add-ons that are not readily available in the initial quote.”

James calls mobile installation “the future of the tire business. Customers in my area are always cautious about trying new things. People are set in their ways.

But once they find out (about mobile tire installation), they love it.” ■

69

TPMS

Lexus RC F, RC 200T, RC 300 and RC 350 TIRE PRESSURE MONITOR WARNING LIGHT

SUBJECT VEHICLES: Lexus RC F 2015-19, RC 200T 2016-17, RC 300 2016-19 and RC 350 2015-19.

SPECIAL TOOLS NEEDED? A Toyota Techstream must be used.

T

he tire pressure monitoring system (TPMS) in Toyota’s luxury line of Lexus vehicles is designed to provide warning when tire inflation pressure of one or more tires (including the spare tire) is low. A tire pressure monitoring valve sub-assembly equipped with a tire pressure sensor/ transmitter is installed in each tire and wheel assembly.

The sensor measures the tire pressure and transmits the measured value and transmitter ID to the tire pressure monitoring receiver assembly on the body as radio waves, which are then sent to the

Figure 1: Identifying the data link connector terminals.

tire pressure monitor engine control unit (ECU). If the transmitter ID has already been registered, the ECU compares the measured tire pressure value and the warning threshold pressure value.

When the value is less than the warning threshold pressure value registered in the tire pressure monitor ECU, the tire pressure warning light on the instrument cluster will turn on.

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

When the tire pressure warning light does not go off, or when it comes on during driving, check tire pressure (including spare tire) and adjust as necessary. The warning light should turn off a few minutes after air is put into a deflated tire. If the tire pressure warning light comes on after blinking for 1 minute frequently when the engine switch is turned to the “ON” position, there is a malfunction in the TPMS. See the appropriate manufacturer service information. The spare tire is also equipped with the tire pressure warning valve and transmitter. The tire pressure warning light will turn on if the tire inflation pressure of the spare tire is low. If a tire goes flat, even though the flat tire is replaced with the spare tire, the tire pressure warning light does not turn off. Replace the spare tire with the repaired tire and adjust the proper tire inflation pressure. The tire pressure warning light will turn off after a few minutes.

TPMS RESET PROCEDURES

NOTE: If the tire pressure sensor and/or tire pressure monitor ECU are replaced, the transmitter ID needs to be registered in the tire pressure monitor ECU.

NOTE: When a tire pressure sensor and/ or tire pressure monitor ECU are replaced, all the tire sensors must be registered. To perform this procedure, a Toyota Techstream must be used.

Transmitter initialization NOTE: Initialization can be confirmed through the tire pressure warning light.

• The order in which the data is received is random. If the signals from all the tire pressure warning valve and transmitters are received, initialization is completed.

• Initialization is completed when the

70

MTD Third Sq Feb 2020

MTD January 2020

ALL ART COURTESY OF © TOYOTA, LICENSE AGREEMENT TMS1002

TIRE PRESSURE SENSOR REGISTRATION

AUTOMOTIVE INTELLIGENCE

TPMS

TPMS KITS Ask Your Autel Distributor for Details

TS508/TS508WF PLUS

COMPLETE

SOLUTION

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

© 2020 Autel U.S. Inc., All Rights Reserved

72

Figure 2: Identifying the tire pressure monitoring system reset switch.

Data List “ID Tire Inflation Pressure” display shows the correct pressures.

• It may take a few minutes until the values are displayed. If the values are not displayed after a few minutes, perform troubleshooting according to the inspection procedure for DTCs C2121/21 to C2124/24.

• If initialization has not been completed successfully, DTC C2177/77 is stored after a vehicle speed of 23 mph (37 km/h) or more is detected for 20 minutes or more.

• During test mode (sensor check mode), the system will not change to initialization mode even if the tire pressure warning reset switch is pushed.

• Initialization can be terminated by connecting terminals 13 (TC) and 4 (CG) of the DLC3 (see Figure 1).

1) Set the tire pressure to the specified value.

2) Turn the engine switch on (IG).

3) Press and hold the tire pressure warning reset switch for 3 seconds or more until the tire pressure warning light blinks 3 times (see Figure 2).

4) Turn the engine switch off.

5) Connect the Techstream to the DLC3.

6) Turn the engine switch on (IG) and turn the Techstream on.

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

8) Check that initialization has been completed.

9) Confirm that the tire pressure data of all tires is displayed on the Techstream screen.

Register transmitter ID NOTE: The transmitter ID is written on the tire pressure warning valve and transmitter. It is not possible to read the transmitter ID after installing the tire onto the wheel.

Therefore, make a note of the transmitter ID before installing the tire.

NOTE: If the ID registration step is not completed within 300 seconds, ID registration will be canceled.

1) Set the tire pressure of all wheels (including the spare tire) to the pressure specified on the tire and loading information label.

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

3) Turn ignition switch to ON position.

Turn the Techstream ON. 4) Enter the following menus: Chassis / Tire Pressure Monitor / Utility / ID Registration. NOTE: If registration is not completed within 300 seconds, ID registration is canceled.

5) Perform the procedures displayed on the Techstream.

NOTE: After all IDs are registered, DTC C2126/26 is stored in the tire pressure warning ECU and the tire pressure warning light blinks for 1 minute and then comes on. When the tire pressure warning ECU successfully receives radio waves from all the transmitters whose IDs are stored in the ECU, DTC C2126/26 is cleared and the tire pressure warning light goes off.

Confirmation of transmitter ID registration NOTE: It may take up to approximately 2 or 3 minutes to update the tire pressure data. If the values are not displayed after a few minutes, perform troubleshooting according to the inspection procedure for DTCs C2121/21 to C2124/24.

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

2) Read the “ID Tire Inflation Pressure” values.

3) Confirm that the tire pressure data of

Figure 3: Locating the tire pressure monitor valve sub-assembly transmitter ID on the sensor.

MTD January 2020

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TPMS all tires (except the spare tire) is displayed on the Techstream screen.

4) If normal pressure values are displayed, the IDs are registered correctly.

DEMOUNTING/MOUNTING PROCEDURES

CAUTION: The tire should be demounted from the wheel using the tire changer manufacturer’s instructions.

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

NOTE: When a tire pressure sensor and/ or tire pressure monitor ECU are replaced, the sensor for all of the tire pressure warning valve and transmitters must be registered.

See “Reset procedures.” TPMS requires no action when tires are rotated or tires are inflated to specification.

TIRE PRESSURE SENSOR

CAUTION: Do not try to install a tire pressure sensor in a steel wheel or aftermarket wheel. Use only in original style factory wheels.

CAUTION: The use of tire sealants is strictly prohibited for vehicles equipped with the TPMS. Tire sealants can clog tire pressure sensors.

CAUTION: Be sure to reinstall tire valve caps, or dirt or moisture could get into the valve core and cause air leakage.

Use only the original valve cap.

If any other valve cap is used, it may

Figure 4: Disengaging the bead using the shoe of the tire remover.

corrode or melt, and become extremely difficult to remove.

NOTE: The average life of the grommet of the tire pressure monitor valve sub-assembly is approximately 5 years, at which time it must be replaced. If the valve is leaking air, is less than 5 years old and there is no problem with grommets, retighten the valve nut to 35 in.-lbs. (4 N.m).

Whenever the tires must be replaced, replace grommets for the tire pressure sensors as well.

NOTE: If the tire pressure valve subassembly is going to be replaced, make a note of the 7-digit number (transmitter ID) before installation, as it cannot be seen after sensor is installed (see Figure 3).

Whenever a new sensor is installed, it will need to be registered in the tire pressure monitor ECU. Removal 1) When replacing a wheel or tire, tire

pressure sensors must be set up in one of the following ways: • Remove the sensor from the old wheel and install it to the new wheel. Keep the same wheel with the tire pressure sensor and replace only the tire.

• Use a new wheel and sensor (the new sensor must be registered after installation).

2) Remove the wheel. Remove the valve core and cap, and release air from the tire.

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

3) After ensuring that air is sufficiently released, remove the nut and washer that is used to fix the tire pressure monitor valve sub-assembly and drop the sensor inside the tire.

NOTE: Be careful not to damage the tire pressure monitor valve sub-assembly due to interference between the sensor and tire bead.

4) After dropping the tire pressure monitor valve sub-assembly into the tire, disengage the bead using the shoe of the tire remover (see Figure 4).

5) Remove the bead on the upper side in the usual operation.

6) Take out the sensor from the tire and remove the bead on the lower side as in usual operation.

NOTE: Do not reuse the grommet.

7) Remove the inner grommet from the tire pressure monitor valve sub-assembly (see Figure 5).

NOTE: Tire pressure sensor is powered

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MTD January 2020

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Figure 5: Installing the tire pressure monitor valve sub-assembly.

by a lithium battery. When disposing the sensor, remove the battery and dispose of properly.

Installation 1) Install a new inner grommet to the tire pressure warning valve and transmitter.

2) Insert the tire pressure monitor valve into the valve installation hole. Insert from the inside of the rim so that the print surface can be seen. Check for the following: • Check that there is no visible deformation on the transmitter.

• Check for foreign matter on the inner grommet and around the rim hole.

IS THE ONLY

COMPLETE

• If installed in the reverse direction, the tire pressure monitor valve may be damaged or fail to transmit signals when running at high speed.

• If installing a new tire pressure monitor valve, write down the ID number before installation (see Figure 3). It is necessary to register an ID in the ECU after installation.

3) Install the washer on the tire pressure monitor valve from the rim side and tighten the nut to 35 in.-lbs. (4 N.m), see Figure 5. Check for the following: 4) Ensure there is no foreign matter on the washer and nut.

5) If the tire pressure monitor valve was removed, check that there is no damage or cuts, and no foreign matter such as mud, dirt or sand attached to the grommet.

Replace the grommet with a new one if any of these defects are found.

6) Check that there is no oil, water or lubricant around the rim hole, tire pressure monitoring valve, washer and nut. Failing to do so may result in improper installation.

CAUTION: If the sensor is positioned

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76

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Figure 6: Positioning the tire pressure monitor valve sub-assembly.

outside this area, it generates interference with the tire bead, causing possible damage to the sensor.

If the use of lubricant is required when installing the bead, do not apply the lubricant directly to the tire pressure warning valve and transmitter.

7) Set the wheel disc to the mounting machine and install the lower tire bead.

Position the main body of the sensor in the shaded area as shown in the illustration (see Figure 6).

8) While making sure that the tire bead and tool do not interfere with the main body of the sensor and that the sensor is not clamped by the bead, install the upper bead.

NOTE: If the valve nut is loose after inflating the tire, retighten the nut to the specified torque.

9) When putting air into the tire, first install the valve core on the stem of the tire pressure warning valve and transmitter.

10) Install tire and wheel assembly.

11) When a new sensor is installed, the ID code will need to be registered. See “Tire pressure sensor registration” under “Reset procedures.” ■ Information for this column comes from the tire pressure monitoring systems data in ProDemand®, Mitchell 1’s auto repair information software for domestic and import vehicles. Headquartered in Poway, Calif., Mitchell 1 has provided quality repair information solutions to the automotive industry since 1918. For more information, visit www.mitchell1.com. To read archived TPMS articles, visit www.moderntiredealer.com.

MTD January 2020

ITDG’S COMMITMENT TO YOUR BUSINESS IS STRONGER THAN EVER • The ITDG team works hard to add value for all of our products and programs for ITDG members.

• We hold regular meetings with our members for maximum engagement.

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Products Clore expands Solar line Clore Automotive Inc. has added the Pro-Logix PL6100, a 12-volt 100A flashing power supply and 60/40/10A battery charger, to its Solar product line. The PL6100 is designed to provide stable power, on demand up to 100 amps, to a vehicle electrical system to support module reprogramming. It also provides full-service battery charging capability from 10 to 60 amps, to service everything from small vehicle batteries to Group 31 batteries. Features include a voltage output range of 13.1-14.9V, adjustable in 0.1V increments.

CLORE AUTOMOTIVE INC. www.cloreautomotive.com

PCL offers new MK4 electronic tire inflator The new Accura MK4 Digital Tire Inflator Gauge can be used for both passenger and heavy-duty commercial vehicles.

Despite its sturdy design, the Accura MK4 is the lightest metal bodied digital inflator on the market, according to PCL USA. Features include a sleek body shape to provide increased comfort for the user. The large, blue LCD (liquidcrystal display) backlit screen is easy to read at night or in dim light. Users can easily toggle between different pressure calibration units (psi, bar, kPa). The inflation range goes from 4-250 psi.

PCL USA www.pcltireinflation.com

Tireco releases Milestar Patagonia Xtreme sizes Tireco Inc. has added 12 sizes to its Milestar Patagonia X/T Xtreme all-terrain tire, including 40X13.5R17LT high flotation. All sizes feature a 3-ply sidewall for added strength and durability and a silica-infused cut-and-chip resistant tread compound to work with stone and mud ejectors. Select sizes are offered with an F load rating. A total of 19 sizes will be available in Q1 2020 with another 29 sizes coming in late 2020.

Popular sizes available are LT285/70R17 E/10, 35X12.50R17LT D/8, 37X12.50R17LT D/8, LT305/55R20 F/12, 37X12.50R20LT F/12, and 40X13.5R17LT D/8.

TIRECO INC. www.tireco.com

Hamaton introduces TPMS valve in gun metal grey In response to the popularity of gun metal grey alloys, Hamaton Inc. has released a TPMS valve for its U-Pro Hybrid 2.0 dual frequency, configurable and programmable sensor that matches the wheel’s distinctive finish. Hamaton’s gun metal grey clamp-in valve features an anodized coating that prevents corrosion from chemicals and road salt. The washer enables users to tighten the valve without scratching the alloy wheel service. The nut-over-cap feature allows users to remove and attach the nut while the cap is on, reducing the time it takes to fit a sensor to a wheel.

HAMATON INC. www.hamaton-tpms.com

Cloyes has new VVT chain kits Cloyes Gear & Products Inc. says its new variable valve timing (VVT) chain kits offer technicians a complete repair solution for higher mileage vehicles. The kits are designed for the replacement of worn or damaged timing chains, tensioners, sprockets, guides, and VVT actuators, also known as cam phasers. Cloyes’ new VVT components are 100% tested during production, with test parameters including adjustable angle, leakage, locking pin functionality, friction, max oil flow, and holding duty cycle.

CLOYES GEAR & PRODUCTS INC. www.cloyes.com

78

Hercules adds Avalanche XUV winter tire for CUVs and SUVs Hercules Tire & Rubber Co. says the new Avalanche XUV is the first dedicated winter tire for crossover utility and sport utility vehicles. The studdable tire has the 3-peak mountain snowflake emblem. Manufactured in the United States, the Avalanche XUV features a proprietary winterized tread pattern with the company’s Snow Grabber Grooves to deliver snow-on-snow traction.

Tailored thin-gauge full depth sipes prolong tread life and provide a more responsive ride. The improved contact patch surface area increases rubber contact with the road for a greater grip on icy roads.

HERCULES TIRE & RUBBER CO. www.herculestire.com MTD January 2020

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

23

www.31inc.com

Aftermarket Auto Parts Alliance Inc.

73

www.partsmastersynthetic.com

Alliance Tire Group

17

www.atgtire.com

American Omni Trading

65

www.thunderertireusa.com

AUTEL

45, 72, 76

www.autel.com

AutoNation

49

www.autonation.com

Bartec USA

70

www.bartecusa.com

BendPak Inc. Ranger Products

57

www.bendpak.com/laser

BKT USA Inc.

11

www.bkt-tires.com

Blackburn OEM Wheel Solutions

53

www.blackburnswheelfinder.com

CEAT Specialty Tires Inc.

75

www.ceatspecialty.com/us

Continental Tire

3

www.continentaltire.com

DSP 20 Group

81

www.20dsp.com

Falken Tires

31

www.falkentire.com

Federal Tire

15

www.federaltireusa.com

Gaither Tool Company Inc.

74

www.gaithertool.com

GRI Tires

56

www.gritires.com

GT Radial

55

www.gtradialsmartprogram.com

Hunter Engineering Company

58

www.hunter.com

Independent Tire Dealers Group

77

www.itdgusa.com

K & M Tire Inc.

51

www.kmtire.com

Kenda Tires USA

IBC

www.kendatraction.com

Kumho Tire USA Inc.

5, 25-26

www.kumhotireusa.com

Linglong Americas Inc.

7

www.linglongtire.com

Marangoni Tread N.A.

41

www.na.marangoni.com

Maxxis Tires

37

www.maxxisaccelerate.com

Nexen Tire America Inc.

IFC

www.nexentireusa.com

Nitto Tire U.S.A. Inc.

OBC

www.nittotire.com

Nokian Tyres Inc.

79

www.nokiantires.com/one

Sailun Tire Americas

9

www.gosailun.com

Schrader Sensors

24

www.schradersensors.com

Sentury Tire

19

www.landsailtires.com

Sumitomo Tire

39

www.sumitomotrucktires.com

TECH

54

www.techtirerepairs.com

Tireco Inc.

59

www.tireco.com

Toyo Tires

47

www.toyotires.com

TR Wholesale Solutions

61

www.trwholesalesolutions.com

Travelstar Tires

69

www.travelstartires.com

Triangle Tire USA

22

www.triangletireus.com

West Creek Financial

63

www.westcreekfin.com/mtd

ZAFCO International

13

www.armstrongtire.com/MTD2020

ZC Rubber America Inc.

71

www.arisuntires.com MTD January 2020

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