There's reason for optimism in the 1994 TIRE BUSINESS survey of tire manufacturers, dealers and retreaders. But the findings also contain a ``wake-up'' call for North America's tire makers and marketers. Unlike tire manufacturers, who continue to scale back operations to reduce overhead costs, most independent dealers surveyed said they'll maintain current employment levels in 1994, while raising salaries an average of 4 percent.
Moreover, dealers said tire sales are assuming increased importance in their operations-reversing a trend over the past few years in the opposite direction.
For nearly two out of three dealers surveyed, retail sales of passenger and light truck tires increased by an average 7.3 percent during 1993.
Commercial tire sales likewise grew an average of 7 percent for nearly half the dealers handling them, while more than one in two independents surveyed reported that automotive service sales increased by an average of 10.2 percent.
From the surveys' results, it's obvious tire dealers are starting to get their act together. But the same cannot be said of North America's tire manufacturers.
Only six of the 13 tire companies participating in the survey turned a profit during 1993-this in a year of record shipments of passenger and light truck tires to the original equipment and replacement markets.
Manufacturers participating in the survey cited tire pricing as the No. 1 concern, pointing to the overabundance of tires on the market as the reason why so many firms weren't able to ask enough for their products to attain profitability.
After years of reporting poor or even non-existent profits, it's high time manufacturers stopped sacrificing profitability in their hunger for increased unit sales.
As history has shown, no tire maker ever improved its profitability by cutting prices.
With five tire makers accounting for an estimated 84 percent of North America's tire sales, pricing one's products high enough to earn a profit should not prove impossible. Tire makers should stop behaving as if it were.