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April 04, 1994 02:00 AM

GOODYEAR INCREASES PRIVATE BRAND ACTIVITY IN EUROPE

Bruce Davis
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    GENEVA, Switzerland-Goodyear, the largest maker of private and associate brand tires in North America, plans to step up this activity in Europe with the establishment of a ``custom brands'' division. ``Custom brands represent a big opportunity for us in Europe,'' said William J. Sharp, executive vice president, Europe, in an interview at the Geneva Auto Salon in early March. ``They give us the chance to get additional value out of the existing assets.''

    Goodyear's move reflects a fundamental change taking place in the European marketplace, in that large retailers and buying groups have attained enough purchasing power to attract the attention of mainstream tire manufacturers.

    It also comes at a time when, industrywide, tire plants are operating at less than 80 percent of capacity, prospects for a market rebound are not favorable and aftermarket pricing is in a period of instability.

    Sales of non-Goodyear-branded products have been taking an increasingly larger share of Goodyear's total tire sales over the past few years, accounting for an estimated one-fourth to one-third of 1992 North American tire-related sales. A breakdown of 1993 sales is not yet available.

    Private and house brands account for 51 percent of the North American aftermarket, industry data show. Comparable numbers for Europe are not readily available, but it is believed the share is not significantly more than 10 percent.

    Other tire makers are testing the private brand tire waters of Europe, as well.

    Pirelli Tyre Holding N.V. has begun to make private brand tires for a handful of customers; Bridgestone/Firestone Europe, traditionally the most active in this sector, has been shifting more capacity into its mainstream product lines.

    Goodyear's move coincides with the release of the firm's 1993 annual report, which shows the European activities absorbed a 9.8-percent drop in sales last year, primarily due to the precipitous drop in original equipment shipments.

    In the past few years, the firm has stepped up marketing in Europe of its own house brands-Kelly-Springfield and Lee-and raised a few eyebrows in 1992 by agreeing to make up to 1 million units a year for France's Arc-en-Ciel retailing group under its ``Rainbow'' brand.

    The company also makes tires for the Swiss ESA buying group, which in turn is part of the expanding five-nation TECAR buying cooperative. Representatives of ESA are interested in expanding their private brand deal to the entire TECAR group, which consists of 5,500 partners in Germany, Denmark, Italy, Austria and Switzerland.

    The other private brand account of note is the Kingstone brand, also being marketed in France.

    The Fulda brand, representing about 15 percent of Goodyear's European sales, is distributed through an independent marketing organization, and maintains its own identity and pricing structure.

    For now, Goodyear is limiting the production of private brand tires in Europe primarily to S- and T-rated summer and winter passenger car tires, with some H-rated units in development, according to Marco Molinari, director of sales and marketing in Europe, who is overseeing the development of the custom branding business.

    Custom branding of performance tires is not currently part of the program, but demand for 4x4 off-road tires will lead to private brand production of such units in the near future, Molinari said.

    While custom brands for now come from European plants, Goodyear said it takes into account its global resources when considering a private brand account, and currently is evaluating its Latin American tire plants for such production.

    Though the firm has no plans to debut other house brands, it has a ``full library'' of names to choose from should opportunities arise, Mr. Molinari said.

    Goodyear's interest in custom branding coincides with the firm's search for alternative marketing concepts for its products.

    In Germany, the firm has revamped its equity-owned company stores into franchises, developed a ``dealers marketing initiative'' program for independents, and tied up with the ARAL service station chain to open tire stores attached to gas stations.

    Goodyear Great Britain has adapted the marketing initiatives for its own ``Tyreservices GB'' chain and for independents under a program known as ``Hi-Q.''

    The annual Western Europe replacement market for passenger car tires is estimated by various sources at between 125 million and 128 million units.

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