AKRON-Private brand tire marketers' jobs are none too easy these days. Just consider what they're up against: intense price competition from down-streamed original equipment tires; proliferation of sizes; and low-cost imports-not to mention the fact that manufacturers' associate or ``house'' brands are so competitively priced that profit margins are being squeezed until they squeal.
However, judging from the responses to TIRE BUSINESS' annual survey of private brand marketers, most appear equal to the challenge. And some are getting additional discounts from tire makers in order to remain competitive.
North America's latest wave of cutthroat tire pricing is putting them to the test, most survey participants admitted. Some foresee a thinning out within private brand ranks, what one described in Darwinian terms as ``survival of the fittest.''
``This is a serious problem in 1996,'' wrote Steve Buck, vice president and tire division general manager for Hercules Tire & Rubber Co., a dealer-owned buying group marketing the Hercules, Merit and Superior brands.
``OE downstreams, spot-buy overstocks and actual dumps have littered the replacement tire market with major brand tires at or below (the prices of) private brands,'' he said.
``Fortunately, our customers remember that this is typically a short-term gain and try to maintain volume with our private brands.''
Meanwhile, as marketers fight to maintain their market share, margins on private brand tires during the year's first half also have decreased 5 to 10 percent at all levels of the distribution chain, he estimated. As a result, he looks for an increase in mergers and acquisitions among private branders during 1996.
``Something's got to give,'' agreed Don Helker, vice president of sales for Memphis, Tenn.-based Del-Nat Tire Corp., which markets private label tires under the Delta, National and Akuret brands.
Contacted by phone, he pointed out that tire makers can't afford to keep sacrificing profits in order to maintain production levels, and wholesaler customers can't afford to keep writing down inventories while prices drop.
``It will separate the men from the boys,'' Mr. Helker predicted, and the consumer will be the only winner.
Tires are one of the few commodities that can be bought for less today than a few years ago, noted Mr. Helker, who said margins are still good in the case of performance tires. But prices of broadline sizes and older applications are lower than they were at the beginning of last year.
The sad fact is, when all the price cutting is finally done, manufacturers won't have sold any more tires than before. The market can absorb only so many, he pointed out.
Among the 18 private brand tire marketers who replied to the TIRE BUSINESS survey, 61.1 percent said they or their distributors had lost sales as a result of reduced prices on manufacturers' associate or ``house'' brands during the past year.
And 60 percent of the participants said price shaving by tire makers has diminished private brand margins as well.
A third of the group said margins have remained flat. Only one marketer said profitability had increased in the past 12 months.
Things got so bad for Prowler Tire Inc. that President Preston Trammel pulled the plug on his Birmingham, Ala.-based company-another victim of practically non-existent margins between flag brands and his Prowler brand of private-label medium-truck tires.
If things continue in that vein, he said that he expects more private branders will fold their tents.
Better than half the respondents said the manufacturers of their tires were providing additional discounts to keep them competitive amid the market's cut-throat pricing conditions.
``Our manufacturers are keeping us very competitive,'' said Del-Nat's Mr. Helker-whose largest supplier is Michelin North America. In return, he said, ``We're trying to provide them with the numbers they need. . . . It's a two-way street.''
In reply to a survey question asking whether they are experiencing supply problems, marketers answered with a resounding ``No,'' though one West Coast marketer said he needed ``more dependable production'' from his supplier.
He also cited ``greed balanced by fear'' as another factor impacting the industry.
Nearly eight in 10 private brand marketers felt that high-mileage passenger tires also are impinging on private brand sales.
Fighting fire with fire, Hercules added its own lifetime warranty on the Hercules Mega Touring LXT premium passenger tire, introduced in April.
Asked what other factors seem to be affecting private brand sales, survey participants also cited low-cost imports and consolidation among independent dealers.
As a group, private brand marketers agreed that they tend to play up their tires' Uniform Tire Quality Grades.
``Private label is promoted as a value brand,'' Hercules' Mr. Buck said. ``So UTQG ratings and the tire's warranty are a very important issue.''
About one in four (26.7 percent) of the private branders taking part in the survey described business as ``good'' or ``modestly up'' so far this year.
And 46.7 percent described it as ``about the same'' as that of last year.
Most respondents said they stress the market exclusivity and profitability of their brands when appealing to dealer customers.
At least six private brand tire marketers-American Car Care Centers Inc., Dean Tire & Rubber Co., Del-Nat, Dick Cepek Inc., Eldorado Tires and Hercules-said they offer incentive trips for customers.
Tire Group International reported that it also is considering the addition of such an incentive.