DETROIT-Dealers know firsthand how competitive the North American replacement tire market is, but what of the market for original equipment tires-those that come on new vehicles? In North America, that market, too, is a mighty tough nut to crack.
Four manufacturers supplied 98 percent of tires for passenger cars made on this continent in 1995: Goodyear controlled 40 percent of the market; Michelin North America controlled 29 percent; Bridgestone/Firestone Inc., 18 percent; and Continental General, 11 percent.
It's the global tire suppliers who are getting the OE contracts, according to Saul Ludwig, an analyst with McDonald & Co. Securities Inc.
The market pretty much is set in stone, although Goodyear plans to shave some original fitment contracts because it is too involved in OE, according to Harry Millis of Fundamental Research Inc. The move could drop Goodyear's overall share down two or three percentage points, he said.
The only thing that may greatly affect the worldwide OE market would be the once-rumored merger of Pirelli Group and Continental A.G., ``a combination that makes so much sense'' because of both companies' strengths, Mr. Millis said.
Mergers and acquisitions have changed the face of the North American OE market over the years: Michelin now has the Uniroyal and Goodrich brands; Continental has General; Bridgestone has Firestone. But other general issues also affect these companies' contracts with car makers.
``The major factor that seems to swing market share is price,'' Mr. Millis said.
Mr. Ludwig disagrees. Pricing is important, he said, but among the big four OE suppliers, pricing pretty much levels out. ``I think the most important thing (automakers are looking for in a tire) is the performance on the car it's going on,'' Mr. Ludwig said. ``They want that car to perform in a certain manner.''
Different vehicles demand different qualities from the tires, he said.
It's also important to have a brand name on the vehicle that's recognized for quality, but there really isn't much difference among the four leading companies, Mr. Ludwig said.
Any manufacturer accepted by car companies can consistently provide quality products, according to Mr. Millis.
The actual brand name of the tire is of little concern to the car makers. As long as the tire carries a warranty and the tire manufacturer has the dealers to fulfill the warranty, it shouldn't matter whether the name on a new vehicle's tires is Goodyear, Michelin or even Kumho, Mr. Millis said.
Only one in 30 or 40 new car buyers even pay attention to the tire brand name, said Jack Pohanka, who runs a number of dealerships under the Pohanka Automotive Group near Washington, D.C.
``It's really not very important at all,'' Mr. Pohanka said.
Chrysler Corp. doesn't look at brand name either, a company spokesman said.
A demand for quality products, low prices, the latest technology and timely delivery has led Chrysler Corp. to depend on Goodyear for 75 percent of its passenger tires and turn to Michelin for the rest.
``We work with the best of the best,'' the spokesman said.
Chrysler has worked with Goodyear for 70 years and Michelin for the past 10. The car company is interested in continuing its partnerships with all of its suppliers and maintains two or three for every component, the spokesman said.
Of the domestic car companies, Chrysler is the closest to having a single tire supplier, but it's doubtful Goodyear ever will win all of the company's business. Although the car company is reducing its supplier base, it wants to keep things competitive, he said.
And car companies rarely will put all their eggs in one basket.
Exclusive OE contracts with car companies do exist-such as Bridgestone/Firestone contract with Saturn Corp. and Conti General's contract to supply about 99 percent of Ford Motor Co.'s Taurus/Sable vehicles. Automakers can get a better price through a high-volume exclusive contract, according to Mr. Ludwig.
However, the year-long Bridgestone/Firestone strike could have hurt General Motors Corp.'s Saturn division, had the tire maker not had a fall-back plan, he said.