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February 15, 1999 01:00 AM

GOODYEAR DEALERS LIKE ADDITION OF DUNLOP: DUNLOP DEALERS REACT CAUTIOUSLY

Chris Collins
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    AKRON—Goodyear's comprehensive agreement with Sumitomo Rubber Industries Ltd. also will give the Akron-based company control of a leading second-tier brand: Dunlop. Among the dealers Tire Business contacted for this story, those with ties to Goodyear thought the addition of Dunlop to the Goodyear fold was good news. Other dealers foresaw more competition for Dunlop-brand sales once Goodyear adds Dunlop tires to its company stores.

    ``I don't think I like it,'' said Larry Ward, owner of Holabird Tire Co. in Baltimore. Dunlop is Holabird Tire's top-selling brand, and Mr. Ward said he plans to talk to his distributor about what to do next.

    ``It's a good deal,'' said Nick Mitsos, president of Mountain View Tire and Service in Rancho Cucamonga, Calif. Goodyear is Mountain View's best-selling brand, and Mr. Mitsos thinks the Dunlop brand fits into his store's product matrix.

    ``Dunlop is very popular in the high-performance segment of the market,'' he said, adding that 40-45 percent of Mountain View's sales are performance tires.

    ``It's (Dunlop) been a very big seller for us,'' said John Upenieks, vice president of Upenieks Tire Factory in Lake City, Wash. His dealership is a member of Michelin North America's Alliance program, but Mr. Upenieks said he sells about 500 Dunlop tires a month.

    ``I'm going to take a wait-and-see attitude,'' he said. But if things don't continue to work out with Dunlop, Mr. Upenieks said, there's always another brand available to replace it.

    Randall Clark, chairman of 23-outlet Dunn Tire Corp. in Buffalo, N.Y., and former chairman of Dunlop Tire Corp., wondered if the fate of Dunlop under Goodyear will be the same as Kelly-Springfield Tire Co.

    In October, Goodyear announced it will close the Cumberland, Md., headquarters of Kelly in 1999. Goodyear also shuttered a Kelly plant in that Maryland city in 1987.

    ``Obviously, since we sit in Buffalo, what happens to the headquarters and the plant (in nearby Tonawanda, N.Y.) is of concern,'' Mr. Clark said. He noted that Dunlop is Dunn's second- or third-biggest-selling brand.

    If Goodyear decides to move a large number of Dunlop tires through its company-owned stores, ``that's going to have an effect on us,'' he said.

    Mr. Clark said the Dunlop plant in Tonawanda should be safe because it manufactures some specialty products—such as motorcycle tires—that Goodyear doesn't have.

    The Dunlop brand will retain a distinct identity, said Dick Cahoon, vice president of marketing for Dunlop Tire Corp., ``and the strength of the Goodyear marketing resources can only help the brand's image in the marketplace.''

    Mr. Cahoon added that he has called more than 50 of Dunlop's largest dealers, and their response was ``overwhelmingly positive.''

    Brian Hesje, president of Fountain Tire in Edmonton, Alberta, which is 49-percent owned by Goodyear, said the combination of Goodyear and Sumitomo to form the world's largest tire company will have a positive effect on Goodyear dealers.

    ``It makes a huge difference for Goodyear to be No. 1, and it makes us in a stronger position to be No. 1 in our area,'' he said.

    But, Mr. Hesje and others raised questions about Goodyear's brand strategy once the deal is finalized.

    The positioning of two Dunlop brands—Centennial and Remington—hasn't been determined, said Mr. Cahoon. But he thinks the Dunlop brand will be positive for Goodyear retailers.

    ``There has been test-marketing of the Dunlop brand in Goodyear stores over the past two years, and the results have been positive,'' he said.

    At regional dealer meetings in January, Goodyear announced that it will roll out several lines of low-priced, non-Goodyear-brand tires this year. ``I'm curious how that's going to match with the others,'' Mr. Mitsos said.

    But none of these dealers thinks that there will be any lessening of consolidation activity among the world's tire makers. ``It's inevitable that there's going to be a battle of the titans,'' Mr. Clark said. ``They need the economies of scale to compete at the factory and retail level.''

    Reporter Bruce Davis contributed to this story.

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