AKRON—Ford Motor Co.'s new advertising campaign to promote itself as ``America's newest tire store'' hasn't gone unnoticed in the tire industry. Some tire dealers are shrugging off the TV commercials, featuring name-brand tires bouncing inside a three-dimensional auto dealership, as just another big-name retailer in the marketplace, while others see it as an intrusion by the auto maker into their territory.
``How much is enough with these guys?'' said Jack McCarthy, CEO of McCarthy Tire Service Co. Inc. in Wilkes-Barre, Pa.
Mr. McCarthy told Tire Business he has discontinued purchasing Ford products for his dealership since the ad campaign kicked off Aug. 2, even though he has an estimated $6 million in Ford vehicles.
``Why should we buy their products when they are going to be a major competitor of me and every other tire dealer?'' he said.
McCarthy Tire is the 20th-largest commercial tire dealership in the U.S., with commercial sales of $38.6 million in 1998. It operates 12 locations, one of which is retail.
The company has bought Ford vehicles since 1954, but Mr. McCarthy said he thinks tire dealers should boycott Ford products because the auto maker wants to take away their customers.
``This is my livelihood. I sell tires. I resent the fact that they are going to get into my business and every other tire dealer's business,'' he said.
Ford is touting its Ford and Lincoln-Mercury dealerships as one-stop shops for virtually all automotive products and services to make up for falling warranty service revenues.
The auto maker intends to sell 1 million tires in 1999, 3 million in 2000 and 6 million in 2001. In July alone, Ford dealers sold 96,918 tires compared with 700 in July of 1998, a company spokesman said.
More than 2,400 of the 5,000 Ford and L-M dealerships in the U.S. sell tire brands fitted as original equipment on Ford vehicles—Goodyear, Michelin, Firestone and General. The company's QuickLane and AutoCare service shops also will sell tires.
A year ago, the auto maker introduced an ``Around-the-Wheel'' program to its dealers to boost sales of tires, brakes, struts, shocks and wheel alignments. Ford has sold tires for years, but the ad campaign marks the first time the auto maker has pitched it nationally to consumers.
Some tire dealers view Ford's aggressive move into the aftermarket as a boon for their businesses.
Frank DiGiglio, general manager of Vespia Tire Centers Inc. in South River, N.J., said the dealership recently began selling Goodyear tires to three Ford dealerships, a service it also has provided for years to Chrysler Corp.—now DaimlerChrysler—dealerships. He said he sees Ford's move into tires as no different.
``As long as we receive credit and delivery commission, and they are part of our customer base, we'll continue to do it,'' Mr. DiGiglio said.
Goodyear has a program in place for its dealers to deliver tires to Ford's Around the Wheel dealers at previously negotiated prices and receive a commission on those sales, Mr. DiGiglio said.
Still, Mr. DiGiglio said he doesn't welcome the added competition and noted that Ford needs to overcome obstacles such as the premium pricing of OE tires and the need to stock numerous sizes and brands. He said he doesn't know how Ford dealers can service customers quickly if they don't have the tires in stock.
``I think that for a person to come in and say, `Just give me four of these tires—I want to be out of here in 25 minutes,' I think that'll be a difficult task for them without stocking at least 900 to 1,200 tires per location,'' he said.
Mark Rhodes, president of Service Plaza Tire Inc. in Cape Girardeau, Mo., said independent tire dealers are used to seeing new competitors enter the industry, but he doesn't consider Ford a true competitor.
``My opinion is that Ford Motor Co.'s focus is to sell cars. When they attempt to do other things that are not truly their focus, it's hard to do it very well,'' Mr. Rhodes said. ``I think that will keep them from being a real competitor, because I don't think their commitment level will be as strong as an independent tire dealer's would be.''
Service Plaza Tire, which has 34 outlets, supplies tires to more than 30 Ford dealerships, Mr. Rhodes said.
Ford's ad campaign also involves radio and print ads promoting specials on tires. Bob LaRoche, wholesale manager of Nashua, N.H.-based Maynard & Lesieur Inc., said Ford dealerships in his area are selling certain General tires for $32.99, a price his dealership can't even get for the same tires.
Maynard & Lesieur sells Michelin, Uniroyal, BFGoodrich, Continental and General brands to Ford, but may reconsider doing so if Ford can buy from the tire makers at prices below the wholesaler's cost.
``It's going to hurt independent tire dealers in the long run,'' Mr. LaRoche said, in reference to Ford's buying clout.
However, Larry Deatherage, president of Dee's Tire Stores Inc. in Yukon, Okla., isn't worried about Ford as long as tire dealers continue to supply Ford dealerships. An independent Goodyear dealer with three stores, Mr. Deatherage has sold tires to auto dealers for 35 years and is looking forward to selling premium OE brands to Ford dealers.
Dee's Tire currently sells about 50 tires per month to Ford dealerships at a commission of $6 to $7 per tire, he said.
Rather than worry about how Ford tire sales will affect his business, Mr. Deatherage is hoping the car maker's Around the Wheel initiative will develop quality, well-trained tire technicians that he can hire away from its dealerships.
In the long run, Mr. Deatherage thinks Ford will realize that its Around the Wheel program takes too much personnel and will contract with independents to perform diagnostic and warranty work.
``You never want to play another man's game. They're trying to play another man's game in the long run,'' he said.
``Their object is to manufacture and sell their products. If they can sell every bit of their product off the assembly line, they've got no use for dealerships or anything else. All this other (Around-the-Wheel initiative) is a way to move that product.''
Editor Dave Zielasko contributed to this report.