AKRON—What are dealers talking about as the New Year ushers in? If you guessed Bridgestone/Firestone Inc.'s tire recall and uncertainties about the economy, you'd be right on the mark.
The publicity surrounding the massive Firestone recall may have harmed the public's perception of the tire industry, but most dealers don't feel they were tarred by the same brush.
In a year-end survey of 20 dealers, conducted by Tire Business, nearly two-thirds of the respondents agreed that the Firestone recall had harmed the industry's image, but only two believed that damage extended to tire dealers as a group. And fewer still indicated that their particular dealership's image had been harmed.
The general consensus among respondents was that the recall had heightened public awareness of tires and tire maintenance, and had provided a temporary increase in replacement tire sales.
The scrutiny the tire industry is receiving as a result of the recall should leave it stronger, said H.H. Arihood of Arihood Tire Market in Rensselaer, Ind. "I feel it supports the experienced dealers who specialize in tire services and customer consulting," he said.
Consumers require more and better education about tire maintenance at the point of sale—especially about air pressure, said Duane Gardner of the Olson Truck Tire Center in Tampa, Fla.
"As a Firestone dealer," he said, "more than 70 percent of all `recall' tires we replaced had less than 20 pounds air pressure." (Recommended pressures for these tires generally were in the range of 26-30 psi.)
Another BFS dealership said it is rethinking its product line-up. "Being 90 percent Bridgestone/Firestone will certainly make it difficult to capture new customers," said John Allen of Hughes Brothers Inc. in Wilmington, N.C. "(We) will have to add additional lines to offer more choices."
Asked about the importance of automotive service to their overall business, nearly three-quarters of the respondents said they couldn't survive in 2001 without it. Typical of the responses was that of Mike Garrett at Garrett Tires & Treads in Grand Island, Neb.: "There is too much overhead to survive on the small margins (on tires) in a very competitive market."
Most of those who said they could do without automotive service were either primarily in the commercial or wholesale end of the business, but one who offered a contrary point of view was Arnold Gritters of Hungry Dutchman Tire Co. in Pella, Iowa, who found auto service a hindrance.
"Automotive service radically slows the ability of a tire dealer to perform the efficient service necessary to survive in the 2000s," he wrote.
He also was among the minority who said they weren't concerned about the economy in 2001. "A dealer that performs super service and sells at a fair price doesn't have to worry about the economy," Mr. Gritters said.
The overwhelming majority of respondents, however, said they were worried about the economy—"concerned, but not terrified," as Galen Glotfelty of Tri County Tire in Petersburg, W.Va., put it.
Most said they will be keeping a closer eye on expenses, trying to lower overhead, reduce debt and trim inventories. Many also will be looking to buy better, hunting out special deals on tires.
One potential source of deals could prove to be a two-edged sword, as Barry Levin of Levin Tire Centers in Highland, Ind., pointed out.
"There appears to be a slowing in the auto sector," Mr. Levin said, "which could result in additional units being available for the replacement market—further depressing prices."
Concerns about the economy also contributed to a reluctance to boost spending on training. Asked whether they will be budgeting more for training in 2001, respondents were almost evenly divided, with those saying "no" often citing the uncertain business climate.
Others said the spotlight turned on the industry by the Firestone recall practically mandated more training for dealership personnel.
"We feel that the changing market warrants better qualified people to perform the everyday services that we do," said Fred Burklund of Walker Tire Inc. in Omaha, Neb.
Looking at the commercial tire business, respondents overwhelmingly expected manufacturers to increase their involvement in terms of servicing end-users, including owning commercial dealerships.
Commercial dealers indicated it was difficult to hold onto large fleet customers with multiple locations, and said they were going after smaller, more local fleets, where they also were facing competition from leasing companies.
One Goodyear dealer in South Carolina said he expected more opportunities with the larger nationwide network being created by Goodyear's joint venture with Treadco Inc., while a Goodyear dealer in Missouri expressed concern at being thrust into direct competition with Treadco in his market.
When asked what other concerns they had for the year ahead, dealers' responses included rising insurance rates, the tight labor market, the prospect of more government regulation of the tire industry as a result of the Firestone recall, and tire makers selling direct to consumers/end-users—whether via the Internet or through national account programs.
"Hospital insurance rates are up 25 percent," said Julian Frasier of Frasier Tire Service in Sumter, S.C. "We had to cut benefits."
Rates for the group insurance he offers employees were the No. 1 complaint of Mr. Glotfelty in West Virginia. "It's as high as $700 per family a month," he lamented.
A Kelly dealer in Michigan worried that Goodyear's G-3 multi-brand marketing program was "screwing up" the Kelly line. "What a mess!" he exclaimed.
Still, the goal for most dealers in 2001 is likely to be similar to that of John Anderson of John Anderson T.B.A. Inc., Chillicothe, Mo.: "to sell more by being more competitive."