PARIS (May 18, 2001)–Michelin North America Inc. lost market share in truck tires in the first quarter as it held a hard line on price increases in the face a 15-percent drop in replacement market demand for truck tires, Group Michelin said in its first quarter operating results.
As a result, Michelin has begun to review its price increases on a product line by product line basis, the company said. Price increases on passenger car and light truck tires, however, are being honored by the marketplace, the company added.
In passenger car/light truck tires, Michelin continued to increase market share in North America, as sales of Michelin-brand tires shot up 11.6 percent, compared with a 6.8-percent drop in overall demand for these type tires, Michelin said, attributing the increase to consumers' “flight to quality” in the wake of the Firestone recall publicity.
Globally, Michelin reported a 2.8 percent increase in first quarter sales, to $3.41 billion, despite a 4.1-percent drop in units shipped. Michelin attributed the sales increase to improved prices and a better product mix.
For the rest of 2001, Michelin is forecasting volume growth 2 percentage points ahead of the market. Longer range, the company is striving to achieve a 10-percent operating margin by 2005. In North America, Michelin is implementing a structural cost reduction plan aimed at saving the tire maker $125 million annually; among the moves are production slowdowns to match demand and a review of investments.