PARIS-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 of 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 hikes 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. The company attributed the increase to consumers' ``flight to quality'' in the wake of the Firestone recall publicity.
Globally, Michelin reported a 2.8-percent rise 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 at 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.