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April 14, 2003 02:00 AM

Some dealers unhappy with Goodyear-ATD pact

Lisa Aichlmayr
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    In a move that some Goodyear dealers said has strained relations once again with the tire maker, Goodyear has signed wholesaler American Tire Distributors Inc. (ATD) to distribute its Goodyear-brand medium truck tires, effective April 1.

    In both its dealer meeting in Orlando in February and annual earnings reports, Goodyear officials said the tire maker needs to repair damaged relations with its dealers and distributors, which account for nearly 60 percent of the company's replacement volume.

    ``It is absolutely critical that we win back their confidence,'' said Robert Keegan, president and CEO, during a conference call with analysts April 3.

    But some dealers contacted by Tire Business said the decision to add American Tire Distributors has alienated them once again. Charlotte, N.C.-based ATD operates 62 distribution centers serving dealers in 35 states with most major-label tire brands.

    ``I'm neutral to negative (about Goodyear),'' said Gary Wright, president of Nebraskaland Tire in Lexington, Neb. ``From what I've seen, I think they made a unilateral decision on how they're going to market on the commercial side that certainly was not in line with what they were talking about in Orlando as far as who their distribution is and who they need to take care of.''

    A Goodyear spokesman said the agreement with ATD, which already was a dealer for other Goodyear corporate brands, does not give the distributor access to Goodyear's national accounts or government sales.

    ``That in no way changes the commitment to dealers,'' he said, adding company officials are meeting with some concerned dealers.

    Turnaround expert Bill Brandt, president and CEO of Development Specialists Inc. in Chicago, said dealers-and Goodyear's distribution network in total-are critical to the company's turnaround. But the solution will have to be a give and take on both sides, he said. Dealers need to recognize Goodyear's needs and vice versa, he said, so the two can establish a ``happy medium.''

    One element for both is simply time. Mr. Keegan said Goodyear plans to make significant headway in 2003, but not all of the tire maker's problems will be solved this year.

    An ATD spokesman said the arrangement between the distributor and Goodyear is a growth opportunity for both. The Goodyear brand will supplement the Dunlop and Steelmark truck tire brands offered by ATD.

    ``We see that as an opportunity for us and Goodyear in the marketplace as well as an opportunity for us to expand our relations with Goodyear,'' the ATD spokesman said.

    The relationship may even broaden to passenger and light truck tires, the ATD spokesman said.

    Goodyear also is looking for growth from the venture. ``We have been struggling a little bit in that segment of the business for the past couple months, so it was seen as an opportunity to increase some (market) share,'' a spokesman for the tire maker said.

    Still, some commercial dealers said the arrangement worries them because ATD-with its national reach and deeper volume discount-could sell to competitors at a lower cost, thereby allowing those dealers to undersell the independent Goodyear dealers.

    Mark Carpenter, president of Jerry's Tire & Auto in Lake Odessa, Mich., said he's afraid he could lose as many as 20-30 percent of his customers if his competitors buy Goodyear truck tires from ATD.

    ``You just can't afford to lose customers,'' he said. ``When you lose it to your own product, that's what hurts the most.''

    But the ATD spokesman said the arrangement also can help dealers who may decide to take advantage of the channel.

    ``We really see our role in the marketplace to enhance the service and increase the inventory and availability for independent tire dealers across the country,'' he said. ``I would hope that (fear about competition) would be of less concern than our ability to provide greater service.''

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