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Consumers ruling the tire business

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I always look forward to hearing Rick Brennan talk. He has a keen understanding of the tire business and the ability to explain industry and economic trends in terms I can understand.

Mr. Brennan is the vice president of marketing for Kumho Tire USA Inc., and I met him early in my 28-year tire industry career when he was working for Bridgestone.

We run into each other periodically, the latest being at the recent Kumho dealer meeting in Mexico.

In a speech he gave there to dealers and distributors, he shared his thoughts on some of the issues that could impact the market in 2013.

His ideas differ somewhat from what I had been hearing, and I thought I would share a couple of them with you to see if they get you thinking creatively.

Mr. Brennan talked about how passenger and light truck tire shipments have been stagnant for the past 10 years in the U.S. and how many people attribute the recent weakness to the recession.

But he thinks there are other issues going on, as well, like the impact of cell phones—and not just their ability to give everyone easy access to information or to communicate anywhere at any time.

Cell phone plans are expensive. Today it's not uncommon for a family of four, all with smart phones, to have a $300 a month cell phone bill. Compare that with the $20 a month bill for a landline in the old days.

People are making choices today where they want to spend their money, and tires are a low priority, he said. Many are choosing to spend that $300 on cell phones, smart phones and other electronic media, which means they have less money for other purchases.

Cell phones also allow customers to comment on products and services instantly.

“One of the things that is beating us all up is the consumer” through often spur-of-the-moment customer reviews, Mr. Brennan said. “If he doesn't like the tire now, everybody reads it. He can just say what he thinks.”

There are a lot of places where patrons can go to get consumers' opinions, and all of these sources are looked upon as being more important than what the manufacturer has to say, according to Mr. Brennan.

“You can't just benchmark somebody else's tire,” he said. “You almost have to benchmark the consumer reviews and see how many of them are bad. Are they all saying the same thing? Can we fix that?”

Another change taking place is in how people drive, where they drive and how often they drive. This has to do with the aging Baby Boomer population. They aren't driving nearly as much.

Speaking about himself, Mr. Brennan said over the last 20 years he and his wife have done a lot of driving, taking their kids to soccer games, to school, to the grocery store, to gymnastics—any place they wanted to go. Now that they are out of the house, “we don't go a lot of places.”

The Baby Boomer population is going to increase for the next 10 years and that means the number of miles driven is not going to rise dramatically, Mr. Brennan said.

“Because of that, we're seeing an effect on the number of tires sold in the U.S.,” he said. “So, it's not just the economy causing that flatness, it's old guys like me.”



Dave Zielasko is editor and VP/publisher of Tire Business.
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