WASHINGTON—Tire dealers who "go green" may see benefits other than the good feelings that come with being more environmentally conscious. Results of a recent survey indicate that selling green products and services may translate to a "greener bottom line" for businesses.
Of the 1,305 small businesses that responded to the survey—conducted by Green America, EcoVentures International and the Association for Enterprise Opportunity—three out of four of them reported that sales of green products and services actually increased during the economic downturn. About 58 percent of businesses surveyed said they expanded their products and services with green offerings during the recession, with 84 percent of that group reporting increased sales as a result of their investment.
In addition, companies with the "greenest" practices among the group also reported the highest sales. About 79 percent of respondents strongly agreed that offering green products and services gave their businesses a competitive advantage, and 75 percent said they plan to expand their green offerings. "In the three decades since Green America first started promoting sustainable practices in business, the market has clearly shifted dramatically," said Russ Gaskin, chief business officer for Green America. "We believe that the market preference reported by the small businesses in this study is just the tipping point. Sustainability is clearly becoming a competitive imperative in business."
For tire makers and dealers alike, the potential competitive advantage that goes along with the trend toward sustainable practices is one that can't be ignored. On the manufacturing front, many tire makers have been focused on reducing traditional raw materials in their products—both on the commercial and retail side—in favor of new, more sustainable technologies. Many of the changes are being driven through regulations, such as changes to Corporate Average Fuel Economy (CAFE) guidelines for vehicles.
"CAFE regulations are getting stiffer, which means we've got to be working on it for OE, which means it's going to have to come into play when we sell replacement tires," said Rick Brennan, executive director of product strategy for Falken Tire Corp., in a recent interview with Tire Business (See related story 'Falken looks for positive in an uncertain market' in TB's June 10, 2013 issue).
"It's going to be driven by CAFE regulation, and it's just going to be driven by the fact that tires, overall, have to fit into the environment better. The consumer's not asking for it right now, but he's going to need it." Dan Guiney, director of technical services for Yoko-hama Tire Corp., agreed that vehicle-related regulations "certainly are a driver for our industry" in the development of eco-friendly products, but the economics in the marketplace—specifically the cost of fuel—is the biggest driving force for consumers. "Regulations have an impact, but so does the cost of diesel fuel and the cost of regular fuel," he said.
"It gets people's attention, and if they believe that companies are retailing products that help them do that, there's certainly some dialogue and some interest in trying those products." Yokohama notably has incorporated the use of orange oil into several of its product lines, the most recent being its AVID Ascend all-season touring tire, which launched in 2012. The Ascend is the first Yokohama replacement tire to fall under the company's BluEarth family of eco-friendly products, which offer lower rolling resistance and better fuel economy.
"I think everyone is focused on improving energy efficiency of their products," Mr. Guiney said. "As new generation tires are being designed, the energy efficiency of that product both in manufacturing and in use are a primary focus along with the safety attributes and the longevity of the product as well.
There've been more things put on the engineer's list for sure." Jeremy Smith, manager, community and corporate relations for Bridgestone Americas, said in the last few years the tire maker has seen "robust growth" in its Ecopia low-rolling-resistance and high-mileage tires. Prior to the recession, tires focused on reduced rolling resistance "served a narrow, niche market," he added.
"Consumers are holding companies to a higher standard with regard to sustainability practices and product development," he said. "
A 2013 Bridgestone Americas consumer survey found that individuals are cognizant of being green as they shop, with 92 percent indicating a manufacturer's operational sustainability or a product's sustainable attributes have some impact on their purchasing decisions." According to Bridgestone's survey results, the top three ways companies can show they are environmentally responsible are: creating a product design that minimizes energy and water usage; minimizing generated waste; and minimizing carbon emissions tied to waste.
Bill Jackson, store manager for Suburban Tire Auto Care Centers' Hanover Park, Ill., location, said while customers aren't necessarily coming into his shop with sustainability in mind, actively promoting the "greenness" of products can be an effective sales tactic. "Eco's not really in their head already, but if you've got a customer—even just a regular customer who's looking at a touring tire—and you bring up the advantages of the eco-friendly tire, they will sway toward helping the environment more times than not," he told Tire Business. "Having eco-friendly products, they'll move faster than a tire that's not, just because people think they're helping the environment."
Jessica Carrino, marketing manager for St. Charles, Mo.-based Sparks Tire & Auto, said "green" isn't usually going to be on a consumer's mind unless the dealer puts it there. "I'd say performance and price sell more than a green tire. (Consumers) don't come in looking for that, but we do promote that because they are some of the better tires on the market right now," she said.
"...In the past year, I've seen a trend of (sales) increases each month, with people that choose that tire over another one." The product offerings aren't the only thing that's green about Suburban Tire. In 2008, the company committed to a major overhaul of its Hanover Park outlet, tearing down the existing 75-year-old facility and building in its place the self-proclaimed "world's greenest tire store."
The location features a geothermal system that heats and cools the showroom and a waste oil system to heat the shop, leaving the store with no gas bill. Other green features include motion-sensing lights, solar panels, preferred parking for hybrid vehicles and a literally green roof designed with sedum plants to absorb water runoff.
Mr. Jackson said the company's eco-friendly focus has had a direct impact on business. "I think it's definitely saved us money, and it has brought people in," he said. "With the green thing in mind, when people are choosing one place over the other, it gives you a little added advantage." While Mr. Jackson noted that pitting sales figures from the company's old building (four service bays) against the new one (10 bays) is an "apples to oranges" comparison, he said he believes a portion of the increase can be attributed to the company's green practices.
"From the old shop to now, our sales have tripled.... We're doing $200,000 a month now, where in the four-bay shop we were at $65,000-$75,000," he said. Sparks Tire, on the other hand, is new to the green scene, but the company is working to pursue a more sustainable path. In 2012, the shop added a waste oil heater, which Ms. Carrino said has saved the company hundreds of dollars. "So far we've just done the waste oil heater," she said.
"We are talking—we just met with a local energy resource company—we want to eventually go solar, but we don't know how that's going to happen. We don't own the building, so it's a lot of logistics sitting down with the landlord and the accountant and figuring out if it's feasible for us to do or not. "That's the path we'd like to go next, I just don't know if we're there yet." The business, which is a NAPA AutoCare center, has been certified under NAPA's GreenCare program, which requires that shops be evaluated by environmental engineers and achieve EPA certification.
In addition, the shop recently was named by the Automotive Service Association Midwest (ASA-Midwest) as a "Green Star Facility." To be named a Green Star shop, a dealership must make "a significant environmental impact by eliminating or reducing hazardous waste going to landfills and diverting potentially contaminated water from unprotected storm drains and waterways," the ASA-Midwest said.
To reach this reporter: [email protected] crain.com; 330-865-6148.