AKRON (Feb. 3, 2015) — The past few weeks have shown how quickly things can change in the tire business and why it is becoming more important than ever to keep up with trends and try to forecast where the industry is going.
It wasn't that long ago, for example, that the major tire manufacturers selling in North America backed away from the entry-level part of the market to focus on their higher-margin, higher performance, name-brand products.
Their reasoning: The lower end of the market was flooded with inexpensive tires imported primarily from Asia. Rather than compete primarily on price in this arena, they chose, for the most part, to move out of it.
That strategy appears to have run its course.
Group Michelin CEO Jean-Dominique Senard recently revealed the French tire maker plans to combat the flood of low-cost tires in North America and Europe by increasing the number of less-expensive tires it offers in its sub brands such as Tigar, Kleber and Riken.
This influx of low-cost imports “tends to have an impact on the price structure of the tire market,” Mr. Senard said, adding that if Michelin doesn't offer low-cost tires under its sub brands, dealers will turn to the competition for entry-level offerings.
Don't be surprised if the other majors follow Michelin's lead.
Goodyear's Jan. 26 announcement at its just-concluded dealer conference in Texas that it will begin offering on-line tire ordering later this year via its website is another seismic shift in the industry, illustrating how quickly the Internet is altering the norms of tire selling and how companies go to market.
While several large tire distributors and tire sellers have sold tires online for years, this is a first for a major tire manufacturer.
Akron-based Goodyear revealed that once the program is activated, consumers will be able to purchase Goodyear tires online from the company and have them installed locally by an authorized retailer of their choice. Customers will pay Goodyear online for the tires, taxes and standard installation, and the tire maker will compensate the installing dealer.
With this move, Goodyear is responding to the changing habits of tire consumers. For example, last year more than 20 million consumers visited Goodyear.com to research and shop tires, the company said. And an estimated 83 percent of tire shoppers now use digital sources as part of their purchase process—up from 66 percent two years ago, according to a recent Millward Brown Digital-Google Auto Tires Purchase Study.
The tire world is changing—and changing fast. Keeping up with trends and anticipating market changes is now part of what's considered normal business practice.
Don't let them pass you by.
This editorial appears in the Feb. 2 print edition of Tire Business. Do you have an opinion about it? Send your comments — or a letter to the editor — to [email protected].