NASHVILLE, Tenn. — Bridgestone Americas Inc. has notified American Tire Distributors Inc. (ATD) it is discontinuing distribution of its passenger and light truck products through ATD, just days before TireHub L.L.C. — the Goodyear-Bridgestone Americas Inc. joint tire distribution venture — is to begin operations.
The move is effective July 31, or 30 days after TireHub will be launched.
Bridgestone said it will continue to distribute commercial truck and agricultural tires as well as tubes in the U.S. through ATD, the largest aftermarket tire distributor in the country.
National Tire Distributors Inc. (NTD), ATD's Canadian subsidiary, will continue to distribute Bridgestone passenger and light truck tires in Canada.
Bridgestone informed ATD of its decision on June 25.
Goodyear ended its direct supply relationship with ATD on April 23, a little more than a month before Bridgestone followed suit. Bridgestone and Goodyear jointly announced the formation of TireHub at the close of business on April 16.
In a prepared statement, ATD said it is "disappointed" in Bridgestone's decision, "which we believe limits consumer choice."
ATD maintains it is financially viable.
"Importantly, ATD continues to generate substantial cash flows and as of May 31, 2018, had approximately $300 million of liquidity," the company said. "We have a loyal base of customers and manufacturer partners with whom we are continuing to work as we always do."
Bridgestone's move was announced just days after ATD held its inaugural, three-day North American Innovation Summit in Dallas, before 1,200 associates. There, ATD launched three digital initiatives it said are the next phase of its strategic transformation.
"Our value proposition continues to strengthen as we execute our strategy. Our industry is evolving and we are been bringing game changing innovation — including digital tools, programs and technical support — that will make us the most connected and insight-driven automotive solutions provider in the industry," ATD said.
"We have been and will continue to take steps to meaningfully offset the potential impact of Goodyear and Bridgestone's actions. To us, it's all about keeping the power of choice alive, and we look forward to continuing to support our customers and manufacturer partners like no one else can."
ATD informed its customers of Bridgestone's decision through a letter signed by ATD President and CEO Stuart Schuette, writing that the decision "limits ATD's product line, but it also limits how customers can purchase and obtain products."
Mr. Schuette told customers that ATD continues its "ironclad commitment to our customers and vendors to always deliver the best service in North America. We are helping to chart the course for many of the changes in our industry and, our purpose is to help our customers thrive and drive into the future.
"We have set a high bar in terms of customer service, choice, and the integration of new technologies with one goal in mind: To support our customers. Our vision is one that is centered on technological innovations to support customers by driving traffic, saving you money and simplifying your operations," Mr. Schuette wrote.
Mr. Schuette told its customers that ATD remains "well-positioned and will remain the leader in the industry.
"ATD will continue to offer more choice to customers — many of whom are independent dealers — than any other company. We offer products from nearly two dozen tire manufacturers and more than 50 wheel and supply vendors. We operate the largest national network, and our world-class supply chain has been built, refined, and perfected over decades."
In the letter, Mr. Schuette touted ATD's commitment to customers by driving traffic, saving money and simplying operations. He cited ATD's new iPhone-based delivery platform, traction, as one innovation in a suite of value-added services.
"Going forward, ATD is confident in the focus of our business and the strategy we have in process," he wrote.
"Over the last 80 years, we've built a network to deliver on the needs of our customers. We are customer-focused first. We will always remain an innovative partner. From our standpoint, everything ATD does is aimed at driving store traffic, enhancing operations, and maximizing profits for our customers."
In its statement, Bridgestone said it "is focused on giving consumers and the independent dealers that serve them more access to the full depth and breadth of our passenger and light truck product lines. Third-party distributors are an important part of Bridgestone's consumer tire distribution strategy, and we are committed to prioritizing distribution partners that prioritize our company's products and brands.
"As such, we will end our affiliate and associate dealer programs with American Tire Distributors (ATD) in the U.S., effective July 31. ATD will continue with the Bridgestone consumer tire delivery program in the U.S. for a period of time to ensure a seamless transition for customers."
TireHub combines Goodyear's company-owned wholesale distribution network with Bridgestone's Tire Wholesale Warehouse (TWW) business, creating a business with 80-plus locations throughout the U.S.
The business will be based in Atlanta and managed by an independent management team led by CEO Peter Gibbons, a veteran business and supply chain executive. The JV has an an estimated fair value of roughly $600 million.
TireHub will provide U.S. tire dealers and retailers with a comprehensive range of Bridgestone- and Goodyear-brand passenger and light truck tires — including the two tire makers' associate brands — with an emphasis on satisfying growing demand for larger-rim diameter premium tires.