HILTON HEAD ISLAND, S.C. —Disruption is now almost a daily event in the tire industry, according to Dave Zielasko, publisher of Tire Business.
But disruption is good for business as long as you're prepared to face it, Mr. Zielasko said in his presentation at the 35th Clemson University Global Tire Industry Conference, held April 10-12 in Hilton Head Island.
"Disruption can be an opportunity," he said. "You need to embrace innovation and the turbulence that comes with it."
Part of the opportunity comes from not being afraid to work with your competitors, according to Mr. Zielasko. In the past year, Goodyear and Bridgestone Americas formed TireHub from their company-owned wholesale operations, while Michelin North America and Sumitomo Corp. of America/TBC Corp. merged their wholesale operations to create National Tire Wholesale.
This didn't just mean the coming-together of two major wholesale operations to ensure the availability of tires, he said.
"Because of disruption, there was a real opportunity for regional wholesalers to gain additional business."
There was also disruption caused by changing consumer vehicle preferences and resulting shifts in car manufacturers' product mixes.
In 2018, light truck sales in the U.S. rose 7.7 percent to just shy of 12 million units, a level passenger car sales never achieved, he said. Simultaneously, car sales fell 12 percent to 5.4 million units, the lowest since 1958.
Anticipating this change, Fiat Chrysler Automobiles shifted its focus to its Jeep and Ram models, and Ford Motor Co. announced it would stop selling sedans in North America. General Motors Co. phased out six models — including the Cruze, Volt and Impala — and closed five plants.
For tire dealers, however, these changes mean the opportunity to sell higher-value tires, Mr. Zielasko said, although it also means doing analytic work in local selling and servicing statistics to understand the potential.
Understanding the electric vehicle market is also critical to success down the road. In 2018 alone, EV sales nearly tripled over 2017, he said.
"It took five years to sell the first million electric vehicles, but it took just six months to sell the last million," he said.
Over the next five years, auto makers will introduce 158 new battery-powered vehicles, Mr. Zielasko said, citing data from Paul Eichenberg Strategic Consulting.
"Tire dealers will have to know how to service these vehicles," he said, "which otherwise will go to franchised dealers — which also are in the tire business."