The first Pirelli-brand off-the-road (OTR) replacement tires arrived in the U.S. in late September destined for markets along the country’s southernmost cross-country interstate highway, Interstate 10.
“Anything to the south of California to the north of Florida is basically where we are focusing,” says Alex Vitale, CEO North America for Prometeon Tyre Group Commercial Solutions LLC, the commercial arm of Pirelli Tire North America Inc. “We have a good concentration of dealers in this area that sell both truck and OTR products.”
The arrival of the Pirelli OTR tires at the Savannah, Ga., port marked the brand’s entry into the U.S. market. “We deliver containers direct to dealers,” says Vitale. “Quite a few of our dealers take mixed loads of truck and OTR tires.”
Vitale says Pirelli does not intend to be heavily involved in distribution. “We give a few dealers their area to work and leave it up to them to push the product all the way through.”
The company has a warehouse in Rome, Ga., but it will be used mainly for distributing medium truck tires. “We try to avoid using the warehouse for agricultural and OTR products. Just the size and the movement make us less competitive. We try to ship direct shipments from Brazil right to our customer.”
Several dealers are selling Pirelli OTR tires, which range up to 29 inches in diameter, in the U.S. Six models are currently available for loaders, graders, dump trucks, forklifts, and other construction applications, as well as for cargo handling equipment at ports.
Prometeon Tyre Group Commercial Solutions is headquartered in San Diego, Calif. The company introduced the first Pirelli-brand truck tires, the TG:85 and FG:85 series, in the U.S. in April 2017. “With our introduction of our commercial truck tires in the U.S., the plan was always to introduce Pirelli industrial tires to the marketplace,” says Vitale.
Vitale says the company intends to expand the OTR tires to the entire U.S. market, but he did not specify a time frame. He did, however, name when Pirelli brand farm tires will be available in the U.S. “We are still testing in the market with great results. We should be introducing ag in January of 2019.”
The tires for the U.S. market are made at Pirelli’s OTR and agricultural tire factory in Brazil. Pirelli has been supplying replacement OTR and ag tires and original equipment fitments to the Latin America market since the 1970s. “We’ve had a long history in Latin America both on agricultural and OTR. We are OE to a few companies there, especially on the agricultural. We’re absolutely market leaders in the Latin American market for small OTR and agricultural tires,” says Vitale.
Goal is 5,000 units per month Vitale sees continued demand for small OTR tires (20-inch to 25-inch diameter) driven by increased construction spending and more powerful machines. “The big machines seem to be used a little bit less because the small ones are becoming more powerful. Smaller equipment, such as skid steers, costs less to run and to transport.”
The company’s sales goal is 5,000 units per month in the U.S., and Vitale expect to meet that target. “We are a great name with a great reputation,” says Vitale. “Dealers seem to easily sell our product as soon as we produce it. I don’t know if the market was waiting for another major brand to come in or the market is just booming for construction and needs more tires.”
Vitale suggests dealers keep plenty of inventory on hand. “Without inventory and delivery you’re losing out. Nobody’s waiting for these tires. If you don’t have it in inventory or access to it pretty quick, consumers will go elsewhere. That’s where the differential is going to be between dealers. These big bulky tires are not a fast overnight delivery. It’s a lost sale if you don’t have inventory.”
Tips for closing the OTR sale
Modern Tire Dealer asked manufacturers and marketers for tips that help a dealer close the OTR sale as well as their view of the future for bias tires. In addition to Pirelli, eight other companies responded. They were: Seth Walters, vice president-aftermarket sales (East) for Alliance Tire Americas Inc.; Minoo Mehta, president of BKT USA Inc.; Michael Dembe, executive director of product management for construction at Camso Inc.; T. Shawn Rasey, director of global business development of earthmover tires for Continental AG; Eric Matson, global field engineering manager for Goodyear Tire & Rubber Co.; Justin Brock, marketing manager for construction at Michelin North America Inc.; Bill Dashiell, senior vice president-commercial tire division at TBC Brands LLC; and Bruce Besancon, vice president of OTR sales for Yokohama Tire Corp.
Responses to MTD’s request for tips to close the OTR sale ranged from stocking plenty of inventory to positioning one’s dealership as a knowledgeable partner rather than a seller of a commodity.
Alliance: My biggest advice would be to make sure you’re not ignoring the small OTR sale! So often, dealers get focused on the big machinery and the bigger-ticket tire and they forget that there’s a forklift or skid steer sitting right next to them. Selling those smaller tires would make for a decent margin and would help build relationships with the customer that could yield the big sales later.
I’d also recommend that dealers get familiar with several different radial and bias options for small OTR sales. Nowadays, there’s a big range of offerings that can help dealers fit the specific needs of their customers in terms of tread design, price point and other design parameters. That makes the dealer part of the customer’s team instead of a commodity. That’s positioning for the long haul.
BKT: Ask questions and get all the information you can on what they are doing with the machine, so that one can suggest the correct tire. Every company offers specialist technical help for the dealers. We encourage dealers to use their help.
Handling of OTR tires are challenging to dealers because of their weight and size. It requires special handling, lot of storage space and capital. To sell OTR tires and be successful requires dealer commitment and servicing capability. Vehicle downtime created by wrong tires or tires fitted in wrong applications can be very costly.
Camso: Take a consultative approach and engage the customer in a conversation about his needs, don’t try for a quick sale. It’s not a one-size-fits-all approach. Ask questions, reach out to tire manufacturers to funnel down to the best solutions. Recommend after consultation. Lock in that repeat business and gain knowledge.
It’s a market with a lot of opportunities where you can separate yourself from competition by becoming a solution provider and OTR expert. Partner with a reliable tire manufacturer. Use online tools. We developed “Sales Intelligence” tools to give dealers and our sales team access to product information, product selector, catalogs and product sheets online.
Continental: Know and understand your local market and customer base. Like most OTR tire sales, knowing the customer application is paramount in making good recommendations. Once you match the right tire to those applications, it’s really about planning ahead and making sure you keep an adequate safety stock to cover your customer needs.
The market has been really active, and in many cases demand has been outstripping global supply. So planning ahead and having the right tires on hand is really important. Add to that maintaining the right equipment and trained personnel to do the service work and you have a winning combination!”
Goodyear: The ability to track the performance of small OTR tires can be sold to end users as an additional benefit. Goodyear’s recently enhanced EMTrack OTR tire management system enables faster, more accurate collection of critical tire data like inflation and tread depth levels, as well as immediate tire data uploading to a secure, password-protected cloud-based storage platform. Services like Goodyear EMTrack can help dispel the sometimes-held notion that smaller OTR tires are more of a commodity than their larger counterparts.
End users will want to do everything within their power to optimize tire performance and longevity. Have you established maintenance programs for your small OTR tire customers? Maintaining proper inflation levels is one of the most important contributors to achieving optimal tire performance and longer service life. In addition, are you offering value-added services, like site inspections? The removal of rocks and other potentially harmful items from job sites can contribute to longer tire life. Water management is important, too. Has the site been designed so that water drains from it? Is there standing water that can hide tire-damaging debris? Site inspections can help reduce these risks for end users.
Michelin: The important aspect is to understand the customer and the application. Based on this information, look to provide solutions to the customer that will help them best complete the job with the maximum uptime, productivity, etc.
Being able to quickly meet the needs of customers is critical in this environment. Having easy access to tires and information is critical. The industry is constantly evolving, and staying up to date on the trends and solutions will help one become a trusted source.
TBC Brands: Most important tip is to ensure product availability; a down vehicle means the end user is losing money on the job site and less likely to price shop as much as other products. Second is service: Look for ways to out-service the competitor from delivery, quality and even on-site services to reduce equipment downtime.
Yokohama: Dealers must make sure they know their market and their customers. By doing so the successful dealer will have both the knowledge to advise the customer (the dealer’s advice or recommendation of a tire to an end user is what is taken in over 90% of transactions) and have ordered the correct tire and stock to keep their customers safe and productive. In this age of internet, there is nothing more powerful than a dealer that actually knows their customer and what can make that customer more efficient and effective in their operation. All OTR tires are sold to other businesses – not a casual consumer – and these businesses rely on their partner suppliers to help them be more efficient.
The OTR world is unique (just like every other tire segment!). History has shown that expertise in tire design, materials, manufacturing, and on-site advice on proper use will give a customer their best cost per hour. True tire professionals know this, and they make the most successful dealerships.
The outlook for bias tires
Modern Tire Dealer also asked the respondents for their perspective on the future of bias tires.
Alliance: Radials deliver a lot of benefits—longer service life, lower fuel consumption, more efficient delivery of machine horsepower to the ground, and a smoother ride that’s easier on operators and their equipment. There’s still life in the bias part of the segment, though. Radials deliver the best value on machinery that covers more ground, like scrapers, graders and trucks, or switches direction often, like loaders.
We’ll probably see continued use of bias in low-mileage machines like dozers, or in certain dump trucks or skid steers where operators want stiff sidewalls for extra stability as their center of gravity changes. Still, expect to see radials grow to dominate small OTR in the next several years.
BKT: Bias will still be around for price and application reasons until a more cost effective alternative is available. Bias tires are also used in older and lower usage machines. In places that tear up tires, customers will prefer to run bias tires.
Camso: Radial tires are gaining popularity for larger and faster-moving equipment, and tracks and solid tires have an impact on bias tires, too. However, bias remains very relevant for compact construction and applications where you need versatility and comfort, and it will continue in the future to be the case. Price-wise, it’s also a very economical choice. Bias tires give a lot of options in terms of sizes and tread patterns.
Continental: It really depends on the segment. In the general small OTR market, radials continue to expand and command the majority of the market. There is still some demand for lower-priced and less sophisticated bias products that will persist for some time into the future, but that segment is steadily declining.
Goodyear: We’re seeing a trend toward radialization, even in small OTR tires. However, there is still a place for small, bias-ply OTR tires in certain applications. The thick, heavy sidewalls of bias tires can offer enhanced cut resistance in severe-service applications and extra stability in some loader applications.
Michelin: This really depends on the machine and application. Bias tires are still a popular choice among many machines. For example, bias technology is still a popular choice for skid steer loaders and backhoe loaders.
Other technology also has its place in the segment including radial and airless options. The importance is to understand the usage of the machine in order to determine the best solution.
Pirelli: We feel the changeover is much slower than expected.
TBC Brands: Currently, we do not see an extinction date for bias tires. This is due to the pricing gap that remains between bias and radial even with the benefits that could justify the cost in the long term. There are also certain applications where bias tires provide benefits in stability over radial. The 24- and 25-inch radial tires will continue to gain share at the expense of the bias business, but in forklift, skid steer and backhoe tires we expect bias to maintain a strong share of the market for the foreseeable future.
Yokohama: Bias tires comprise approximately 30% of the market, and more so in many of the smaller dimensions. This has been a relatively consistent level for better than 10 years (and all during that time “some” stated the demise of the bias ply). In many cases the bias offers characteristics that the radial cannot for a given application, in some cases stability, in others longer life and a better cost/hour for the customer.
The reality is that there is no “extinction” date in sight for bias tires. They will be around and relevant for the foreseeable future and continue to play a strong role in the applications where the customer sees them as the best option. Never forget that the customer is still demanding these tires because they have seen how productive and efficient they are and not because they are the only option.