By now, you have probably heard that Goodyear Tire & Rubber Co. and Bridgestone Americas Inc. are joining forces to create what they say is "one of the largest tire distribution joint ventures in the United States."

That's a little misleading, because to the best of my knowledge, there aren't a lot of domestic tire distribution joint ventures. The only other true joint venture that I know of is the NTW network, formed by Michelin North America Inc. and Sumitomo Corp. of Americas earlier this year.

But the newly created TireHub is a big entity, and a bold move for both tire manufacturers. Although the "independent" company is still subject to government approval, here is what we know about TireHub, by the numbers.

1. It combines Goodyear's 45 company-owned wholesale warehouses on the retail side with Bridgestone's 38 Tire Wholesale Warehouse (TWW) warehouses, for a total of 83.

2. The total number of tires represented by TireHub, at least initially, is approximately 10 million passenger and light truck tires. Goodyear would not break down the 10 million tires between the two companies, although it did say the 50-50 nature of the joint venture is also representative of what Goodyear and Bridgestone are bringing to the table.

3. TireHub's inventory will cover 97% of the cars on the road.

4. A recent 8-K filing by Goodyear with the U.S. Securities and Exchange Commission estimates TireHub's start-up costs at $40 million. The estimated fair value of the joint venture is $600 million.

5. Goodyear expects TireHub to generate an incremental $80 million to $100 million in annual volume. Based on Modern Tire Dealer's estimated consumer tire price of $128, that works out to between 625,000 and 781,250 units.

6. The additional units would not increase the Goodyear brand's consumer tire market share, estimated by MTD at close to 11.9%, by more than 0.3 percentage points.

7. TireHub would become the third largest tire wholesaler in the U.S., behind American Tire Distributors Inc. (ATD) and NTW. In the last 10-K the company filed, ATD, which is owned by two private equity firms, estimated its share of the replacement passenger and light truck tire market in 2014 was approximately 14% in the U.S., which worked out to 33 million tires, according to MTD’s 2015 Facts Issue. Overall, ATD said it distributed more than 40 million replacement tires in 2014. Forbes magazine estimated ATD was worth $4.6 billion in 2016.

As for NTW, Michelin placed its annual sales at nearly 15 million units.

8. TireHub will sell seven brands: Goodyear, Dunlop, Kelly, Bridgestone, Firestone Fuzion and LeMans. When asked if it will sell more brands -- for example, Firestone Complete Auto Care stores sell Toyo -- Andy Traicoff, Goodyear's vice president of consumer sales for North America, said "TireHub will be an independent (agency), so that will be the choice they will make down the road."

(Both ATD and the Tire Rack, another one of the largest tire wholesalers in the U.S., sell the Goodyear, Bridgestone and Michelin brands. NTW does not sell Goodyear or Bridgestone, although it does offer Firestone. ATD, NTW and Tire Rack offer the Continental and General brands.)

As for growth, it will be up to TireHub to increase its number of warehouses, or consolidate them as the case may be, added Traicoff.

Author

Bob Ulrich
Bob Ulrich

Editor, Retired

Editor Bob Ulrich has earned a reputation as an industry expert thanks to his insightful, in-depth articles and blogs on the tire industry. Before joining Modern Tire Dealer in 1985, Bob earned a B.A. in English literature from Ohio Northern University. Also, he graduated from the University of Akron School of Law with a J.D.

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Editor Bob Ulrich has earned a reputation as an industry expert thanks to his insightful, in-depth articles and blogs on the tire industry. Before joining Modern Tire Dealer in 1985, Bob earned a B.A. in English literature from Ohio Northern University. Also, he graduated from the University of Akron School of Law with a J.D.

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