The following is the latest in MTD's exclusive series of interviews with top tire industry executives about the impact of the COVID-19 crisis on business and what their companies are doing to prepare dealers for a post-pandemic market and industry. Stay tuned to www.moderntiredealer.com for more coverage!
Business may be tough right now, but Nexen Tire America Inc.’s John Hagan is convinced that consumer tire demand will return in due time.
“We truly believe there is a lot of pent-up demand, so we just have to ride through this storm and be prepared for when it’s over and things improve,” says Hagan, the company’s vice president of sales.
Meanwhile, Nexen is forging ahead with its growth plans.
In mid-April, the company opened its third distribution center in the United States, a facility in Lockbourne, Ohio. The complex joins existing Nexen distribution centers in California and Georgia. (The company opened a $5 million technical center near Akron, Ohio, last fall.)
“With three distribution centers triangulating most of the U.S., customers can now expect shorter delivery times and lower costs,” company officials said when the new facility was announced.
Hagan says Nexen had targeted an April opening long before the widespread COVID-19 outbreak.
The pandemic has given the company time to fill the center with stock “so when we are out of this, we are rocking and rolling.”
Hagan says Nexen’s dealers “are starting to get somewhat positive” about a rebound in business.
“In talking with them, they are starting to show some improvement” in business, which he says can be attributed the disbursement of stimulus and unemployment checks.
“We’ve seen that the bottom has stopped eroding. So, I think in May, you’ll see some improvement. In June, you’ll see more improvement. In July, you’ll see even more improvement.
“And I think by the August or September timeframe, you’ll see what I call respectable numbers.”
Dealer sales might not match prior-year figures, which, he admits, “is not the best. But it won’t be as bad as it once was” during the depths of the pandemic.
At the very least, he believes that in the second half of 2020, “we’ll be able to tell what we lost in the first half.”
Consumer restlessness will play a role. “When you look at the customer – and I count myself as one of them – if they can find a reason to go out the door (of their homes), they’re going to get out. We could see a lot of traffic in the summer months due to the fact people want to get out and go somewhere.”
In the meantime, Nexen will stay focused on maintaining fill rates – which Hagan reports as being firmly in the “90%-plus” territory –and staying close to its dealers.
Nexen’s plant in South Korea is cranking out product for the U.S. market. (Its factory in the Czech Republic builds tires for the European market only.)
“We have slowed production a bit at this time to meet demand, but are fully prepared to pick back up once the economy starts moving again,” says Hagan.
Sales of the company’s latest product, the Roadian GTX all-season touring SUV/CUV tire, are up. “We were lucky enough to roll out the Roadian GTX last year, so that was already in place.
“We do have new products for 2021 and 2020, but they’re still in development – so no delays or impacts (there) at this time,” says Hagan.
The company is updating its marketing content.
“And we’re keeping in contact with our dealers through our field staff and also through corporate – through social media and our training site. With our sales team being stuck at home, there’s been a lot of online training.
“We aren’t big enough to do a national campaign,” he explains. “What we do is keep it regional, keep it local… whatever their needs are, if we can do it, we’ll do it. We’ve been doing a very good job of keeping the lines of communication open with our dealers.”
'Back to Where We Were'
Nexen also is working with its larger distributors to identify and meet their needs.
“Their big concern is how many smaller tire dealerships will be left” after COVID-19. “And how many will be able to come back?’ Some small guys have shut their doors, so it’s wait-and-see to determine who’s going to come back and in what capacity.
“We’re taking care of our customers and trying to help them in any way possible, just as they try to help us. I truly believe that by the end of the year, we’ll be back to where we were before this. We just have a lot of catching up to do.”