When will demand for tires rebound? Which segments will bounce back sooner? How has COVID-19 changed consumer tire buying habits? Top executives at various tire companies recently shared their thoughts with MTD.
“We truly believe there is a lot of pent-up demand, so we just have to ride through the storm and be prepared for when it’s over and things improve,” says John Hagan, Nexen Tire America Inc.’s executive vice president of sales. “In June, you’ll see more improvement. In July, you’ll see even more improvement. And I think by the August of September timeframe, you’ll see what I call respectable numbers.”
“Prepare for an emergence from this crisis,” Roy Bromfield, president and CEO of Toyo Tire U.S.A. Corp., tells tire dealers. “It will come.”
Bromfield says dealers need to be “positioned for success when the market returns to normal and perhaps for even a surge in business to meet pent-up demand.”
Yongsik Shin, the head of Kumho Tire’s Americas region, says the North American consumer tire replacement segment could normalize within a few months. Buyer preferences will shift, too, he adds. “Buyers who were once accustomed to upper-tier brands will look to more products” in lower tiers.
“Consumers are treating their cash preciously now – no different than companies – so we’re seeing a certain (trend toward) lower price points,” says Bill Caldwell, senior vice president of sales and marketing for Continental Tire the Americas LLC. “We’re certainly seeing less headwind with our General brand, which is a step lower in price point than our premium Continental brand.”
Brandon Stotsenburg, vice president of American Kenda Rubber Co. Ltd.’s automotive division, believes that “value-based passenger and light truck will recover faster than other segments. In the near-term, it may be more practical for people to drive to destinations rather than take planes, and the independent tire dealer will be in a prime position to benefit from this.”
The impact of COVID-19 on OTR and farm tire demand was “comparatively less than in the passenger and light truck tire markets,” says Arvind Poddar, chairman and managing director of Balkrishna Industries Ltd. “We are blessed to have our own mold-making factory. We roll out 60 to 70 new products every year, in most segments of OTR tires, and will continue to do so.”
T.J Higgins, global chief business strategic officer for Bridgestone Corp., told MTD that the unique dynamics of the COVID-19 crisis have changed how some customers are buying tires. “We’re seeing more e-commerce activity – certainly more than we’ve seen in the past as a percentage of sales. I don’t know if it will sustain in the future, but we have to continue to update our capabilities to handle those transactions that customers would like to have.”
In early-May, Owen Schiano, chief operating officer at American Tire Distributors Inc., told MTD he was “optimistic” that demand for tires will grow “over the next month or two months. Hopefully, as we enter the fall, we will start to return to what I call normalcy. More and more of our customers have fully booked and scheduled appointments. I’ve heard a lot of examples of (appointments) scheduled out even further than they have been historically.”
Manny Cicero, CEO or Triangle Tire USA, says that “if we use China as an example – and if we lag two or three months behind them, like we seem to do – they were shut down in January and February” due to stay-at-home orders. “And now things are seemingly back to normal. It would follow, then, that by mid-summer, we will be back to normal in the States, following the China curve.”
“I tend to be a contrarian when it comes to the concept of pent-up demand,” says Richard Smallwood, CEO and president of Sumitomo Rubber North America. As governments relax stay-at-home orders, “there will be those consumers who have waited to replace their tires until they felt it was safer to do so and now will come back to buy tires.”
But with more than 40 million Americans out of work, the market “will most likely take a while to recover and it will take customers some time to feel comfortable spending money on anything right now – even tires.”
In the meantime, he maintains, flexibility will be critical. “We’re adapting our programs to make sure they help dealers during this transitional period. Things will get better.”
Erik Olsen, president and CEO of TBC Corp., believes it’s too early to pinpoint when the tire market will roar back to its previous level of strength. “What I do know is that at TBC, we are working toward what our ‘new normal’ will look like,” he says.
On the retread side of the industry, Clif Armstrong, CEO and president of Marangoni Tread North America, sees good things ahead. “Most people I talk to are very bullish about where they are. And they’re looking forward to things starting to loosen up. It won’t be an on-off switch. But it will come back at a pace that allows the market to plan for what the business climate will be.”
Pietro Berardi, CEO of Pirelli Tire North America Inc., says he has been impressed by how quickly dealers have adapted to changing business conditions. “We’ve seen our partners investing in online capabilities for consumer interaction, using this time to get associates up to speed” on training and “getting organized with new ideas, such as touchless service, and adapting to remote communication tools.”
Check out the COVID-19 Resource Center on www.moderntiredealer.com for full-length interviews.