Falken is Delivering on Promises Made Last October
At their annual dealer meeting slightly less than one year ago, Falken Tire Corp. executives told the dealers about their aggressive plans for the North American market. The motivation for the new strategy was the dissolution of a long-standing global alliance between Falken’s parent company and Goodyear Tire & Rubber Co. Customers were told to expect 12 new product lines to be introduced within 18 months, a very active approach to original equipment business, and the manufacturing of the Falken brand in the U.S.
The scorecard as of this year’s dealer meeting in August was as follows. First, Falken is now a subsidiary of Sumitomo Rubber North America Ltd. (SRNA), and Falken-branded tires are now being produced at the former Goodyear-owned Tonawanda (Buffalo), N.Y., plant by Sumitomo Rubber USA LLC. The company has recently announced plans to invest $87 million to double the capacity at the plant to 10,000 tires per day by 2019.Rick Brennan, vice president of marketing for Falken, said the company is producing some sizes of the Ziex ZE950 and WildPeak HT lines at the plant. Brennan assured dealers that the company would not dual source for designated sizes of tires to maintain consistency and quality.
The company has introduced four consumer tire lines: the WildPea k M/T, an off-road traction tire; the WildPeak A/T3W, an all-terrain tire; the Sincera SN250 A/S, a high mileage, all-season performance touring tire; and the Azenis FK450 A/S, an all-season ultra-high performance tire. On the commercial side, Falken introduced four tires: the BI 850, an open shoulder regional drive tire; the RI 130, a long-haul steer axle tire; the RI 150 regional all-position tire; and the BI 830, a line-haul, closed shoulder drive tire.
The Falken brand is now being sourced on seven vehicle platforms from Fiat Chrysler Automobiles N.V., Nissan Motor Co., Mazda Motor Corp. and Volkswagen AG, with four of the vehicles — Jeep Renegade, Nissan Rogue, Chrysler Pacifica and the Mazda CX-9 — destined for sale in the U.S.
Brennan said Falken’s Major League Baseball sponsorship program has delivered a tremendous increase in consumer impressions for the brand. Not counting the MLB All-Star Game this year, the company had registered 498 million impressions, compared to only 3.5 million in 2015. Brennan expects to have more than 3 billion impressions for the full year. The company is expanding its signage sponsorship to include the San Diego Padres, Detroit Tigers and Cleveland Indians.Brennan said consumer tire demand has been flat this year. He said initial forecasts by the Rubber Manufacturers Association (RMA) called for 236.3 million replacement passenger and light truck tires to be shipped in 2016. In July, the RMA reduced that estimate by 900,000 units. If this happens, the entire market will have grown only by 200,000 units in the last three years.
He noted that tires sized for CUVs are growing rapidly, as these vehicles are becoming a larger segment of the vehicle population. The rapid growth of the 225/65/17 is directly attributed to its use on various CUVs, such as the Honda CR-V, Toyota RAV4, Chevrolet Equinox and Ford Escape. Brennan believes this market segment will see continued growth and further segmentation of styles, particularly those that showcase an aggressive look.
“As consumers move away from SUVs and into CUVs, they move further away from ‘rugged truckish’ imagery and toward commuter passenger cars,” he said. “But the consumer looking for a bit of off-road flavor has little to choose from. The Jeep Renegade Trailhawk is the first to truly attack this, and I believe we will see others take the same road. As they do, the tires become part of the imagery.”
3 questions with Andrew Hoit, vice president of sales
MTD: What has been your main sales message for dealers and distributors for the Falken brand?
Hoit: Today’s message to dealers and distributors is really one of “Falken 2.0,” the evolution of our brand and our company. Falken 2.0 is a combination of our next generation of products, an increased focus on brand exposure/recognition (through our MLB sponsorship), and an aggressive OE strategy in North Amer ica. We are no longer only a niche manufacturer. As the only brand that Sumitomo Rubber Industries (SRI) controls globally, we are the future!
MTD: How do your OE sales help your dealer network?
Hoit: Simply put, OE sales increase the relevancy and legitimacy of our brand. OE placement is certainly different than it was 10 to 15 years ago, but to be original equipment with multiple car manufacturers improves the awareness and consideration for the Falken brand with both consumers and distributors. We have 18 OE fitments currently in the pipeline and more to come.
MTD: Will you continue to concentrate your sales efforts exclusively on the Falken brand?
Hoit: The Falken brand is our flagship brand, and will always be No. 1, but with the dissolution of the global alliance with Goodyear, we can now expand our brand offerings beyond only Falken and Ohtsu. In the near-term future you will see us expand our private label offerings, as well as potentially expanding and/or re-launching an associate brand.
3 questions with Richard Smallwood, CEO and president, SRNA
MTD: What have been your key challenges to handling this rapid expansion?
Smallwood: It is easiest if I break it down to three basic areas: people, products and processes. The people part of the transition went very smoothly as the Dunlop Motorcycle Tire culture was very similar to the Falken Tire culture. Both groups were very entrepreneurial in nature and passionate about their products. The teams have been a great fit together and there are a lot of areas where we can work together to grow our business.
Products have presented a bit more of a challenge in that on the Falken Tire side, we launched a total of eight new products in a period of less than six months — four consumer products and four commercial products. This was tremendously challenging for our dealers, and honestly, it was very challenging for us as well. The products have been received very well, and will be providing areas of growth for us and our dealers, but it has been challenging none the less.
Processes have presented the greatest challenges over the last 10 months. We have had to move over a number of OE programs, export programs, and the Dunlop Motorcycle business in a very short period of time. And we had to complete the transition without creating any business disruption to our customers. The amount of work required to integrate all of the different business processes was taxing on the team, but thankfully we are finally nearing completion.
MTD: How do you measure your success in this type of situation?
Smallwood: Success will be measured by being able to meet or exceed our customers’ expectations without disruption, and doing so without overburdening our associates. Meeting our customers’ expectation has to always be our priority, but we need to find a way of doing so without burning out our associates.
MTD: What has your dealer network been telling you about your forward movement with the company?
Smallwood: Our customers have been pleased with our aggressive move into OE fitments with the Falken brand and our position as the Official Tire of Major League Baseball. They see a long-term commitment into building the power and value of the Falken brand, which means bringing more Falken customers to their businesses. Our customers have also been very happy with the level of performance and quality of our new products. Falken 2.0, which we talked about last year at the World Series, is coming to life as we said it would.