Nitto Tire U.S.A. Inc. and American Tire Distributors Inc. (ATD) are making a run at the growing luxury touring tire market with Nitto’s first entry into the segment, the Nitto NT850 Premium.
The V-rated NT850 Premium will be sold exclusively through ATD’s network of independent tire dealers. It’s currently available in seven 17-inch and two 18-inch sizes.
The tire was born out of discussions between Nitto and ATD, says Ron Sinclair, ATD’s senior vice president of marketing.
“It was sitting down with them and saying, ‘How do we continue to grow our business together?’ We decided an exclusive ATD tire would be one way to do it.”
Sinclair says the companies decided to target the luxury touring segment because of its growth projections.
“In terms of volume, it’s not huge, but it’s certainly an important segment in terms of the vehicles on which these tires fit.” (The NT850 Premium is designed for compact, mid- and full-size luxury sedans, including the Audi A4, Lexus LS and Mercedes E Class.) “Luxury touring is a growing segment and one we think offers potential for dealers, especially from a sales and profit standpoint.”
‘Tier one performer’
The NT850 Premium contains a variety of features, including Nitto’s proprietary Advanced Quiet Serration sidewall technology, which minimizes road noise; the company’s Silent Pad technology, which adds a cushioning layer around the tire’s steel belt package; and deep, circumferential tread grooves.
The tire took approximately 18 months to develop. “We worked with Nitto and had discussions on tread patterns and sidewall treatments,” says Sinclair. “They involved us from the ground floor.”
Its 17-inch sizes are being built in Japan, while its 18-inch sizes are being produced at Toyo Tire North American Manufacturing Inc.’s plant in White, Ga. (Toyo Tire & Rubber Co. Ltd. owns Nitto.) Nitto plans to eventually build the 17-inch sizes in the United States, says Conrad Galamgam, director of Nitto’s technical department.
The NT850 Premium comes with a 50,000-mile limited tread wear warranty, which Sinclair calls “a huge benefit. It’s a tier one performer, but it’s going to be at tier two pricing,” he explains. “That offers the dealer the ability to sell at a competitive price point.” At present, ATD will offer the tire only through its independent tire dealer channel.
“When you work through one (channel), you can be thoughtful and disciplined. It gives us the ability to offer a product to our dealers that they know won’t be sold on every street corner.”
Nitto officially introduced the NT850 Premium at a recent ride-and-drive event in Napa, Calif. The event was attended by ATD officials, as well as representatives from several independent tire dealerships that buy from ATD. (The company has 82 distribution centers throughout the U.S.)
Dealers told Modern Tire Dealer they’re excited about having exclusive access to the tire.
“There are not a lot of lines anymore where you get exclusivity,” says George Hoellen, president of Lincoln, Neb.-based T.O. Haas Tire Co. Inc., which has 27 stores throughout Nebraska, Kansas and Iowa. “I think it’s a product independent dealers should be able to program to allow us to make a respectable margin.”
“Exclusivity is something that was needed,” says David Armstrong, owner of The Tire Corral in McAllen, Texas. “One of the problems that hampers the ability of dealers to succeed is the fact that everybody has everything. You’re up against everybody from the Wal-Marts to what we call the ‘shade tree guys.’”
Armstrong says many of his customers are already familiar with Nitto.
“If this tire is priced below, say, the Michelin and Bridgestone products, I think there will be customers who’ll try it.”
“Exclusivity is a big deal for us,” says Steve Stock, general manager of Plains Tire, an 11-store chain based in Logan, Utah. “It’s so important to differentiate yourself from your competitors. That’s how you hold your margins.”
Plains Tire plans to market the NT850 Premium as a top-level alternative to higher-priced luxury touring tires. “We’re seeing more luxury touring tires than ever. Even the Honda Accord is coming with luxury touring tires.”
Pricing the product at a sub-premium level will help alleviate some of the sticker shock associated with replacing OE luxury touring tires, says Pete Spoelhof, president of Tire Source Inc., a single-location dealership in Boulder, Colo. “The problem with some of this OE stuff is that it’s outrageously expensive.”
Spoelhof reports he’s had great success selling Toyo brand luxury touring tires as OE replacements. He expects to achieve the same with the NT850 Premium.
‘The luxury touring market is growing’
Nitto president discusses plans for segment, North American market
During the recent introduction of Nitto Tire U.S.A. Inc.’s NT850 Premium luxury touring tire, Modern Tire Dealer sat down with Nitto President Tomo Mizutani to discuss his company’s operations and plans for the North American market. (The NT850 Premium is exclusively available through American Tire Distributors Inc.)
MTD: What was Nitto’s business like in 2007?
Mizutani: In 2007, we did very well. In 2008, we are concerned about the recession. We didn’t bring enough tires (into the country), so we have some shortages.
MTD: What are you doing to correct the supply problem? More production?
Mizutani: We’re working harder. We think around the middle of the year we’ll be in good shape. We are growing.
MTD: Are you happy with Nitto’s brand share in North America?
Mizutani: We would like to have more.
MTD: How does Nitto operate in relation to Toyo? Do the two operate as separate companies?
Mizutani: Yes. In some areas we share services from our parent company, Toyo Tire Holdings of America, but we try to operate separately. One important thing for us is to have a different channel of distribution. Because we are a small organization, we like to work with national distributors. (Note: Nitto distributes through American Tire Distributors Inc., Discount Tire Co. Inc., Carroll Tire and Wheel Pros, plus smaller direct sale distributors/wholesalers, including Turbo Tire, Terry’s Tire Town, Trotta Tire and Steeda Autosports.)
MTD: Nitto has been categorized as an LT and high performance tire company. Now you’re producing a luxury touring tire for American Tire Distributors. Do you see luxury touring as the next big thing?
Mizutani: We’ve been chasing the (performance) aftermarket — Plus-One, Plus-Two, etc. We’re known as an aftermarket (performance) company. But in the (general) replacement market, the consumer probably knows nothing about Nitto, so it’s a big challenge. We chose to get into this market with our distributors. We will focus on making quality products, and we also want to bring value to consumers. The luxury touring market is growing; that’s why we wanted to get into that market.
The key thing is that we’re not creating a market at all. We’re trying to find out what consumers are missing and we’ll bring products to fill that demand.
Nitto sources half of its tires from Japan and half from the Toyo plant in Georgia, says Mizutani. Nitto plans to source more tires from Georgia in the future. “We need to ask Georgia to make more product because our growth is very strong.”