Today, the first day of 2015, is the first day approved Nexen tire retaliers are eligible to join the Nexen Next Level associate dealer program.
Kyle Roberts, Nexen Tire America Inc.'s director of marketing, revealed details of the program at the 2014 Global Tire Expo in Las Vegas. He also talked about Nexen's other goals in 2015.
Here is the transcript from his speech to attendees at the Nexen Tire America booth inside the the Las Vegas Convention Center. He gave it on Tuesday, Nov. 4, 2014.
"Thank you for being here. What an interesting couple of years in the tire industry right? I myself am still in my first year in the industry, and I tell you it feels like I have served close to 20. 2013 and 2014 have been a couple transition years for Nexen; coming off 10 straight years of double digit growth, we had made significant investments in our manufacturing and capacity, staffed up sales and marketing and were poised for continued growth.
"Unfortunately, some changes in the tire industry found us a little unprepared and threw a wrench into our growth plans. The lift on the Chinese tire tariff in 2013, industry consolidation this year (2014), more recently inflated inventories at distribution, and specials from manufactures trying to maintain market share have all contributed to negatively affect our business. So just two years ago, we had a nice position as a high-quality line at a value price point, but in 2014 we found ourselves without a home.
"That’s going to stop right now. We have dedicated all of our activities to differentiating our brand and taking control of our position in the market place.
"We spent the beginning part of 2014 figuring out who we wanted to be. We knew we weren’t the drift racing guys so we pulled out of drift. We’re not the 4x4 truck racing guys, we don’t have a blimp, but we realized that we did have one distinct advantage that we just weren’t capitalizing on -- our manufacturing capabilities. Our Cheyneong factory is one of the most, if not the most, advanced manufacturing facilities, producing the highest quality products in the industry. Our defect and return rates are well below industry norms and we have never had a product recall. How could we capitalize on this? Let’s take a look.
"In May of this year, we launched our new Total Coverage Warranty, which was designed to provide protection to consumers against all premature costs related to their tires. Coverage includes generous tread wear mileage warranties; two-year limited Road Hazard protection with 100% replacement in year one and 50% replacement in year two; and, of course, Roadside Assistance, which provides our consumers free tire change and tow service 24/7 across the U.S. and Canada.
"I can stand here today with 100% confidence and state that Nexen Tire has the Tire Industry’s Best Warranty in North America. If any other tire manufacturer attempts to challenge our position, we will act swiftly to execute even more aggressive warranty programs that are already developed and ready to launch. Providing the industry’s best warranty is who we are, its who we are going to continue to be and it is how we are going to market the Nexen brand moving forward.
"In North America, Nexen has not invested significant dollars into building the brand in past years. We maintained a push distribution strategy and it worked. That is going to change in 2015. We are going to spend significant dollars within the trade to educate our dealer network on the Nexen story and product lines, making them 100% comfortable selling our product against our competition. And we are going to implement an 'integrated marketing communication' strategy designed to drive consumers to Nexen. This will include messaging through digital, social and community based marketing programs, as well as advertising through traditional media outlets. Our investment in 2015 to build the Nexen brand will be large.
"Nexen has made an extremely successful transition into becoming a valued original equipment supplier to automakers worldwide. In North America our partners include Kia, Hynduai, Ram Trucks, Chrysler, Fiat, and Mitsibushi. You can see here by the end of next year, there will be nearly 1 million vehicles on the road with Nexen original equipment tires on them in North America alone. Our OE business growth means two things: One, our quality, our specifications, and our value all meet the stringent standards demanded by automakers; two, there is going to be nice demand for Nexen replacement tires in the market so stock up.
"I mentioned earlier our huge investments in manufacturing capabilities and capacity. It’s a good thing we made those investments because starting early in 2015, North America will need that capacity more than ever. In 2013, 40 million tires were imported from China into the U.S.
"This year, it is estimated that the number is going to balloon to 60 million. With the impending ADD (anti-dumping duties) and CVD (countervailing duties) affecting Chinese supply, it’s been forecasted that only 20 million tires will be imported from China to the U.S. in 2015. Who is going to make up the 40 million tire shortage? Nexen increased its Korean manufactured capacity by 5.5 million tires in 2013-2014, and you can see here we have plans to add more capacity in the future as needed.
"Over the past four years, Nexen has won major design awards for both production and concept tires. This is a testament to its talented designers and engineers, and it ensures that innovative and relevant products will continue to be delivered from Nexen’s walls for years to come.
"So, we have talked a little bit about why the trade should get behind Nexen with plans to increase dealer education on our products, our growing OE business and, of course, available capacity. We have also explained how we are going to drive consumers to retail with our industry-leading warranty and new emphasis on consumer marketing campaigns.
"So now, we just need a program that ties everything together. We are extremely excited to introduce the Nexen Next Level Associate Dealer Program, which will launch Jan. 1, 2015. There are about a dozen dealer programs out there, so we were able to benchmark those and design ours to be simple and most importantly lucrative for dealers while helping to ensure loyalty between our distributors and those dealers.
"We are offering basic cash back incentives to dealers on all of our patterns. Tires will fall in one of the following categories: High Performance, Passenger, SUV/Light Truck and Winter. The payouts per tire are... $5 for High Performance and $3 for all others. During the course of the year, we will have the ability to run specials that will increase these payouts, so keep an eye out. To be eligible for these awards, a dealer must purchase an average of 100 tires per quarter or 400 per year. No matter how many tires purchased everyone earns at this level.
"On top of the base payout, dealers can earn extra dollars based on the volume they purchase during the year. The pay outs are as follows: up to $10 per tire for High Performance and $8 per tire for all other patterns. That’s some pretty generous payouts for a brand that is supposed to be playing in the value/value-plus segment. It’s very attractive.
"Some other programs offer additional benefits like gear, P.O.P. materials, trips and co-op. We wanted to do something a little different and have some fun.
"We have combined our dealer program focusing on guaranteed money with a sweepstakes that gives the chance to win some serious money. We are talking $1 million.
"For every tire a dealer purchases, they will also receive an entry into our Next Level Sweepstakes. At the end of the quarter, we will draw randomly from all eligible entries, and one dealer is going to win a trip for two and get to play our Match and Win game with a chance to win $1 million. The great part about this game is the least amount of money the dealer is going to win is $75,000. So we are talking some real cash.
"The drawing will include other great prizes as well. We are giving away a $45,000 truck and over 750 gift cards at $500 or $250 each. And you may have heard I said end of the quarter -- that’s right we are going to draw for these prizes quarterly. That means four chances to win $1 million, four chances to win a truck, and 3,000 gift cards being awarded every year. The chances are really good that nearly every dealer will win something. We’re excited. I hope you are excited."
Roberts went on to say that dealers can combine all locations to reach the highest level of bonus. "Locations do not need to stand on their own."
For more information on Nexen and its products, visit www.nexentireusa.com.
