John F. Kennedy was president of the United States. The National Tire Dealers and Retreaders Association was preparing for its 40th annual convention. I turned three years old.
Welcome to June 1960, when Fisk was still a well-known brand, and the radial tire was an alien concept, at least to tire dealers. The controversy at the time, however, sounds eerily familiar.
In a feature story titled, “Third line tire issue gets hotter,” Modern Tire Dealer objectively looked at what independent dealers perceived as a threat to their livelihood. According to the article, the third tier tire controversy began “when department stores, discount houses and other mass marketers specializing in low price tires got into the tire business in a big way several years ago.”
With the help of newspaper advertising, new competitors were attracting customers with attractive pricing, as low as $9.98 a tire.
“With sustained advertising and smart merchandising, they pull in many a tire customer who normally would have purchased his tire at an independent dealership or other traditional tire outlet,” said the article.
Any time tire manufacturers decide to sell through another distribution channel, dealers get nervous and combative. However, this issue was not as much about the interlopers as it was about third-tier tires.
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Some manufacturers were advertising third-tier nylon tires as being approved for highway use, a quality claim that others vehemently disputed.
In full-page magazine ads touting B.F. Goodrich highway tires in the “Saturday Evening Post” and “Look,” B.F. Goodrich Tire Co. President J. Ward Keener didn’t mince words.
Under the headline, “We’d rather lose a few quick sales than have you lose your life,” Keener wrote about the difference between first- and third-tier tire lines.
“No tire maker has the secret magic to produce cheaper tires without cheapening quality,” he said. “B F. Goodrich tire advertising will continue to be honest. We will not trade on words like ‘speedway-proved’ and ‘stronger than new-car tires’ to confuse third-line with first-line tires.”
To remain competitive, independent tire dealers understood the need for a third-tier tire. To remain profitable, they didn’t know what to do.
“I sell quality retreads at $14.50,” one dealer was quoted as saying. “How can I compete against a new nylon tire selling for only $13.95?”
Fast forward 50 years. Low-cost imports, particularly from China, are the present day equivalent of the third-tier tire. (They are really fourth-tier tires based on price points used by dealers across the country, but their position in the marketplace is the same as third-tier tires in 1960.)
Being “turnpike-approved” is no longer an issue because of technological advancements in tire development and manufacturing. In addition, all passenger and light truck tires sold in the U.S. have to meet our Department of Transportation (DOT) standards, which require them to be highway safe. And, as you may recall, the International Trade Commission in 2009 deemed Chinese tire imports “substantially identical” to domestically produced consumer tires in terms of quality.
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No, the issue with third-tier tires today is not about improper advertising or a lack of quality anymore. Distribution channels are still a point of contention, but the real issue is the same as it was in 1960: profitability.
Being able to offer multiple brands of tires at multiple price points is necessary to survive at the retail level. When any tire manufacturer or distributor sells product at cost — or less — it hurts your bottom line. The tier isn’t as important as the price, although the lower the tier, the more price becomes a factor.
In our June 1960 issue, we offered dealers advice on how to handle third-tier tires: “Stock the third line tire, use it as an advertising item and, when the customer comes in, sell him the grade he requires for his personal kind of driving.”
We still go along with that strategy. Advertising low prices is not an unfair business practice as defined by the Federal Trade Commission and the Code of Federal Regulations.
Under 16 CFR Part 238, bait advertising “is an alluring but insincere offer to sell a product or service which the advertiser, in truth, does not intend or want to sell.” In addition, the “refusal to show, demonstrate, or sell the product offered in accordance with the terms of the offer” will help determine whether or not the advertisement is a bona fide offer.
Players and brands have come and gone in the last 50 years. But the good-better-best selling philosophy never changes. Neither does selling tires that your customers need.
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If you have any questions or comments, please e-mail me at [email protected].
