Tire dealers who have learned to adjust to the industry’s uncertainties of the past two years aren’t off the hook yet. Matt Leeper, vice president of sales for Sumitomo Rubber North America Inc., told a group of Falken dealers that the latest economic conditions are changing the game again. Last year’s product shortage worries have transitioned to concerns about higher inventory levels.
Leeper was among the executives who provided an update during Falken’s annual dealer trip. He said consumers are spending less and paying more for fuel. Through May of this year consumers were driving more, but it has since started to level out. “We’re starting to see miles driven go down.”
Data from the U.S. Tire Manufacturers Association showed increases in the first quarter — up 3% for passenger and light truck tires — but the numbers have started to slip, and both consumer tire and medium truck shipments were down in July, Leeper said.
From April to July, USTMA shipments were off 9% in consumer tires compared to 2021, which was notably a strong year. In truck tires, the strong market conditions continued through April, which was up 11% year-over-year. But the growth slowed in May and June, to a 2% gain, followed by a 3% decline in July.
One critical factor is tire dealers are managing higher inventories. Leeper called them “extremely high.”
A big piece of that can be attributed to the resurgence of imported tires. Leeper said imports “are way, way, way up,” and they’re grabbing a lot of shelf space. Passenger tire imports are up 29% through May, while light truck shipments are up 18%. Truck tire imports have increased by 25% through the first five months of 2022.
Leeper said that kind of boom in imports is “putting a lot of pressure on brands, especially the tier two brands.”
Focusing on Falken
SRNA is answering that pressure with full focus on its Falken brand — without any distraction of the Ohtsu brand. The company is adding sizes to products (for everything from the all-season Ziex CT60 to the Winterpeak F-Ice and WildPeak A/T Trail) and bringing new tires to market on both the commercial side, as well as a new ultra-high performance tire. (MTD will have a separate report on the new tire lineup from Falken.)
In addition to advancing the product lineup, Leeper said Falken has 13,000 dealers signed up for its Fanatic associate dealer program. Those dealers sell about 450,000 units a quarter.
SRNA works to differentiate itself from other tire manufacturers by having “a huge dealer presence,” and that means the company has committed a large team to signing up and serving those Fanatic dealers. Leeper said there are 30 team members who focus on signing up Fanatic dealers.
“We have a lot of people in the field. We believe the fight is going to be won on the street,” he said.
Signing those dealers also requires Falken’s distributors to stock the right mix of products and service those retail dealers well. He said it’s just as important that the distributors are good stewards of the program.
“We are now laser focused strictly on (the) Falken brand and holding Falken brand share. So you know if you’re going to invest in Falken, we’re investing in Falken. There is no question that is the brand we’re going to run with.”
“We will continue to put our resources into marketing to the dealer versus the consumer. We don’t have enough time and money to ever impact the consumer. Our focus will continue to be the dealer.”
