Goodyear's Gibara says price increases leveled the playing field
Sam Gibara, chairman and CEO of the Goodyear Tire & Rubber Co., says domestic tire manufacturers are now on more of "a level playing field" following the implementation of all first-quarter price increases.
At the company's investor conference call following the release of its first-quarter 2002 financial results, Gibara explained why Goodyear's tire shipments were down in January and February compared to the rest of the industry. He said Goodyear's price increases went into effect Jan. 1, while some of the others didn't implement price increases until March 1.
(Cooper Tire & Rubber Co., Kumho Tires U.S.A. Inc., Michelin Tire North America Inc., Toyo Tire (U.S.A.) Corp., Hankook Tire America Corp. and Falken Tire Corp. increased their tire prices on March 1. Bridgestone/Firestone Americas Holding Inc. raised its prices Feb. 1, while Yokohama Tire Corp. raised its prices at the same time Goodyear did.)
To beat Goodyear's price increases, dealers purchased its tires in December. Gibara said Goodyear outpaced the industry in December, when overall shipments "were way down."
In comparison, dealers purchased tires from Goodyear's competitors in January and February to beat the March 1 price increases, which he said explains why Goodyear's shipments fell below industry shipments during the first two months of the year.
"January and February is when Goodyear saw its biggest market share losses," Gibara said. "In March, we saw it come back."
According to the Rubber Manufacturers Association, 12.9 million replacement passenger tires were shipped in the United States in December 2001, the lowest total of any month in the last four years. The units represented 6.7% of total 12-month shipments, which was less than in 2000 (7%), 1999 (8.2%) and 1998 (7.8%).
Light truck tire shipments followed a similar pattern. In 2001, 2.3 million replacement light truck tires were shipped in December, the lowest December total in four years. The 2.3 million tires represented 7.3% of total shipments, lower than in 2000 (7.5%), 1999 (8.1%) and 1998 (8.1%).
Goodyear posted a net loss of $63.2 million for the first quarter of 2002, 35% higher than the $46.7 million net loss in the first quarter of 2001.
Goodyear's worldwide sales in the first quarter were $3.3 billion, down 3% vs. 2001. The company sold 53 million tires, up .7% from the same period last year.
In North America, unit volume during the first quarter in 2002 was up 1.5% compared to 2001. However, replacement volume decreased 2.5%. Shipments to original equipment customers were up 10.5%.