Michelin kills MVP pricing program
Michelin North America Inc. (MNA) will end its oft-discussed two-year-old Maximum Value Policy (MVP) program on Feb. 1. The program was designed to protect the profit margins and beef-up sales of its BFGoodrich All-Terrain T/A KO light truck tire and the tire it was designed to replace, the BFG Radial All-Terrain T/A.
MNA says the goals of the program have been met; however, MNA is reserving the right to deploy the program again “should extreme market conditions dictate.”
“The discontinuation of MVP will allow for greater simplicity and flexibility in the programming and promotion of the All-Terrain T/A KO,” said the company in a letter to its dealers.
Under the program, Michelin exclusively sold its All-Terrain T/A KO and All-Terrain T/A tires through authorized direct dealers and established the minimum price they could advertise and charge for the products.
The tiremaker also laid down strict rules to eliminate any deal or program that would lower this minimum price and insisted on the right to audit participating dealers’ books to make sure they complied with the policy.
MNA claimed too many dealers had been selling the Radial All-Terrain for less than its competitive value. That may happen again, particularly through other channels such as warehouse clubs, according to some dealers.
"What's to prevent Costco from lowering the price now that they can?" one dealer told Modern Tire Dealer. "They probably will."