Falken addresses growth rates, pricing, the Ohtsu passenger line launch and OE (!) fitments

June 14, 2012

Falken Tire Corp. has experienced a 16.5% annual growth rate in North America during the last decade, according to its CEO and president, Richard Smallwood. He made these favorable remarks at Falken’s dealer trip in Kona, Hawaii.

But this wasn’t the main point that Smallwood wanted to share with Falken’s largest dealer customers. In a broad-ranging Q&A session, the straight-forward-speaking Smallwood told dealers that Falken aspires to be at the same level as Toyo Tire U.S.A. Corp. and Yokohama Tire Corp., “but we’re not there yet.”  He believes the company is currently competing with Hankook Tire America Corp., Kumho Tire U.S.A. Inc. and Cooper Tire & Rubber Co.

He said the company wants to “brand up,” but must do the rights things to do this.  “You just can’t raise prices and say you’ve moved up!” Smallwood joked with dealers.

The company continues to expand its product offering, work on its promotional efforts and increase distribution. Right now, Falken has 8,500 points of sale in the country, which Smallwood believes positions the brand well.

The company has also begun placing its brand strategically at the original equipment level. Last week, it was announced in Europe that the Falken brand was going to be OE on the VW UP!, a city car designed for Europe. Smallwood said more OE fitments are in the works. He wants the Falken brand to be placed on high volume vehicles with strong consumer preference images.

“We don’t want to be at OE just to be at OE. It’s about supporting the brand.”

He explained the balancing act the company has been doing this year due to the unfavorable currency exchange rate between the yen and the dollar, since his company doesn’t manufacture in the U.S.

Smallwood said earlier this year, Falken raised prices substantially, leading to customer complaints. The company has since revised its pricing, but must continue to watch its profitability closely.

As for the Ohtsu passenger tire line, Smallwood said the company has delayed the launch.

“The exchange rate just would have killed us. So the launch is on-hold for the present time, even though we have molds in a plant for UHP passenger, and two light truck tire lines.”

In response to a dealer’s question about offering consumer incentives -- not to bring customers into the store, but to help the close -- Smallwood said he didn’t foresee any at the present time.

Andrew Hoit, vice president of marketing, explained that the company prioritized its resources on the company’s new Falken Fanatic Associate Dealer program above consumer incentives. (For details on the Falken associate dealer program, click here, or check out page 33 in the May issue of Modern Tire Dealer.)

Hoit said Falken is spending more money on branding and marketing impressions in 2012. In addition to traditional media, the company has invested heavily in social media.

Hoit told dealers that in one month, the company can reach five million potential consumer customers by posting two items per day on its Facebook page.

The company is updating its ZE 912 line due to mileage concerns in the fourth quarter of 2012. The new product will be called the ZE 912 Plus. This will then be phased out and replaced with a completely new line in the first quarter of 2014.

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