Numerous finance companies are ready to partner with retailers to offer no credit needed financing options for their customers. Areas to consider when evaluating their programs are presented in this chart along with responses from five companies that market their services to tire dealers: Acima LLC, FlexShopper LLC, Snap Finance LLC, Tempoe LLC and West Creek Financial Inc.
How much have sales and profits generated by automotive services changed in the last 10 years? Very little, according to Modern Tire Dealer research.
Yearly tire capacity, not production, in North America totaled 334.8 million tires at 62 plants as of Jan. 1, 2018. That’s up 4.9% compared to 2017, when capacity was 319.1 million tires. (The total does not include race or aviation tires.)
For all of you commercial truck tire dealers and manufacturers, remember the first quarter of 2017? No? I’m guessing that is the result of selective memory. It was pretty slow, and that is an understatement.
Tire manufacturers continue to see high-value-added (HVA) tires as the way to increased profitability. They are generally defined as 17-inch and larger tires (Michelin North America Inc. says 18-inch and larger), which takes them out of broad-line sizing. But they are more than just a tire size. They are, as Pirelli Tire North America Inc. executives have said for years, premium and prestige tires because they fit on higher-end vehicles. They may cost more, but their return on investment is greater, a win-win for manufacturers and the dealers who sell their brands.
Selling tires online is a growing trend, with more online-only players making names for themselves each year. The relative newcomers compete against not only brick-and-mortar retailers, but also each other, and cannibalize sales from leading online tire companies like the Tire Rack Inc. and Discount Tire Direct.
What spurred Michelin North America Inc. to buy 50% of TBC Corp. from Sumitomo Corporation of Americas (SCOA)? Michelin Chairman and President Scott Clark says the resulting joint venture “is about increasing our service capabilities and increasing our scale so that we can be a better supplier to both independent dealers and to provide secondary supply to our direct customers.”
Analyst Nick Mitchell follows more than just results from publicly traded tire and automotive companies for Northcoast Research Holdings LLC. He also tracks tire pricing and demand by tier. When asked how the tire tiers fared against each other last year, Mitchell said Tier 2 and Tier 3 brands outperformed Tier 1 brands through the first 10 months of the year based on unit growth. We agree, and the market share changes in the charts below compared to 2016 reflect that.
Profiling tire dealers reveals strength in numbers.
Since Modern Tire Dealer began assembling the list of low rolling resistance truck tires that are SmartWay-verified, the number of qualifying tires and brands has increased dramatically. In the last three years, the number of SmartWay-verified truck tires has doubled, from 612 steer, drive, all-position and trailer tires in 2015 to 1,226 truck tires this year. Compared only to last year, the number is up 23.4%. The number of brands on the list has spiked as well over the same three-year period, from 193 to 270. The U.S. Environmental Protection Agency (EPA) says using SmartWay-verified tires can achieve fuel savings of 3% if: All tires are properly inflated, based on the manufacturer’s specifications. They are used on Class 8, line-haul tractor trailers. They are used on the axle positions for which verification is specified. (For tractors equipped with 6x2 drivetrains, verified steer or trailer tires may be used on the tag axle with tire manufacturer approval. Even if low rolling resistance tires are only used on the tractor or trailer, the EPA says there will be incremental fuel savings.