TH THE IN INDU DUSTRY’S LEADING NG G P PUB UBLICA A TI T ON ON MAY 2011 • VOL. 92, NO. 5 • TEN DOLLARS • A BOBIT PUBLI CATI ON M a r k e t i n g t h e G r e e n I n i t i a t i v e s TELEPHONE ETIQUETTE Addressing creative new ways customers shop for tires TRUE VALUE Is your business worth less or more than you think? NOT DEAD, JUST DIFFERENT Tire dealers say private brand marketing has evolved • Manufacturers embrace eco-friendliness • The latest in low-rolling resistance tires
Transcript
THTHE ININDUDUSTRY’S LEADINGNGG P PUBUBLICAATIT ONON
MAY 2011 • VOL. 92, NO. 5 • TEN DOLLARS • A BOBIT PUBLICATION
Marketingthe GreenInitiatives
TELEPHONEETIQUETTEAddressing creative new ways customers shop for tires
TRUE VALUEIs your business worthless or more than youthink?
NOT DEAD, JUST DIFFERENTTire dealers say private brand marketing hasevolved
• Manufacturersembrace eco-friendliness• The latest in low-rolling resistance tires
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THE INDUSTRY’S LEADING PUBLICATION
MAY 2011 • VOL. 92, NO. 5 • TEN DOLLARS • A BOBIT PUBLICATION
Marketing Marketing the Green the Green InitiativesInitiatives
TELEPHONE ETIQUETTEAddressing creative new ways customers shop for tires
TRUE VALUEIs your business worth less or more than you think?
NOT DEAD, JUST DIFFERENTTire dealers say private brand marketing has evolved
• Manufacturers embrace eco-friendliness• The latest in low-rolling resistance tires
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Quik-Link: 800-687-1557 ext. 16101
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T here are times when the claim “investigative reporting” is an oxy-
moron. One of those times was March 14, 2011, when KDKA , a CBS television affi liate out of Pitt sburgh, Pa., aired an educa-tional news story titled, “5 Ways to Save Money on Tires.”
It might have been education-al, if any of the people involved in putt ing the piece together had done any investigating.
Any so-called reporter that plays up warehouse clubs as the go-to places for tires hasn’t done his or her home-work. When shopping for tires, “those warehouse club memberships can pay off on more than peanut butt er,” said the article.
On the surface, that statement is at least partially correct. A four-pound jar of peanut butt er at Costco Wholesale is prett y economical. (My wife and I have two jars of peanut butt er in the pantry, totaling not quite three pounds. We bought them at the grocery store. If we were club members, we could have saved a bundle.)
But the reason KDKA preferred the clubs was that the local Costco knocked $70 off the price of a set of Bridgestone tires, and Sam’s Club did the same thing to a set of Michelin tires.
I guess companies that sell major brand tires don’t off er special promotions to independent tire dealers, do they?
Th e report even admitt ed that the selection was limited! And the deals did not apply to all makes and models. But tires from the clubs were still deemed the bett er buy.
Ron Brutt could not let the report go. As president of the Tire Dealers Association of Western Pennsylvania, he shot off a lett er to the general manager.
“Th e way the piece was presented was a direct slap in the face to the many hard-working independent tire deal-ers who overwhelmingly make up the vast distribution network of retail tires,” he wrote.
“Not once did your piece mention the superior service and professional knowledge that our members can off er in the complex decision-making process of what tire is best to buy.
“You simply treated the purchase of a tire as if it was a commodity item, rather than the very important part it plays in the overall safety and performance of the vehicle.”
One month later, Brutt still hadn’t heard from anyone at KDKA .
“No, not a word,” he told me. “I’m not surprised, to be honest with you, that I haven’t. Th ose people just write what they want, and that’s the way it is.”
Still, he couldn’t let that go without at least trying to make a point for association members and his own business, Brutt Tire & Auto Center Inc. in McKees Rocks, Pa.
“When you start saying big box places are the place to go without doing any research, that isn’t right.”
At the very least, his fellow dealers were thrilled with his response.
“We’ve heard a lot from our members about taking a stand with it. Th ey were happy to hear the association was on top of it.”
Why is it that tire dealers seem to get litt le, if any, respect from local and national media outlets? Th ey are experts in their fi eld, just like news organizations are supposed to be, and should be treated as such.
Does CBS News like it when viewers learn about the day’s events from bloggers, or shows that lampoon the news like “Th e Daily Show” or “Th e Colbert Report”? I
think not.Th e other four ways the article said
consumers could save money on tires were based somewhat on common sense.
Th e piece suggested pricing them online, buying used tires, keeping them properly infl ated and buying low-rolling resistance tires. Not one tire dealer was quoted in the article, although the Tire Rack was listed as an online shopping option.
“Th ere are many online sites doing just what they do,” wrote Brutt . “Many
independent tire dealers have online sites, also.” Th e event that spurred the story was Cooper Tire &
Rubber Co.’s second price increase of the year. Th e increase was treated as an isolated event — one more example of poor research on the part of the television station.
Th ere were three comments to the story, which is posted on the TV station’s Web site.
“Nathan” didn’t see anything “ground breaking” in the article. “In fact, I feel dumber for having read it,” he wrote. I like Nathan.
“Richard” said the Cooper brand is the only tire manu-factured in the United States! Th at is about as accurate, and educational, as the story. ■
If you have any questions or comments, please e-mail me at [email protected].
Contributors: Auto Service/Technical: MIKE MAVRIGIANTraining/Tire Service: KEVIN ROHLWINGIndustry Analyst: SAUL LUDWIG Art Director: NEAL WEINGART [email protected] Production Manager: KA REN RUNION [email protected]
Modern Tire Dealer is a Bobit PublicationExecutive offi ces: 3520 Challenger St. Torrance, CA 90503Chairman: Edward J. BobitCEO & President: Ty F. BobitChief Financial Offi cer: Richard E. Johnson
Online
Log onto our Web site for popular blogs
D id you know blog is short for Web log? And that blogs were invented to serve as an outlet for posting commentary on the Internet?
Modern Tire Dealer editors use their blogs to inform readers on our Web site — www.moderntiredealer.com — about subjects of interest to those in the tire industry.
Some current blogs include Editor Bob Ulrich’s “An in-depth look at Goodyear’s board of directors,” about how the companies associated with Goodyear’s board members fared during the last fi scal year they were run by the board members, “In the wake of a
devastating plant fi re, retreader Pete Kearing gets a litt le help from his friends,” about Kearing’s Westover Bandag retread plant in Chicopee, Mass. Westover Bandag is a subsidiary of Holyoke Tire & Auto Service Inc. in West Springfi eld, Mass. Holyoke Tire ranks as the 87th largest retreader in the United States, according to Modern Tire Dealer’s “Top 100 Retreaders” list, which appeared in our April issue (see it on our Web site, too).
Ulrich’s “ATD doesn’t believe in the ‘hurry up and wait’ concept of tire distribution” covered American Tire Distributors Inc.’s (ATD) plans to expand its already large distribution footprint. And a blog that has received a lot of hits is his “Gett ing price increases to stick is a sticky wicket for manu-facturers and dealers.”
Also gett ing a lot of att ention is Ulrich’s “Japanese disasters will change the face of consumer
tire shipments in the U.S.,” in which he writes about how much Japan’s consumer tire exports to the United States will be aff ected by its recent natural disasters.
Managing Editor Lori Mavrigian’s recent blogs have covered tire-related happenings on the big and small screens. She has followed the recent release of a movie starring an abandoned tire — yes, tire — in “‘Rubber’ meets the road, and goes on a killing spree,” and the sequel blog “Some critics are saying ‘Rubber’ stinks.”
On the small screen, Mavrigian informed readers about industry veteran Corky Coker, president of Coker Tire Co. in Chatt anooga, Tenn., appearing on an episode of the History Channel’s TV show “American Pickers.”
And her blog on the practice of “tire stretching” — titled “’Tire stretching’ and survival of the fi tt est” — is still one of the Web site’s most popular.
Read them all on www.moderntiredealer.com. And be sure to leave us a comment! ■
Total access — totally freewww.moderntiredealer.com
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MODERN TIRE DEALER (ISSN 00268496) (CDN IPM #40013413) (USPS #369-170) is published monthly by Bobit Business Media, 3520 Challenger St., Torrance, California 90503-1640. Periodicals postage paid at Torrance, CA 90503-9998 and additional mailing offi ces. POSTMASTER: Send address changes to MODERN TIRE DEALER, P.O. Box 1068, Skokie, IL 60076-8068. Please allow 6 to 8 weeks for address changes to take effect. Subscriptions in the U.S. and its possessions, $65; Canadian, $99; Int’l surface mail, $99; Int’l airmail, $198. Single copies, $10, except the January Facts Issue, $30. Address all subscription correspondence to MODERN TIRE DEALER, P.O. Box 1068, Skokie, IL 60076-8068. Please allow 6 to 8 weeks to receive your fi rst issue. Please address Editorial and Advertising correspondence to MODERN TIRE DEALER, 3515 Massillon Road, Suite 350, Uniontown, OH 44685-6217. The contents of this publication may not be reproduced either in whole or in part without consent of Bobit Business Media. All statements made, although based on information believed to be reliable and accurate, cannot be guaranteed and no fault or liability can be accepted for error or omission. For your information: We sometimes make our subscriber information (i.e. fax, e-mail or mailing address) available to carefully screened organizations whose products and services may be of interest to you. If you prefer not to have your information made available, please write MODERN TIRE DEALER, P.O. Box 1068, Skokie, IL 60076-8068.
Henry John Heinz launched Heinz tomato ketchup in 1876. Bert Christiansen is following suit
with Ketchup2 in 2011.A former tire dealer, Christiansen is hop-
ing to market what he calls “the ultimate universal condiment” to the masses.
“I’m an avid chef and griller, always mak-ing steaks, chops, ribs and chicken,” he says. “Th e barbecue sauces I used tasted OK out of the bott le, but lost something on the grill.
“So I started to concoct my own barbecue sauce. Over the course of a summer, I started perfecting it. I wrote down all the ingredients, and kept tweaking the measurements.
“By the end of the summer, I came up with Ketchup2, the perfect concoction, the perfect balance of tang and ‘heat’ and sweetness.”
Bert’s older brothers, Al and Jeff , started Christiansen Tire in their father’s three-car garage in 1977. Young Bert helped out when he could, then offi cially joined the business in 1979.
Eventually, they moved into their own building in rural Le Raysville,
Pa. Aft er a fi re completely destroyed the business in 1987, the brothers went their separate ways.
Al, the oldest Christiansen, opened his own shop, Tireland USA Inc., 500 yards from Interstate Highway Route 17 in Nichols, N.Y. Th e tires-only operation inventories 51,000 tires on site.
Jeff rebuilt the business on the site of the old one. Christiansen Tire & Alignment Inc. also performs undercar service.
Bert opened a Chris-tiansen Tire outlet in Horseheads, N.Y., and ran it with his younger brother, Craig, until sell-ing it in 2008. He also sold the rights to a spare tire removal tool kit he had invented.
“I was in the retail tire business from when I was a kid,” says Bert. “Th irty years was a benchmark for us. Very few businesses survive 30 years. Once I did that, I wanted noth-ing to do with the tire business.”
He still buys his tires from Jeff ’s shop, which he can see from his offi ce window.
Although Bert won’t give away the recipe to Ketchup2 (it also goes by K2), he will say he uses “a lot of high-end ingredients with a lot of ‘heat’ spices.” Th e label on the bott le also lists tomato base, brown sugar, honey, molasses, red wine vinegar, garlic, chipotle chili pepper and cinnamon among the ingredients.
What’s next for Christiansen? Now that K2 is FDA-approved, he plans on riding the wave of its success.
“I am gett ing interest from all over the country regarding distributorships and part-nerships,” he says. “We are also talking with some chain restaurants regarding K2.
“The ultimate goal is to have a bottle of Ketchup2 in every refrigerator in the world!” ■
News/views
From tires to tomatoesBert Christiansen invents Ketchup2, the ‘ultimate’ condiment
Inventor Bert Chris-tiansen is looking at marketing Ketchup2 in a smaller bottle.
Christiansen started selling K2 to small shops within a 50-mile radius of his brother’s store in Pennsylvania.
Brothers2Al and Jeff
Christiansen remain tire dealers
While Bert Christiansen sold his tire store in 2008, his older brothers remain suc-cessful retail tire dealers.
Al Christiansen, the oldest Christiansen brother, runs Tireland USA Inc. in Nichols, N.Y. The dealership stocks 51,000 tires in 81 tractor-trailers and two warehous-es on its 22-acre property. It only sells, mounts and balances tires.
“We have a minimum of 15 choices for all the popularsizes in stock,” says Al, who is looking at buying another 20 tractor-trailers for ad-ditional inventory.
Jeff owns Christiansen Tire & Alignment Inc. in Le Raysville, Pa. He says being located in a rural area low-ers his overhead and allows him to successfully compete on price against city-based competitors like Kost Tire & Auto Care, Sears Auto Centers and Sam’s Club.
In addition to undercarservice, Christiansen Tire services motorcycles, ATVs and small farm tires. Auto-motive service accounts for35% of Jeff’s business.
The brothers started out selling tires out of their father’s three-car garage. They mounted and balanced the tires outside, even when it snowed.
“It was quite an adven-ture,” says Al. “We learned the hard way how to do it the right way.”
Continental will build a tire plant in the U.S.Continental AG plans to build a consumer tire manufacturing plant in the United States.
At the company’s annual shareholders’ meeting on April 28, 2011, executive board Chairman Dr. Elmar Degenhart told shareholders that the plant will help cover rising tire demand in North America.
“These plans are further proof for the depth of the turn-around that the Passenger and Light Truck Tires Division has achieved in the Americas region by means of determination and perseverance.
“Back at the beginning of the new millennium, the passenger and light truck tire business incurred massive losses in the region. Today, it is profi table, and at the same time, a growth area.”
In North America, Continental, through its Continental Tire the Americas LLC subsidiary, manufactures tires in Mount Vernon, Ill., and San Luis Potosi, Mexico.
Th e Mount Vernon plant has the capacity to produce 28,000 passenger, 8,000 light truck and 4,500 truck tires a day. Th e Mexican plant can produce 15,000 passenger and 5,000 light truck tires a day. Continental also produces truck tires in con-junction with Yokohama Tire Corp. at their GTY plant, which is also located in Mount Vernon.
It’s a sign: Goodyear Tire & Service Network emerges coast-to-coastTh e Goodyear Tire & Rubber Co.’s Tire & Service Network is spreading across the nation. Dealers who meet the company’s eligibility requirements have been contacted. Th e company envi-sions a total of between 3,000 to 4,000 locations in the group. Th e network focuses on strong Goodyear retailers that mainly sell the tiremaker’s brands — Dunlop, Goodyear and Kelly. Th e goal is to create one, unifi ed program.
Participants in the network must sign a license agreement, and perform the following:
• submit Goodyear, Dunlop and Kelly point-of-sale sell-out data;• actively promote the core product screen;• keep a “G3 tire expert” on staff ;• maintain a satisfactory rating on the Network audit;• comply with the dealer agreement, standards and guidelines;• participate in Goodyear National Promotional Programs.
Th e program is free to qualifying dealers. Program benefi ts include a 12-month/12,000-mile nationwide limited service warranty, a parts rebate program and a Kendall oil program. Th ere also is online technical training, a tool and equipment program, a uniform program, plus TPMS and lube guides.
In addition, a new Web site for the program launches in July with a search engine that brings Tire & Service Network dealers up fi rst. Goodyear says this will be the fi rst time in the company’s history that service appears on the company’s Web site.
Quik-Link: 800-687-1557 ext. 1610510
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In the raw: materials are up, so are Toyo’s pricesEff ective May 1, 2011, Toyo Tire U.S.A. Corp. will increase prices on all commercial tires by up to 15% with in-line adjustments. Toyo says the increase is due to a continued escalation in raw material costs.
“Due to the steep increase in the costs of raw materials aff ecting our industry, we must reluctantly raise prices of our product,” says John Hagan, senior director, sales, Toyo Tire U.S.A. Corp. “We appreciate the continued support and understanding of our dealers as we remain committ ed to providing the highest quality products.”
Happy 100th birthday to Tripp’s Tire ServiceTripp’s Tire Service celebrated its 100th birthday on April 11, 2011. It is one of the oldest family-run tire dealerships in North Carolina.
A Tripp has helped run the busi-ness for fi ve generations: N.C. Tripp, 1911-1934; Larry Burton Tripp, 1923-1968; William Burton Tripp, 1968-2003; Tony Burton Tripp, 1980-present; and Matt hew Burton Tripp, 2003-present. Th e business was established by N.C. Tripp in the back of the family-owned blacksmith shop in 1911.
In 1925, the shop was moved to its present location in Ayden, N.C. In 1934, the business became known as Tripp’s Garage and Wrecker Service. In 1973, it was renamed Tripp’s Tire Service.
A second location was opened in February 2009 in Winterville, N.C.Both shops are NAPA AutoCare Centers, and joined American Tire Distributors’
Tire Pros program in December 2010. Th ey off er the following:
It’s a plan: Hankook markets brandIn a move designed to build brand recognition and speed market growth in the U.S., Hankook Tire America Corp. will implement a new marketing plan throughout 2011. It includes:
1. TV and print advertising. Hankook has expanded its TV ads under its brand umbrella “Driving Emo-tion.” Print advertising will include placements in magazines, such as “Maxim” and “Forbes.”
2. Baseball-related advertising. Hankook has nearly doubled its advertising presence behind home plate in 22 Major League Baseball parks throughout the country.
3. Motorsports. Hankook has multiplied its involvement for 2011 by becoming an offi cial sponsor of Formula Drift . Hankook also will support teams competing in the Redline Time Att ack series, Rally Cross and Pikes Peak Hill Climb.
4. Consumer promotions. On April 1, Hankook kicked off its 2011 “Great Catch” mail-in rebate promotion and giveaway, rewarding customers with up to a $60 cash rebate for the purchase of a set of four qualifying tires, along with a chance to win a 2011 Ford Explorer Limited.
5. Times Square billboard. Hankook’s “Driving Emotion” tagline already has become a fi xture in Times Square, and its tire-shaped billboard will be seen for a full year.
Fiore moves on to AAIAPaul Fiore has been named direc-tor of government affairs for the Automotive Aftermarket Industry Association (AAIA). Fiore joined the Tire Industry Association (TIA) as a lobbyist in 2003 and most recently served as TIA’s director of government and business relations.
Michelin rolls on CorvettesMichelin North America Inc. is helping Chevrolet elevate the 2012 Corvette’s performance. The new, optional Michelin Pilot Sport Cup Zero Pressure tires are available on the two highest-performing models, the lightweight, 505 hp (377 kW) Z06 and the maximum-performance, 638 hp (476 kW) supercharged ZR1.
Yokohama helps Japan rebuildEmployees of Yokohama Rubber Co. Ltd. and the Yokohama Group are helping Japan rebuild following the March 11 earthquake and tsunami. The company and its employees donated $1,100,000 to the relief ef-fort, mainly through the Red Cross societies in their nations.
Marshall joins Hercules as CFOHercules Tire & Rubber Co. has ap-pointed Jeff Marshall chief financial officer. Marshall fills the position vacated by Vic Siewert, who has been named senior vice president of planning and administration. Marshall has nearly 20 years of experience in finance, operations, sales and marketing.
Michelin partners up in ChinaGroupe Michelin has signed a “Memorandum of Understanding” with Double Coin Holdings Ltd. and Shanghai Huayi (Group) Co. to create a joint venture to produce and market Warrior-brand passen-ger car and light truck tires for the Chinese market.
Goodyear closes offeringGoodyear Tire & Rubber Co. has amended and restated its European revolving credit facility and closed an offering of 250 million euros ($364 million) aggregate principal amount of senior notes due in 2019 by its European subsidiary, Goodyear Dunlop Tires Europe B.V.
bites
Matthew Burton Tripp, Tony Burton Tripp, and William “Burt” Burton Tripp recently celebrated Tripp’s Tire Service’s 100 years in business in North Carolina.
Hankook’s new commer-cial, “Be One with It,” uses extreme sports themes.
• under-car and underhood automotive services;• ASE-certifi ed technicians;• passenger, light truck, truck and farm tires;
• Michelin, BFGoodrich and Uniroyal tires;• commercial tire and farm tire repair; and• 24-hour wrecker service.
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1st quarter results: Cooper nails North AmericaIn North America, Cooper Tire & Rubber Co. posted net sale of $648 million during 1Q of fi scal 2011, ended March 31. Th at is 22% higher than its net sales of $532 million for 1Q 2010.
Th e increased sales in its North America Tire Operations segment were the result of stronger price and mix, and increased unit sales.
Th e company’s total light vehicle tire shipments in the United States increased by 9.2% compared with a total industry shipment increase of 8.8% (as reported to Cooper by the Rub-ber Manufacturers Associa-tion). Unit sales for the North American segment increased 8.6% compared with the fi rst quarter of last year.
During the quarter, North America Tire Operations implemented a Feb. 1 price increase of 2.5% on light vehicle tires in the U.S., and another price increase on March 15 that will have an impact on average of between 8% and 9%, with prices varying by product.
Th e segment’s operating profi t was $22 million for the first quarter, or 3.3% of net sales. Th is is an increase of $8 million compared with the same period in 2010.
New Pirelli board leads by committeeFirst Pirelli & Cie. SpA’s shareholders elected the new board of directors. Th en the board elected its officers, including Chairman Marco Tronchett i Provera.
Th e shareholders elected 20 board mem-bers to three-year terms ending upon the approval of fi scal 2013 results.
In the session, the new board elected Tronchett i Provera chairman and CEO.
Th e board members also named new members to two existing committ ees, and members to two new committ ees.
“Th e Strategies Committ ee will support the CEO and board of directors as a whole in the defi nition of the strategic guidelines of the business, as well as the defi nition of the conditions and terms for operations, including extraordinary ones, of great strategic importance,” says the company.
Dealer of the Year Snider adds sixth plantSnider Tire Inc.’s sixth retread plant opened on April 21, 2011. Th e plant is located at the company’s headquarters in Greens-boro, N.C.
Snider Tire was a Bandag retreader prior to becoming a Michelin Retread Technolo-gies (MRT) franchisee in May 2009. Snider produces 2,050 precure and mold cure truck tire retreads a day at its other fi ve plants, and it is the fi ft h largest retreader on MTD’s “Top 100 retreaders” list.
Th e sixth plant is expected to add 200 retreads a day to the total. CEO and Presi-dent John Snider says the plant has the capacity to produce 400 a day.
Snider is Modern Tire Dealer’s 2010 Tire Dealer of the Year. Th e MRT network is 14 years old. It has 44 franchise members with 78 retreading plants in North America.
RMA honors tire plant excellence in the U.S.Th e Rubber Manufacturers Association (RMA) honored 18 members’ facilities for improvements in health and safety.
Th e RMA’s Safety and Health Improve-ment Program (SHIP) recognizes “signifi -cant enhancements” in worker health and safety, measured by the incidence rate for lost workday cases. Here are the winners:
Tyrexpo: First Asia, now IndiaTyrexpo India 2011 in Chennai, India, is benefitting from the recent success of ECI International’s flagship tire trade exhibition in Singapore, Tyrexpo Asia 2011. Fol-lowing that show, ECI says suppliers are confirming their involvement in July’s first staging of Tyrexpo India at the Chennai Trade Centre, Chen-nai July 5-7. For more information, visit www.eci-international.com.
Conti buys India tiremakerContinental AG has signed an agreement with Modi Rubber Ltd. to acquire its Modi Tyres Co. Ltd. subsidiary. The deal will give Con-tinental Corp. 100% ownership of Modi Tyres, and is part of the com-pany’s strategy to invest in growing markets in Asia. The company will focus on local production and distribution of bias and radial truck and bus tires and radial passenger tires. Continental and Modi have collaborated on various projects going back to 1974.
Weaver new Bridgestone CFOKen Weaver will take over as chief financial officer of Bridgestone Americas Inc. effective May 15, 2011. He will succeed Koki Taka-hashi, who recently became chair-man of Bridgestone’s board. Weaver is chairman, CEO and president of Firestone Diversified Products LLC (FSDP) and president of Firestone Building Products LLC (FSBP). Both are subsidiaries of Bridgestone Americas. He began his career with the company 28 years ago.
bites
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Besides my regular chan-nel checks with tire deal-ers and manufacturers,
I speak often with suppliers of raw materials including produc-ers of synthetic rubber, carbon black, steel cord and polyester. Th eir message is that they cannot keep up with demand from tire manufacturers. And that is not just a U.S. comment, but a global one. Tire manufacturers are still struggling to keep up with your demand because their inventories are too low. So I am not surprised when I continue to hear dealer complaints about supplier fi ll rates — although the shortages are not as acute as they were last year. It is clear, however, that dealers who have been loyal to their supplier (vs. ones who buy from deal to deal) are gett ing the best service levels. With gasoline prices now in the $4/gallon range, I do expect to see some back-off in car driving, so consumer tire demand in the second half of 2011 may be a bit less than my initial expectations. Truck tire demand will still be strong all through this year.
Monthly survey
A number of independent tire dealers were surveyed concerning current business trends. Except for tire prices and costs, the results of the March 2011 survey are compared with those of March 2010.
Dealers’ outlook is positiveAccording to our dealer survey, dealers
who sell passenger or truck tires sense that in the next six months business will either remain the same or improve. Roughly 40% of passenger tire dealers suspect business will remain the same, while the remaining 60% expect improvement. Likewise, 75% of all the truck tire dealers sense that in the next six months business will improve. Th e other 25% expect business will remain the same. None of the dealers expect business to worsen. Th ese outlook comments tend to be seasonally directed rather than year-to-year comparisons.
Tire sales were again strong in March
According to dealer reports, on average, retail sales of new replacement passenger tires were strong with many reporting as much as a 10% increase in March vs. March 2010. Some dealers we surveyed noted that they expect business to grow, but were very concerned about rising
fuel prices deterring people from driving, impacting sales. Truck and retreaded tire sales were also strong, increasing 12% and 7%, respectively, in March year-over-year.
Selling prices for major and private brand tires were up In comparing the month of March 2011 with February
2011, average costs for size 215/60R16 major brand tires were up 4% while selling prices were up 6%. Th e average costs for a 215/60R16 private brand tire were up 5% while selling prices were up roughly 7% also for the month.
Tire pricing remained very fi rmIn March 2011, all of the passenger and truck tire dealers
suggested pricing was very fi rm. None of the dealers felt pricing was normal or aggressive.
Truck tire inventories remained too low Th e survey suggests that the majority of passenger tire
dealers view future demand as consistent, as 80% of tire inventories seemed to be in line with business levels. Twenty percent said inventories were too high, while none indicated inventories were too low. Conversely, 75% or the truck tire
dealers surveyed felt inventories were too low, while the remainder felt inventories were in line with business.
Service revenues are up, dealers reported Dealers who provide automotive service reported that
25% of revenues, on average, were generated by service during March. Dealers indicated that service business was up over 9% in March vs. March 2010. Unless gas prices continue to trend higher, service business in 2011 should continue to remain strong. ■
Analyst Saul Ludwig is a managing director with Northcoast Research Holdings LLC based in Cleveland, Ohio. He concen-trates on the tire and chemical industries. He has been writing for Modern Tire Dealer since April 1975.
Ludwig Report
High fuel prices will impact consumer driving patterns and tire demand
By Saul Ludwig
How dealers view their near-term businessDealers NOV DEC JAN FEB(R) MAR(P) MAR(10)
I t’s the right thing to do, but it’s also good business,” says Bridgestone Americas Inc. spokesman Dan MacDonald. In one sentence, he summed up the “green movement”
in the tire industry. MacDonald, vice president of community and corporate
relations, says there are many ways to embrace both goals. Reducing the weight in a tire not only saves on raw material costs and usage, but also can reduce rolling resistance. With gas prices climbing toward the $4.50 a gallon mark, that is a selling point.
Community involvement also is part of the movement, he adds. Bridgestone is one of many manufacturers with environmentally friendly programs that also promote their brands locally and nationally.
Will gas prices stay above $4 a gallon? Not according to the United States Energy Information Administration (EIA).
Th e EIA projects that the retail price of regular-grade motor gasoline will average $3.86 per gallon between April 1 and Sept. 30, up 40% from $2.76 per gallon last summer.
However, we may not see sub-$3-per-gallon pricing again in the foreseeable future. Th e EIA forecasts an average price of $3.70 per gallon in 2011 and $3.80 per gallon in 2012.
In addition, the National Highway Traffi c Safety Administra-tion is close to fi nalizing a new tire labeling law that requires a fuel effi ciency (i.e., low-rolling resistance) rating.
Th e end result will be tires with lower rolling resistance in addition to more traditional performance characteristics. Here is a listing of the latest fuel effi cient passenger and light truck tires manufacturers have to off er.
Bridgestone EcopiaBridgestone Americas Tire Operations LLC is dramatically
expanding the number of replacement sizes for two of its Ecopia tire lines.
Th e company introduced its latest eco-friendly Ecopia products in limited sizes at the 2010 Chicago Auto Show. Th e Ecopia EP422 is an all-season tire; the Dueler H/L 422 Ecopia is an SUV, CUV and light truck tire with an all-season tread patt ern.
Bridgestone will add 24 sizes to the Ecopia EP422 line by mid-year, according to Julie Porter, consumer tire product manager for the U.S. and Canada. That will increase the number of sizes to 29, broken out as follows:
• 15- to 18-inch sizes;• 45 to 65 series aspect ratios;
Green initiatives
Low-rollers, high road From Bridgestone to Yokohama, manufacturers market their ‘green’ tires
Bridgestone recently tested its Ecopia EP422 against the tire it is replacing, the Turanza EL400. The 2011 Honda Civic fi tted with Ecopia EP422s (right) rolled 98 feet longer. The test compared size 195/65R15 tires at 30 psi. The vehicles were in neutral.
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Th e Dueler H/L 422 Ecopia size lineup will increase from six to 19 sizes, ranging from 16 through 20 inches. Th e tire has a UTQG tread wear rating of 640.
Bridgestone’s Ecopia technology features two types of compounding that reduce rolling resistance. NanoPro-Tech controls the interaction between polymer fi ller materials (such as carbon black and silica) and other rubber chemicals at the molecular level.
The “Fuel Saver Sidewall” compounding lowers rolling resistance by returning more energy to the tire than a normal sidewall. Th e result is less heat generation.
Porter says Bridgestone’s goal is taking Ecopia technology and “applying it across all of our tires.”
Continental EcoPlusTh e benefi ts of the Continental ProContact with EcoPlus
technology include improved fuel effi ciency and an 80,000-mile tread wear warranty, according to Continental Tire the Americas LLC. It also reduces CO2 emissions.
Th e all-season tire was designed to provide these benefi ts without sacrifi cing wet braking.
EcoPlus technology consists of two main components.
1. Tg-F Polymers: temperature activated functional polymers that increase compound bonding, thus improv-ing tread wear and fuel effi ciency.
2. +Silane: additives that enhance grip on slippery roads, therefore reducing stopping.
“Ever y gallon of gasoline saved not only reduces fuel costs for the consumer but also helps to reduce our nation’s dependence on oil.
“In addition to reducing costs, each gallon of gas saved also means up to 20 fewer pounds of toxic CO2 emissions released into the Earth’s atmosphere.”
Th e Continental ProContact with EcoPlus passenger tire was named Best New Product at the 2010 SEMA Show.
Th e tire also received an “excellent” rolling resistance rating from “Consumer Reports” in the magazine’s most recent all-season tire tests.
Sample vehicle fi tments for the tire include the Buick LaCrosse, Chevy Cobalt, Chrysler Sebring, Dodge Caravan, Ford Focus, Honda Civic, Nissan Altima, Lexus RX330 and Toyota Prius.
Th e Continental ProContact with EcoPlus is available in 22 T-rated sizes ranging from 185/65R15 to 225/50R18.
Cooper GFETo meet consumer demand for greater vehicle fuel effi ciency,
Cooper Tire & Rubber Co. added its fi rst low-rolling resistance tire — the Cooper GFE (Greater Fuel Ef-fi ciency) — to its product portfolio. Th e tire was introduced at the 2008 SEMA Show.
Th e GFE tire showcases Cooper’s “Energy Return” compounding tech-nology, which will be the backbone of future low rolling resistance products from the company.
Its innovative tread stock features a unique silica technology married to a specialized polymer. In combination, they provide very low rolling resistance, outstanding wet grip and long tread life.
Cooper says the lower rolling resistance of the GFE can reduce fuel use by approximately 3%, resulting in “substantial savings in fuel costs and considerable reduction in the greenhouse gas emissions.”
GITITh e GT Radial Champiro 228 is marketed by the company
worldwide as a “performance tire for drivers desiring more than a smooth ride, comfort and excellent grip” but “who also expect eco-friendly and fuel effi cient tires.”
Th e performance touring tire fea-tures a Nanotek silica compound for reduced rolling resistance and excep-tional grip in wet and dry conditions. Nanotek silica is a GITI Tire Pte. Ltd. manufacturing technology process that utilizes Nano-grade silica modules. Th ese modules, which are smaller than traditional silica modules, are mixed into GITI’s specially formulated polymer-carbon black matrix by employing a silane-based coupling agent and a proprietary mixing technique.
Th e result is a product that features a highly homogeneous and low hysteresis tread compound that provides the lower rolling resistance, along with the improved wet handling performance.
In addition, the GT Radial Champiro 228 and other GITI tires are produced with non-aromatic oils, a greener manufacturing process. High-aromatic (HA) oils are classifi ed as carcinogens because they contain polycyclic aromatic hydrocarbons (PAHs).
Goodyear Fuel MaxGoodyear Tire & Rubber Co.’s Assurance Fuel Max is a
fuel-effi cient passenger tire that also provides confi dent wet and dry traction.
Th e tire’s fuel-saving tread compound uses functional polymers
The Continental ProContact with EcoPlus all-season tire (being examined by Brad Shim-bashi of Markham, Ontario-based Braidan Wheel & Tire) was recognized for its low-rolling resistance and fuel-saving fea-tures at the 2010 SEMA Show. The GT Radial Cham-
piro 228 is available in 30 sizes.
Cooper engineers use environmentally friendly, low polycyclic aromatic materials in the GFE’s tread stock.
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Green initiatives
that help reduce energy loss as the tire rolls, saving up to 2,600 miles worth of gas over the life of a set of tires compared to other Goodyear tires. A “Wet Tread Zone” with dual aquachannel grooves helps evacuate water from the surface of the tread face for traction on wet roads, and a “Dry Tread Zone” with solid shoulder blocks helps enhance handling and grip on dry pavement.
Th e Assurance Fuel Max is available in 34 passenger car sizes ranging from 185/65R15 88H to P235/65R17 103H.
An additional 21 sizes are available for SUVs and crossover vehicles in the Assurance CS Fuel Max version.
Goodyear backs both tire lines with a 65,000-mile limited tread wear warranty.
Hankook eco tiresHankook Tire America Corp. will
be launching two low rolling resistant tires specifi cally for the U.S.
market in 2011.The Optimo H426,
a luxury all-season per-formance touring tire, and the enfren eco, an eco-friendly all-season performance tire, incor-porate an advanced silica tread compound into their design to provide lower rolling resistance w ithout sacrif icing
performance characteristics.
According to Hankook, the Optimo H426
“will sport 20% lower rolling resistance than its predecessor.” It also “adopts a rib-block design to minimize vibration while driving and employs an optimized lateral groove width to generate the least possible noise.
Hercules Ironman iMoveLow rolling resistance is one of the
performance driving characteristics of the new Hercules Ironman iMove all-season tire. So is a smooth, comfortable ride.
A continuous center rib provides
The enfren eco line targets hybrid and other high fuel effi ciency vehicles.
Goodyear has sold an estimated four million Assurance Fuel Max tires in North America since the line’s introduction in February 2009.
The Hercules Ironman iMove features an asymmetrical tread design.
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constant road contact to enhance straight-line handling and dry road response. Th e silica tread compound and tread design enhance water evacuation.
Th e tire is available in 44 sizes ranging from 155/70R13 75T to 275/30ZR19 96W. Th ere also are four SUV sizes.
Kumho eco Solus KL21, ecowing KH30As part of its “Beautiful Company” initiative, Kumho Tire
Co. Inc.’ focuses on having optimal low rolling resistance in all of its products. Two primary examples of this are the eco Solus KL21 and the ecowing KH30.
Th e eco Solus KL21 is an eco-friendly tire for CUVs, SUVs and minivans. It provides even wear and improved wear resis-tance, while still providing performance and all-season traction.
Th e ecowing KH30 is equally environmentally conscious. It is formulated with eco-friendly, silica-based com-pounds, and features low rolling resistance and long tread life — but not at the expense of high performance character-istics such as responsive handling, traction and ride comfort.
Michelin Green XOn the consumer tire side, Michelin North America Inc.
promotes its Energy Saver All-Season passenger tire and Latitude Tour light truck, SUV and crossover tire as its fl agship fuel effi cient tires.
Th e Energy Saver targets “popular mainstream and hybrid vehicles” and is designed for “exceptional levels of fuel effi ciency,” according to the company. Its “Energy Saver Construction” technology keeps the tire running cooler, thus improving its fuel effi ciency. Th e tire also bears Michelin’s “Green X” symbol on its sidewall, “a visual signal to consumers that the tire has a level of increased fuel effi ciency.”
Th e Latitude Tour features special tread compounds that reduce rolling resistance and increase traction compared to the previous generation Latitude Tour. Michelin claims the tires also save up to 82 gallons of fuel over the life of a set.
Nexen NBlueNexen Tire America Inc.’s NBlue passenger
tire contains a special compound “contain-ing eco-friendly materials,” according to Nexen. Th e tire also features a special tread patt ern designed for stability and mileage, and a “dynamically engineered tread sequence” engineered to reduce road noise.
The ecowing KH30 is available in 22 H- and V-rated sizes. It is backed by a 60,000-mile tread wear warranty.
Nexen introduced the NBlue at last year’s Global Tire Expo.
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Green initiatives
Pirelli Scorpion Verde All SeasonPirelli Tire North America’s low rolling resistant tire is the
Scorpion Verde All Season. Introduced at the 2009 SEMA Show, the all-season tire was designed specifi cally for SUV’s, crossovers and light trucks.
Compared to previous Pirelli all-season tires, the Scorpion Verde All Season off ers 20% less rolling resistance (thanks, in part, to an 8% reduction in weight), lowers CO2 emissions, and lasts longer — all part of Pirelli’s “Green Performance” strategy. Th e tire’s “green DNA,” as Pirelli likes to say, is identifi ed by the company’s “EcoImpact” symbols on the sidewall.
Energy Effi cient: lower rolling resis-tance = reduced fuel consumption = reduced CO2 emis-sions. (According to Pirelli’s rolling resistance tests on size 255/55R18 Scorpion Verde All-Season tires, fuel consumption is reduced by 3.2%
at a constant speed of 55 mph, and 2.1% at a constant speed of 75 mph.)
Clean Air: manufactured with HAOF (Highly Aromatic Oil Free) compounds and 8% less raw materials = less impact on the environment.
In addition, the tire gives drivers “increased performance in wet braking, dry handling, wet handling, snow traction and reduces aquaplaning.”
It is available in 19 sizes, ranging from P235/70R16 106H to 275/45R20 110V XL. Pirelli says a run-fl at version will be available soon.
Toyo VersadoTwo of Toyo Tire U.S.A. Corp.’s all-season, luxury perfor-
mance tires are designed with low rolling resistance in mind: the Versado CUV for crossovers, and the Versado LX II for sedans and coupes.
The Toyo Versado CUV fea-tures a new low-rolling resistance compound. It also delivers “an extraordinarily smooth, quiet ride coupled with enhanced handling and stability to meet the unique demands of a crossover.”
Th e tire is available in 17- through 20-inch sizes with 65- to 50-series aspect ratios.
Th e Versado LX II features a new silica compound that delivers im-provements in both fuel economy and tread life compared to previ-
ous Toyo tires. An asymmetric, non-directional tread patt ern enables cross rotation that helps reduce irregular wear.
Handling performance is aided by a large contact patch on the outside tread, while snow traction is helped by a high sipe density on the inside tread. Multi-wave sipes help decrease tread block movement under driving and braking conditions for improved tread contact on both wet and dry surfaces.
As it is with the Versado CUV, road noise is reduced using Toyo’s proprietary Silent Wall technology.
“In coming months, we will be introducing Versado Eco,” says Toyo. Th e all-season tire is designed to complement popular hybrids and other environmentally friendly vehicles, such as the Toyota Prius, Toyota Camry Hybrid, Honda Fit, Honda Civic Hybrid, Honda Insight and Chevy Malibu Hybrid.
Vredestein Quatrac LiteIn 2007 Vredestein introduced the Quatrac 3, a highly suc-
cessful all season tire. Two years later, the Quatrac 3 SUV joined the family.
Now, Vredestein has unveiled the latest ad-dition to the Quatrac family, the Quatrac Lite. Th is “green” all season tire meets all the envi-ronmental regulations due to be implemented across the European Union in 2012.
Compared to the Quatrac 3, the Quatrac Lite is more focused on fuel effi ciency. Even its size range is positioned more toward current and future hybrid and electric cars.
It features a high-tech “Full Polymer Compound” that guarantees low rolling resistance, long life and “excellent” road traction in all conditions, says the company. It is available in 14 sizes.
Yokohama orange oilA litt le more orange oil means a lot less petroleum, which
is what Yokohama Tire Corp.’s environmentally sensitive dB Super E-spec passenger tires are all about.
“Th e eco-focused dB Super E-spec mixes sustainable orange oil and natural rubber to drastically cut the use of petroleum, without compromising performance,” says Dan King, vice president of sales. “It also helps consumers save money at the gas pump by improving fuel effi ciency via a 20% reduction in rolling resistance and the Airtex Inner Liner that minimizes tire weight and reduces air loss to help the tire stay properly infl ated.”
Yokohama’s orange oil-infused tires (which includes Advan ENV-R2 racing tires) utilize sustainable resources such as orange oil and natural rubber to help cut petroleum use during manufacturing. Th e new compound is called “Super Nano-Power Rubber.”
“Yokohama is the only tire company to have perfected this science,” says Mark Chung, director of corporate strategy and planning. ■
The Toyo Versado CUV is the company’s most fuel-effi cient tire.
“Flexing points” (sipes) give the Quatrac Lite the fl exibility required for low rolling resis-tance and snow traction.
Innovative materials and design give the Scorpion Verde All-Season a stable footprint, which Pirelli says helps lower rolling resistance.
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W e asked tire manufacturers this question: “In addition to eco-friendly tires (see pages 18-24), does your company employ any other green initiatives in the tire manufacturing
process?” Here’s what they had to tell us. Th ey’re doing a lot more than many people may realize.
Bridgestone Americas Tire Operations LLC
Th e Bridgestone Group has long been an industry leader in green initiatives. In every corner of the company, we
are using the power of our global technologies and our innovative teammates to do the right things for
our planet and the environment.Our “One Team, One Planet” environmental
and energy initiatives are making a diff erence every day. Our concern for the environment
in material selection, production processes and logistics continually improves our
environmental performance.We have the only two tire manufactur-
ing facilities in the world certifi ed by the Leadership in Energy and Environmen-
tal Design (LEED) Green Building Rating System administered by the U.S. Green Building Council. We
also have a Gold LEED certifi ed retail facility from which we are using best building practices when constructing our new retail facilities.
Our global goal is to reduce CO2 from an entire product’s life cycle by 35% per sales. Another goal is to improve tire rolling efficiency by 25%, resulting in less fuel use and CO2 emissions while driving.
We also will reduce the overall weight of our tires and resources needed to produce them while maintaining performance. All scrap tires from the manufacturing and retail groups are recycled or benefi cially reused.
In operations, Bridge-stone embraces new
Green initiatives
Taking the green initiativeCompanies care about more than just tires
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27www.moderntiredealer.com
technologies. Clean, effi cient hydrogen fuel cells power material movers at our tire plants in Warren County, Tenn., and Aiken County, S.C. We reduce our energy consumption by using low energy lighting and high effi ciency fans in our plants. Th rough energy savings measures in our plants, the company saved $2.8 million in 2010 alone and continues to reduce greenhouse gasses on our way to achieving a 25% reduction by 2020.
Since 2005, we’ve reduced waste per ton of product by 40%. We’ve increased waste recycled per ton by 25%. No scrap tires from our manufacturing facilities go to the landfi ll — they are all benefi cially reused. All Bridgestone Americas manufactur-ing facilities are ISO 14001 certifi ed. Also, the new Akron, Ohio, Technical Center is being built to gold-level LEED certifi cation.
Cooper Tire & Rubber Co.Cooper Tire works hard to protect the environment by
considering the environment in the design of its products and processes. Cooper also helps prevent pollution, using energy and resources wisely, strictly controlling emissions, reducing waste, providing proper training and driving continuous improvement in all that we do.
We have not only developed more fuel-effi cient tires, we have also focused on “green-ing” our processes. To that extent, Cooper has earned the U.S. Department of Energy’s Energy Star Partner designation, distinguishing it as the sole tire manufacturer to earn such an honor and as an industry leader in completing green activities.
Cooper’s new 804,000-square-foot warehouse and distribution center in Franklin, Ind., has earned Gold certifi cation status under the LEED Green Building Rating System admin-istered by the U.S. Green Building Council. Th e system is a voluntary, consensus-based standard to support and certify successful green building design, construction and operations.
LEED certifi cation is att ained by incorporating “green” features into the design and construction of the building. Cooper is one of only two tire companies to boast possession of a LEED-certifi ed building. Moreover, the Franklin facility is the largest gold-LEED-certifi ed distribution center in the U.S., and one of the largest LEED-certifi ed buildings in the world.
Cooper’s Texarkana, Ark., plant recently received a “Save Energy Now” Award from the U.S. Department of Energy (DOE). Th e facility is one of just 93 in the U.S. to merit an Energy Saver award. Th e award is presented to plants that achieve more than 7.5% in total energy savings.
Th e plant also won the 2009 Arkansas Environmental Fed-eration Diamond Award for Excellence in Environmental Leadership.
This award is presented annually to the most deserving manufacturing/industrial entity demonstrating initiative and innovative leadership in environmental aff airs. Th e Texarkana plant’s Diamond Award recognizes the plant’s reduced manu-
facturing scrap generation, reduced landfi ll usage, energy and water conservation, and internal recycling.
Also, Cooper’s Tupelo, Miss., plant was recently recognized as an environmental leader with Th e Mississippi Department of Environmental Quality by being accepted into its enHance program. enHance is a voluntary stewardship program begun in 2009 that recognizes committ ed environmental leaders who accomplish goals beyond their legal requirements. Cooper is one of only 16 entities in the state of Mississippi to be recognized at the Leader level.
Federal Corp.Besides just focusing on producing high quality products,
Federal is committ ed to protecting the environment and takes corporate responsibilities to comply with environmental policies and minimize pollution. Federal applies the following principles regarding environmental issues:
1. complying with environmental regulations and other related criteria in the factory.
2. emphasizing water conservation through reducing waste and recycling water.
3. continuously improving product quality, manufacturing technology and enhancing quality control in order to eff ectively minimize defective products to prevent pollution.
4. continuously improving and minimizing odor released by irregular rubber mixture and reducing dust to minimize air pollution and prevent complaints from nearby residents.
5. monitoring “major construction works” closely to prevent pollution and accidents.
Continuously educating employees to ex-ecute environmental conservation practices and communicating with suppliers/contractors to comply with all applicable environmental
rules and regulations are additional goals.
GITI Tire (USA) Ltd.GITI Tire (USA) Ltd. is playing a major role in helping pro-
tect 1,000,000 acres of rainforest in Sumatra, Indonesia. Th ese areas are considered as one of the most critical ecosystems in the world, containing over 400 species including the Sumatran tiger and orangutan.
GITI Tire consumes annually about 525,000 metric tons of coal, or the equivalent of about one million tons of CO2, or 270,000 metric tons of carbon emitt ed into the atmosphere.
Protecting these forest areas from conversion into vegetation with lower biomass (tree plantations or agriculture) conserves about 100 tons of carbon per hectare, or 26 million tons of carbon in total, which is equivalent to about 100 years of carbon emissions resulting from GITI Tire coal burning.
Th ere are also carbon benefi ts by improving the conservation of the nearby Lake Toba watershed forest, and those benefi ts accrued from reforestation of community land in the buff er zones of all three forest areas.
Bridgestone has reduced waste by 40%, and all scrap tires are benefi cially reused.
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Green initiatives
Goodyear Tire & Rubber Co.Goodyear has a comprehensive, well-defi ned Environmental,
Health and Safety (EHS) program that continues to evolve as the global team works with all global operations to make our company more sustainable.
For many years, Goodyear has followed sustainability practices and worked hard to be a responsible neighbor in every com-munity in which we operate. One of the fi rst internal awards created by the company was a conservation award introduced in 1947 to encourage environmentally sound soil management. In the company’s early years, our sustainability eff orts focused on establishing parks and recreation areas in local neighbor-hoods and actively participating in civic organizations and leadership groups.
In the early 1970s, Goodyear established a formal energy conservation program and began energy reduction activities at every company location. We added greenhouse gas (GHG) emissions to our standard monthly report in the late 1980s and, in the 1990s, began releasing annual reports on our activities and progress in the area of EHS.
Our long-established safety and environmental programs make our workplaces and communities safer and healthier. Th e programs have evolved as we continually improve our performance.
Today, Goodyear has a formal EHS organization that is responsible for safety, compliance, sustainability and product stewardship. Aft er the group completed an analysis of our envi-
ronmental footprint that clearly showed GHG emissions as our primary issue, it was determined that improving fuel effi ciency in our products could provide a positive impact.
Hankook Tire America Corp.Hankook Tire adopted an environmental management
system early on and has been proactive in implementing global environmental protection initiatives. Our sustainable environ-mental management practices include resource circulation, environmental management, minimization of environmental impact, sett ing up an integrated environmental, health and safety management system and increasing our eco-friendly product lineup.
In the area of tire manufacturing, Hankook Tire has adopted the following measures as part of our environmental management system at a number of our manufacturing facilities:
• waste control and recycling — generating steam energy from incinerator waste heat.• air quality control — application of high effi ciency regen-erative combustion methodology, testing of bio-fi lters to reduce odors.• water quality control — promoting waste water recycling, monitoring a nonpoint pollution source management system, operating a real-time water quality telemonitoring system.• hazardous substance control — signing a voluntary agreement to reduce use and discharge of chemical substances, improved
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processes to protect fl ying pollutants.• maximizing operational effi ciency.• using clean energies at all plants.• testing the use of new technologies to further reduce environmental impact.
Hankook’s tires are designed in consider-ation of their eco-friendliness for the duration of their life cycle, and minimize the use of polycyclic aromatic hydrocarbons (PAH).
Hankook employs “Kontrol Technology” (K for kinetic) to develop its tires. Kontrol Technology is Hankook Tire’s technology philosophy which refl ects how the tire should perfectly control the interaction between the driver, the vehicle and the road while in mo-tion. In addition AL11, AL07+ and DL11 are designed using Hankook’s e3 (pronounced e-cubed) technology which focuses on the three main areas of energy, economy and environment.
Kumho Tire U.S.A. Inc.Kumho Tire understands its responsibility towards the envi-
ronment and is devoted to improving the world we live in. Kumho Tire takes proactive steps toward research and eco-
friendly management eff orts set with global standards. With consumer needs and performance in the forefront of every
move, Kumho Tire is constantly seeking eco-friendly technology.
Kumho Tire is taking the environment friendly features — lightweight, fuel-effi cient, low noise, and long life cycle — beyond its environment label certifi ed products. Th ey include snow tires and UHP tires with special, environmentally friendly silica compounds.
Parent company Kumho Tire Co. Ltd.’s Gok-Sung, South Korea, factory is located on the upper part of the Sum-Jin River, an area where nature is in its purest form. It is the home of many wild animals and fish. In an effort to preserve the wildlife and the beauty of the surrounding area, Kumho Tire has pledged to prevent the pollution of the river with a reverse osmosis facility that recycles waste water and consistently monitors pollution levels.
In addition, the factory operates facilities that diminish air pollutants. Industrial waste is recycled. Steam is also reused to save energy. Kumho Tire also utilizes High Aromatic (HA) oil-free agents in the manufacturing of tires. Kumho Tires maintains a strong focus on being environmentally responsible.
Michelin North America Inc.Michelin has built tires using “Green X” technology since 1992.
To manage the environmental performance of its production
Green initiatives include conserving the raw materi-als that go into tire making.
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plants, Michelin has developed a propriety standard, known as the Michelin sites Environmental Footprint (MEF).
Reported quarterly, MEF data are an integral part of the group’s management indicators, refl ecting a commitment to reducing the footprint by 35% in 2015 compared with 2005. By 2010, the improvement since 2005 had already reached 30%, thanks in large part to eff ective waste management and the deployment of good energy practices.
In addition, as a corporate initiative, Michelin hosts the annual Challenge Bibendum, the largest collection of alternative fuel vehicles on the planet. OEMs and policy makers all over the world come together to discuss and display the latest technologies that facilitate greater sustainable mobility. Th is year, the event will be held in Berlin, Germany, from May 18-21.
Pirelli Tire North AmericaPirelli’s Green Performance technology permits the reduction
of fuel consumption and minimizes environmental impact due to the use of eco-sustainable materials which last longer and produce less noise when on the road.
Pirelli has always been very att entive to environmental issues. Th e company has developed a series of technologies capable of reducing the environmental impact of its products through their entire life cycle from production to disposal.
Our range of green products covers all production segments and is continually evolving, as seen by the recent launch of the Cinturato P1, already in line with the latest European environ-mental legislation. Th e sale of green products represented 37% of total revenue in 2010.
Pirelli also partners with Go Green Auto Rally (GGAR) that teaches drivers the fundamentals of effi cient driving through endurance racing principles. Drivers who take part in the free program and use the free smartphone app can save up to 25% off their fuel bills through fuel-effi cient driving practices. Last year GGAR won the Bronze Award at the 2011 Edison Best New Product Awards.
Toyo Tire U.S.A. Corp.Th e Toyo Tire North America manufacturing
facility is a non-hazardous waste facility as well as a low air-emissions manufacturer. Toyo Tire is committ ed to assuring and maintaining an eco-friendly environment by continually searching for various recycling industries with compelling and economical alternatives with innovative tools, processes and technology to support the rubber product manufacturers.
Toyo’s scrap rubber and tires are distributed to these vari-ous industries which can support the diverse applications of recycling the rubber into a marketable product and further their own profi t margins. Th ese marketable items are recycled and produced into fl oor mats used in the fast-food and hotel industries. Th ey are also used as paving and landscaping mulch, and on athletic fi elds.
To further support the environmental impact of the local community, Toyo began its eff orts in 2007 to reduce landfi ll waste through recycling items such as cardboard, wood, metal,
pallets, paper, plastics and aluminum cans. In 2009, to further enhance Toyo Tire’s environmental philosophy, Toyo began its “Used Oil Reclamation” process. Th is process has reduced the cost of an external used oil/water recycling disposal as well as the reduction of costs associated with the oil supplier. Th is process reclaims the used oil from the manufacturing equipment. Th e oil is collected, recycled and reintroduced back into the same manufacturing equipment.
Yokohama Tire Corp.U.S.-based Yokohama Tire Corp. (YTC) is joining with its
Japanese parent, Yokohama Rubber Co. Ltd. (YRC), to utilize its strength in technologies to protect the environment. Th is environmental mandate, part of the company’s “Grand Design 100” (GD100) Plan, is designed to have Yokohama harmonize its company-wide operations in everything from manufacturing to product design. Th e GD100 Plan coincides with the company’s 100th anniversary in 2017 and outlines how YRC will reduce the environmental impact made by every one of its products, including passenger and commercial tires as well as adhesives, sealants and golf accessories
Yokohama currently has zero-emissions of waste at all of its eight production sites in Japan, as well as at its Philippines product plant and two factories in China. Th e company will expand this approach to other facilities globally. It has achieved
an 8% reduction in CO2 emissions, exceeding targets set by the Kyoto
Protocol on climate change, and has been awarded the highest possible environmental rating by the Development Bank of Japan.
In the United States and worldwide, Yokohama’s manufacturing plants are ISO 14001-certifi ed, which is an international specifi cation of
environmental management system that holds organizations to stringent environmental prin-ciples and audits.
Development of eco-friendly products is a signifi cant GD100 objective. Yokohama’s environ-mentally friendly tires include the dB Super E-spec, a con-sumer passenger tire, which
has been launched in the United States. YRC has developed a process that combines orange oil with natural rubber to form a new compound called “Super Nano-Power Rubber (SNPR),” which significantly reduces the proportion of petroleum products in the tire.
Yokohama additionally has a green racing tire, the Advan ENV-R2, which like the dB Super E-spec, contains orange oil. Th is compound allows for more natural and sustainable materials to be used, while increasing the grip capability in natural rubber. ■
The Yokohama dB Super E-spec is composed of 80% non-petroleum based materials, including orange oil. It is designed for hybrids.
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T his month we are going to delve into how retailers feel about private brand tires. I talked with dealers about the current trends and the future prospects
of private brand tires, and there are certainly strong and diff ering opinions.
Some dealers I spoke with have been in the tire business more than a few decades, and believe me, they have opinions. When I think of strong opinions, I’m reminded of a quote from Major League Baseball hall of famer Yogi Berra.
Known for his wacky quotes, Berra once described back-to-back home runs hit by Roger Maris and Mickey Mantle as “It’s déjà vu all over again.” But the overall impression I got when I interviewed manufacturers, distributors and retailers about the current state of the private brand tire business is that business is not the same.
Game-changing eventsTh ough the private brand tire game and the rules have
changed, they are not aff ecting everyone the same. Some dealers have retained an advantage in their markets, while others are suff ering. Most everyone I spoke with recited some degree of history regarding private labels. It’s as though they were longing for simpler times. Th e mere fact that everyone wanted to give a slight history lesson indicated to me that all recognize that it’s not what it once was.
For years, private brands were a strategic part of a tire manufacturer’s marketing and production goals. Private brands kept factories running. Private brands added to capacities and helped keep manufacturing costs down.
As America expanded its highway system and as people moved to the suburbs, driving habits changed — more people were driving more cars more miles year aft er year.
As distribution channels developed it made sense to develop and sell private brand products through a variety of the distribution channels. And it worked.
Today, however, with a considerable increase in car com-panies marketing a wide variety of vehicle types with a wide variety of options requiring ever-increasing sizes and styles of tires, SKU proliferation has aff ected tire manufacturing.
Th e manufacturing costs and complexities of tire factory production runs make it impossible to support and supply the necessary requirements for building multiple private brands in ways it was done in the past.
Therefore, over the last number of years, many tire companies have de-emphasized private brands and have committ ed the necessary resources to more adequately marketing their primary name brands.
Th is trend, along with the relatively recent actions by Goodyear Tire and Rubber Co. to exit the private brand business, has left a supply gap for the independent retailer and distributor seeking private brand products.
In an eff ort to close the supply gap, retailers and distribu-tors have gone overseas to seek supply at the lower end of the pricing structure.
Simple logistics dictate that buying tires from the other side of the world will have its share of diffi culties. Pricing fl uctuations, raw material costs, transportation costs, tariff s, rapidly changing SKU demand, etc., are bumps in the road that have made smooth transitioning diffi cult at best. Th e economic recession hasn’t helped, either.
Th ere are a lot of dots to connect to replace a private brand with a brand or brands from overseas. In fact, it is
unrealistic to think replacing an established — in many cases, decades-old — private brand with a “container program” from a supplier and a country unfamiliar with
branding and channel management.With all the shuffl ing of molds and sett ing up and building new factories overseas, there was
a real disruption in product fl ow. To this day, it has not sorted itself out. Th e private brand business is still in a state of fl ux.
Th is fl ux has lead to what has been identi-fi ed as a “supply-constrained environment.”
Nowhere is this constrained supply more evident than in the private brand and low cost import segments.
Producers in the United States have abandoned the entry-level price point market due to labor costs and
Private brand tires
Not dead, just diff erentTire dealers say marketing
private brands is in a state of fl ux
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lack of profi tability, leaving a sizable gap to be fi lled by overseas producers. Th ough the units fl owed freely at fi rst, there was a real lack of channel management.
In baseball, every team and every player is seeking the slightest advantage since it can mean the diff erence between winning and losing. Tire dealers are no diff erent. Th ey are always looking at stocking the right mix of tires, and the right mix incorporates a wide variety of factors in any given market.
A healthy mix of tires is some combination of branded products, associate brands, low cost imports and private brands.
Defi ning momentsModern Tire Dealer defines the brand categories as
follows...
Private brand tire: marketed and owned by a company or organization other than the one that manufactures it.
Associate brand tire: marketed by the manufacturer under a brand name other than the manufacturer’s chief label or labels.
Low cost imported tire: manufactured overseas and marketed as a direct competitor to private and associate brand tires.
Looking at the most recent MTD Private Brand Study, we see that independent tire dealers indicate that “price” and “profitability” are key factors in their decisions to handle private brands.
In the survey, 95.7% of respondents indicated they carried private brands.
Th e trend toward “branded” products by major tire manufactur-ers is having a major eff ect on the independent tire dealer, and this eff ect is predicted by some to accelerate. One individual I spoke with who is pro-private brands feels the lack of adequate supply is going to hurt the independent dealer.
Independent dealers have long recognized the additional profi t potential of private brand tires. As I stated earlier, tire dealers, like baseball players, are always looking for the slight advantage, the advantage that translates into more gross profi t on a per-sale basis.
I’ve observed over the years that a private brand tire sale with appropriate add-ons can be the healthiest gross profi t sales ticket of the day. Private brand tires have played an important part of this gross profi t formula for most independent tire dealers over the years, and the current supply-constrained environment — with fewer available private brands — has the potential to bring adverse eff ects to tire dealers’ bott om line.
As dealers are aware, a shift in product mix combined with a shift in SKU profi t margins can add up quickly — good or bad. I have spoken to several private brand distributors and retailers, and the message can be summed up as follows: Th e game has changed, supply is tough and the rules are diff erent.
Here are a few direct quotes from well-known and respected retailers and distributors. Th ey prove there are very confl icting opinions on this subject.
“Th e private brand business is dead.”“Our private brand business is strong and growing.”“I’m selling more name brand tires and making less.”“I’m selling more name brand products and making more.”
One distributor said, “We had become too dependent on a private brand that was slowing dying. Th ere was a lack of sizes, it was hurting our business.”
(Th is distributor has shift ed its thinking, re-aligned its product mix and is aggressively att acking the marketplace, recouping lost sales and gross profi t with less emphasis on private brands.)
Th e two dealers making the diff ering statements about the state of private brand business are both correct when viewed from their individual situations. One dealer was aligned with a manufacturer that has exited the private brand business and the other is aligned with a manufacturer that remains strong and committ ed to the private brand segment. Th e one dealer is att empting to re-align with another manufacturer and is fi nding it diffi cult as a result of tight supply, territory agreements and the various needs of his specifi c business.
A quick observation, however, points to a rather obvious conclusion. The current state of private brands is far from their former profi le. At one time there was a more substantial diff erence in acquisition costs, and the private brand sizing matched up or aligned more closely with the major brand on a size-by-size, style-by-style basis.
With SKU proliferation being what it is today, it’s impossible to mirror a major brand. Much of this has changed, along with a wide variety of other factors that shift s and realigns the private
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brand business to the point where it is considerably diff erent than it was histori-cally and even recently.
As a result of several major manufactur-ers severely reducing or eliminating their private brand production, the demand exceeds the supply. We are currently operating in a supply-constrained environ-ment. Simple economics says that pricing will increase, and it has. But the acquisi-tion cost between private, associate and major brands has shrunk in many cases, further eliminating the advantage that dealers have long enjoyed when selling private brand tires.
Other factors aff ecting private brand supply include demand for replacement tires in China, India and other emerging and surging countries, which means that fewer low-cost private brand radials are fi nding their way to the U.S.
Stay vigilantSo, as Yogi Berra would say, and has said,
“You can observe a lot by just watching.” As we watch the shift s in worldwide sup-ply and demand, as we watch the shift s in SKU proliferation, as we watch major manufacturers shift away from private brands, it appears that the private brand business is in a state of fl ux — not dead, just signifi cantly diff erent.
However, things in fl ux, like our industry and private brands, tend to stay in fl ux. I predict that the private brand business will rebound due to the high levels of acceptance by tire dealers and consumers. It’s a simple case of supply and demand, and the demand is there.
Th ere are approximately 975 million tires in service in the U.S., and approxi-mately 25% of these tires will be replaced this year. Th e brands may be diff erent, the gross profi ts may be diff erent, the process may be diff erent (Internet, Facebook,
Twitt er, etc.) and the results may be diff erent. Th ose working the retail sale counter still infl uence 85% of the transactions that take place in a brick and mortar store. Let me repeat that: 85% of all the tires purchased will be infl uenced by the counter staff .
It will be the job of the counter staff to give the customer awesome service, to get the right tire on the right vehicle with the right profi t with the right att itude. Th e consumer has and will continue to trust the opinion of the independent dealer, whether the tire is a private brand or an associate brand or one of the tiered brands. ■
DOMESTIC CONSUMER TIRE BRAND SHARE
(by type; based on 226.3 million units)
Associate brands 9.9%
Private brands 11.9%
Major brands 78.2%
Source: 2011 Modern Tire Dealer Facts Issue
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W hen the telephone rings at your store, the odds are bett er than two to one that your customer or prospect is using a cell phone or one of
the newer “smartphones.” Today, there are more than 280 million mobile phones in use by about 80% of Americans, age 18 and above.
In one recent survey, 75% of respondents said they keep their cell phones on and within reach during waking hours! Most users feel that the cell phone has made their life easier by providing instant wireless access wherever they happen to be at the time. Th ere are many funny stories about cell phone call locations.
Th e days of wired telephone service are numbered. For example, last month, I cancelled my land line business telephone service and ported the existing number to my new Blackberry smartphone.
From the time on March 10, 1876, when Alexander Graham Bell spoke the fi rst sentence into his invention, the telephone has become an essential communication device. Telephone use, both personal and business, exploded during the ensuing decades. Perhaps you may still recall the black, rotary dial models, connected by operators using a tangle
of wires. I sure remember them. Today, most equipment is digital, wireless, mobile, and with Internet connectivity built in.
Th e changes actually have made telephone use even more vital to a tire dealer’s success. Customers and prospects have immediate access to an enormous amount of information, and they use their 24/7 connectivity to shop and fi nd the products and services they need.
Although telephone technology has rapidly evolved in the past few years, the need for friendly, att entive telephone etiquett e remains the same. A caller determines his or her fi rst impression of your company during the fi rst half-minute of your conversation. Th e person answering your telephone is the whole company during those crucial moments.
You need repeat business and referrals from delighted customers. Th at means you should pay particular att ention to your fi rm’s telephone etiquett e.
• For Pete’s sake, avoid putt ing mobile phone users on hold for lengthy periods. Delays on hold eat valuable cell phone minutes. • Show that you value the caller’s time. If you must put someone on hold, check back every 30 to 45 seconds or your caller may think he or she is no longer connected,
hang up, and call your competitor! If you can-not connect the caller quickly, ask if it would be bett er to take the caller’s number and have your person call them back shortly. • Just as the fi rst few seconds of a call create the caller’s fi rst impression of your operation, the last seconds establish the caller’s fi nal opinion. Try to end on a brief, but friendly note. People will sense your smile.
I am the curious type, so I decided to make a few calls to a random sample of tire dealers and determine a subjective range of telephone etiquett e. I made seven calls to tire dealers in fi ve states, coast to coast. Th ree were to locations of major independent chains. Four were indepen-dent tire dealers. All seven dealers responded prett y well.
Answering the callAll seven answered my call promptly in one
or two rings. In three cases, I was asked to hold, but my wait on hold only lasted from three to 12 seconds.
Th e initial store greetings varied. In fi ve cases, the greetings were OK. Th e usual answer was the dealer’s name, along with the person’s name,
Business insight
Telephone marketing in transitionAddressing creative new ways customers shop for tires
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39www.moderntiredealer.com
and “How may I help you?” Th e greetings were friendly and not too long-winded.
Two dealers used a central operator who then directed my call to someone else who could help me. Th e process was effi cient, but a bit less friendly at the beginning of the call.
One fellow at a major chain in Maryland answered on the fi rst ring but he spoke too fast and I missed both the dealership name and his name. I had to ask him to repeat. He was friendly and helpful once we began to talk tires.
Every dealer quoted me prices on four new tires for my car aft er I told them the make and model, and the tire size I was using. Th ey asked about my type of driving, or about the type of tire that I was interested in buying.
Four of the seven dealers off ered more than one brand, discussing diff erent mile-age warranties and quoting a range of prices. The other three made a single recommendation based on my stated desire for a touring tire with long life.
Prices for four P215/60R16 tires ranged between $420 and $670 installed, tax included, depending on brand and mileage warranty. Th e quotes covered 11 diff erent tire brand and model combinations.
One dealer in Erie, Pa., listed for me all of the extras that were in the fi nal price, including computer balancing, rotations, alignment checks, road hazard warranty, and nitrogen infl ation.
Looking back on my conversations, I must give Anthony, the independent tire dealer in Erie, the nod for my best telephone tire shopping experience. He was friendly, helpful, and he provided extra information that made me want to buy from him. Anthony was also one of the three dealers who actually asked for my business or asked me to call back and give them the last shot at the deal.
Oddly enough, not one dealer asked for my name. It is easy to overcome that shortcoming. Politely asking for the caller’s name can create a stronger person-to-person link. Th e dealer should then repeat the caller’s name during the conversation.
Why not call your own store(s), and pose as a potential customer? You will quickly learn how well, or how poorly, your company handles customer and prospect calls.
Eff ective inbound callsMost tire dealers will say that their
customers are “Number One.” Does the manner in which your people handle
telephone calls show that customers are “Number One” over the phone, too?
Studies show that the tone one uses on the telephone conveys as much or more than the words used. Your tone of voice is a major part of your message, so take a deep breath and answer with a smile. Do you not appreciate a friendly, helpful voice when you make a call? Look at it this way, a caller could constitute a piece of your next paycheck.
• Slow down a litt le when you pick up the telephone. State
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the company’s name and your own name, then ask how you may help the caller. It is important to remember that cell phone reception varies and may not be as clear as a land line connection. Keep the conversation on a friendly person-to-person level.• Answer questions quickly, politely, and fully. Put your cus-tomer’s time and needs ahead of your own busy schedule. • Try to avoid background noise and other distractions.• Listen and get the caller’s name and concerns right the fi rst time.• Remember, your tone of voice is im-portant, perhaps the most important, part of your message.• Try to avoid sending a caller to “voice mail jail.” If you feel you must put the caller into voice mail, be sure to ask their permission to do so fi rst. Gaining the caller’s permission makes all the diff erence in how your caller perceives voice mail.
Eff ective outbound callsTelemarketing can reduce your sales
cycle time and improve your success ratio. Because so many of your customers and prospects now use wireless mobile devices, you must be acutely aware of their time.
Th e Boy Scout mott o, “Be prepared,” is good advice when calling out. Proper telephone etiquett e is essential when mak-ing outbound telephone sales calls.
• Know in advance with whom you need to speak. If you call another business and you are not sure who to ask for, start at the top of the hierarchy and work down.• Respect your prospect’s time. Ask for permission to con-tinue the conversation aft er the fi rst greeting. “Is this a good time to talk?”• If necessary, schedule a specifi c call back time.• Have a list of specifi c things you want to know. A useful format is to ask a question, listen carefully to the answer, quickly confi rm what you understood your prospect to say, and then ask your next question. Stay focused.
If you are unable to make any progress, try a diff erent ap-proach. Most salespeople surrender aft er just one try. Persistence pays.
When the prospect needs more information, try to advance your sales process. Th ere is a big diff erence between advancing and merely continuing the process. You advance when you get the prospect’s verbal commitment to review any additional information you send, and set up a date and time for your call back. When your prospect refuses to agree to review or schedule your next call, it is likely that you are simply gett ing the old brush-off .
Customer follow-up is another helpful form of outbound marketing. Many car dealerships call service customers a day
or two aft er a visit to make sure the customer is happy with the products and services. Make the calls during brief lulls in activity. A call may result in a raving fan or it may call for some remedial action that helps you retain an unhappy customer. Car manufacturers audit their dealers’ customer satisfaction; why not make the same eff ort?
Wireless marketing opportunitiesTh e explosive growth of smartphones means new ways to
market your tires and services. You now can reach a vast audi-ence of mobile phone users instantly and at a much lower cost.
Instant wireless communication allows tire dealers to build tighter relationships with customers and gain more new business referrals. Applications now exist that allow merchants to create and redeem gift cards, loyalty plans, and coupons electronically. Off ers reach potential buyers at the speed of light, and without the usual printing and mailing expenses.
Smartphones make it easy for your customers to pass along your off ers to their networks of friends, using Facebook, Twit-ter, LinkedIn and other social networks. You can even create coupons that customers cannot use, but only pass on to friends. You can create new business through this new mode of customer referrals.
It pays to get closer to customers and stay tuned to their levels of satisfaction.
Today, online blogs allow customers to tell the world whether they are happy or unhappy with a particular company. You may be surprised to fi nd that customers are rating you daily on one or more local review blogs. Determine if blogs are already rating your business. If they are not, you may want to consider adding a blog page to your existing Web site to make it easy to gather and monitor customer feedback.
Instant wireless communication is now a fact of business life. Customers have creative new ways to shop for tires and automotive services both online and by telephone. What has not changed yet is your need for correct telephone etiquett e, a friendly tone of voice, and a knowledgeable person who sincerely wants to make it easy for that customer or new prospect to do business with you. ■
Dick Morgan is a Certifi ed Management Consultant (CMC) and president of Morgan Marketing Solutions Inc., Dallas, Texas. Morgan helps leaders tackle major issues and become bett er mar-keters, using a holistic business approach. He has been involved in the tire and rubber industry since 1974, as senior vice president of marketing for Long Mile Rubber Co. Since 1989, he continues to provide business advisory services to tire dealers, retreaders and rubber manufacturers. Morgan is one of the judges for Modern Tire Dealer’s Tire Dealer of the Year. For more information, see his Web site at www.morganmarketingsolutions.com or call (972) 931-7993.
Business insight
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Tire dealers who own apparently successful businesses oft en are taken aback when it is suggested to them that their businesses are “worthless.” A soft er way
to say it would be to split the word and say their businesses are “worth less” than they could be.
In harsh reality, the fi rst term may be more accurate.Usually the owners of these successful businesses are right
in the middle of the action. Th ey keep a sharp eye on the details and product quality. Th ey have a joyful relationship with customers and a ready answer for employees seeking counsel. And, odd as it might seem, those traits actually keep a business from being worth as much as it could.
Valuation modelTh e “legal” defi nition of value is, “the price at which a
willing buyer and a willing seller agree.” Th e key word here is “willing.” No “fi re sales.” No duress. No opportunistic gouging.
Businesses are sold every day where one party or the other is not on solid footing. But, in long-term planning, the key objective is to prepare your business for sale from the fi rst day you open it.
It does not mean that you will sell it. It certainly does not mean that you have to sell it. But, if you have it ready to sell, it always has a value. Most people who say they don’t want to sell their businesses know, in their hearts, they have nothing to sell.
Th e truth be told, there are very few tire businesses on any given day that are “ready to sell.” Owners always want to clean up the place, increase sales a bit, make that big deal that really turns the corner, hire that key person who will make all the diff erence. You know, when the business is “ready.”
Success might be the problemIn the previous scenario, the successful owner of the busi-
ness knows the customers intimately and is a ready source for employees who need answers. So, what happens when the owner is not there? Do sales go down because you are not personally there to help the customers who love you? Do employees slow progress by deferring decisions “until the owner gets back”? Your absence could dramatically impact the value of your business.
Th erein lies the challenge for the prospective buyer and seller.
As the seller, you cannot sell yourself. If the true value of the business is you, what is left is essentially tire balancers, air guns and odd-sized tires (equipment and inventory). Th e value of the enterprise is essentially liquidation value.
Being ‘fi nished’Perhaps one of the most valuable images you can have
comes from Tom Watson, former CEO of IBM Corp. He suggests that to get an idea of what your objective is, you only need to imagine what your business would look like when it is “fi nished.”
When all the parts are in place, it runs as smoothly as any business can run — when you are not “doing” or even “managing,” but owning a “fi nished” business. Your task is to simply work every day toward that image (see sidebar).
Th is is the very essence of making the shift from small business thinking to entrepreneurial thinking. Th e only way a business has a value is to make it worth something to someone else. Th en, when you can sell it — but decide to keep it — you essentially bought it yourself. And that is because it is a good deal! ■
Roger McManus, a self-proclaimed “therapist for the entrepreneurially insane,” is a new contributor to Modern Tire Dealer. He is the author of “Entrepreneurial Insanity in the Tire Industry,” a new book that challenges business owners to examine why they opened their businesses and explore whether or not they are achieving the personal fr eedom that business ownership is supposed to deliver. “Entrepreneurial Insanity in the Tire Industry” is available through Amazon in print or Kindle in form; read more at www.thetirebusiness.biz, or visit his blog at www.ensanity.biz. You also can write him at [email protected].
Business insight
True valueCould your successful tire business be worth less or worse?
7 questions To determine if you are ‘fi nished’ (in a good way)
1. Did you get into business for yourself to get rich or obtain personal freedom? How is it going?
2. How many questions are you asked by your employees every day that could be avoided if you had established systems that would provide the answers?
3. If you were gone for a week would sales remain the same or drop? (Or, go up!)
4. Would you say to a prospective buyer of your business, “Let me show you what we do,” or “Let me show you how it works”?
5. Do you have time to grow your business or are you too busy running it?
6. How close is your business to being “fi nished,” that is, being at the point where you are satisfi ed with what you have accomplished?
7. Have you given any thought to what your “fi nished” business would look like? Could you write it down?
Supply. It’s a hot topic right now at Continental Tire the Americas LLC (CTA). So it was appropriate the company chose a place that’s hot — Jamaica — to tell its Gold
Dealers that more supply is coming. “I know the question on all of your minds is product supply,”
Bill Caldwell, CTA vice president of sales and marketing, told deal-ers. “Manufacturers shipped into the industry 29.2 million more tires in 2010 than in 2009. Th at’s the equivalent of three full manufacturing plants. Th e chal-lenge was we weren’t equipped to support that big increase, and we didn’t plan for it.”
Th e economic conditions of 2009 left CTA with a reduced inventory of 30 million tires. Caldwell said 40 million to 50 million tires is the normal range.In 2010 CTA couldn’t rebuild inventories and fi ll rates and sup-ply were tight the whole year.
Continental has addressed the problem. Th e company trans-ferred tire production in the U.S. to Continental AG’s European plants. Caldwell said 75% of the company’s passenger and light truck tires are built in Europe.
“Additional supply is coming,” he told dealers. “Sometimes our demand is growing faster than our capacity is growing. But more tires will continue to come to you and we’ll chase like crazy your demand level to make sure we can improve fi ll as we move through the year.”
To increase fi ll rates, CTA is investing 15% more in pas-senger and light truck capacity in 2011 than in 2010. Also, the company will spend $210 million to double the size of its plant in Camaçari, Brazil, by 2015.
(Th e company has announced it also will build a new tire plant in the U.S. For more information, see page 10.)
Profi table pricingTake advantage of CTA’s marketing and pricing teams. Th at
was the message from Cal Ganda, CTA’s manager of pricing.“Most of you are working, running your organization. You
don’t have time to go over spreadsheets and go over massive amounts of data,” he said.
CTA takes a market-specifi c approach with dealers. Just ask Howard Morgan of Morgan’s Tire Service in Burlington, N.J.
“We identifi ed what he believed to be his key zip codes — where he drew his actual customer base from,” Ganda explained.
From the zip codes, Ganda’s team obtained dealer information showing what vehicles were there, by make and by category. Ganda said CTA determines the number of vehicles in a market, takes a particular tire size and goes into CTA’s portfolio to identify what satisfi es that market.
“I thought sizes that I had in stock were what I needed,” Morgan told dealers. “But my trucks were running every day, picking stuff up, and all of a sudden my fuel bills are gett ing crazy. Cal came in and helped me out, gave me the tools that I needed and showed me the sizes we had to stock to make things work.”
“We look at your market, our off ering, and then how we can help you grow,” said Ganda. “In this situation, we did a retail market study and identi-fi ed retail opportunities for him that would make him the most money.”
Expand the brandCTA is also helping dealers through brand awareness ini-
tiatives. Travis Roffl er, CTA director of marketing, said the Continental brand wasn’t well-known three years ago. Th at’s not the case now.
“We identifi ed a problem in 2009,” Roffl er said. “We had to grow brand. We’re utilizing Major League Soccer and Grand-Am road racing to grow this brand in the U.S. market.”
Th rough 2013, Continental is the offi cial sponsor and tire of the Grand-Am Racing series. Continental is also the offi cial tire of Watkins Glen International raceway in Watkins Glen, N.Y.
Continental is the offi cial tire of Major League Soccer (MLS). Roffl er said the U.S.-based professional soccer league has a growing fan base. In 2010, there were 476 MLS broadcasts that reached 25 million viewers.
“From a media TV value exposure, that’s just shy of $30 mil-lion with 1.7 billion impressions,” Roffl er explained. “Th at far exceeded our expectations for this program when we entered into it in late 2009.”
Expectations also have been exceeded in North Carolina, where CTA supports the University of North Carolina, the nation’s number two collegiate brand. At Duke University in
Focus on industry
Conti invests in capacityGold Dealers can take advantage of new brand awareness
Bill Caldwell, Continental’s vice president, sales and marketing, told dealers that the company’s increased marketing activities, in-cluding racing and sports sponsor-ships, should be “a huge benefi t” to Conti dealers.
him the most money.”
Continental Tire the Americas has a revised corporate logo that was fi rst used last year at the Grand-Am Racing series.
Durham, CTA has signs on both ends of the court at every nationally broadcast home game.
More exposure comes from CTA’s involvement with Camp Boggy Creek in Eustis, Fla. Th e camp, the offi cial charity of Grand-Am road racing, is a Hole in the Wall Camp for children with serious medical conditions.
“It’s a fantastic facility,” said Rof-fl er. “We got together with the folks at Grand-Am and asked how we could help. We came up with the Continental Tire Dream Giveaway.
“You buy entries for the chance to win a 2011 Porsche Cayenne S Hybrid and a 2011 Hurley Haywood Edition Porsche GT3.”
Th e promotion runs through October
15, 2011, when one lucky winner will be awarded both vehicles, tax-free.
Th e brand awareness eff orts are paying off . CTA conducted market research and learned that in just one year, among Grand-Am fans, 46% are now aware of the Continental tire brand. Awareness is there among soccer fans, too.
“If you call some consumer and say, ‘Name a tire brand,’ only 5% of the time the average American answers Continen-tal Tire,” said Roffl er. “More than three times that number of average MLS fans answered Continental Tire.”
Marketing eff orts also have been suc-cessful with the General Tire brand.
“With General Tire, we went off -road
racing and we have been very successful,” said Roffl er. “We’re stepping up with series sponsorships in TrophyLite and JeepSpeed, and racing desert organiza-tions with Best in the Desert and Lucas Oil Off -Road Racing. We’re expanding our pit support in the desert as well as at short course.”
If you go see the new Vin Diesel movie “Fast Five,” pay close att ention to the tires. Th ey were all provided by Continental.
As part of CTA’s “Fast Five” promo-tion, which runs through June 4, anyone buying a set of four General tires will receive a $50 prepaid debit card. Also, the promo’s sweepstakes has a grand prize of a trip to Brazil, where the movie was fi lmed.
Ready for challengesAs the U.S. recovers from the reces-
sion, CTA dealers can benefi t from the company’s strategies.
As Caldwell explained, creating value is CTA’s driving force. He said the way they measures that value is by how successful dealers are. Th e company has achieved a series of successes, and Caldwell said they’re not stopping there. “We really look forward to making some major announcements as we move through 2011,” said Caldwell. “We’re making additional investments that will focus on the U.S. market to increase our production capacity to support the demand that you are bringing to us.” ■
In with the newConti introduces the Cross-Contact LX20
Continental Tire the Americas LLC shared plenty of news at its Gold Dealer trip to Jamaica. The big news? Two new tires that represent a shift in focus.
“We focus on passenger and UHP on the Conti side and light truck on the General side,” said Tony Talbert, product manager for Continental and General brands. “This year, we’re launching a light truck Continental tire and a passenger General tire.”
The Cross-Contact LX20 is the new Con-tinental tire. It was shipped to distributors in April. The all-season UHP tire replaces the CrossContact LX.
“Fuel effi ciency, tread wear, wet traction and snow traction are going to be huge leaps in performance with this tire,” said Talbert.
Launching in August, the Cross-Contact LX20 will be available in 30 unique 16- to 20-inch SUV and CUV sizes. CTA will look into LT sizes in this line in the future.
The new General tire is the General G-Max AS-03. It has been shipped to distributors and is now for sale. This tire is an all-season UHP tire and replaces the Exclaim UHP. (For more information on the new G-Max line, read “A UHP tire for all seasons” on page 44 of our April issue.)
Talbert also went over the details of Continental’s new technologies for its UHP tires. Aquacleave technology provides wet and snow traction. Acoustic Modulation Sound Technology (AMST) suppresses sound waves to reduce road noise. Three dimensional (3D) sipes extend into the tread walls on either side for cornering and dry performance.
“For tread wear, we have monitor technol-ogy,” said Talbert. “The Replacement Tire Monitor will say ‘Replace Tire’ when it gets down to the 2/32-inch wear mark. It is placed at three points around the tire.”
Talbert also explained the Visual Alignment Indicator (VAI), a system of sipes on each tread shoulder made up of two shallow sipes and one deep sipe. The two shallow sipes will wear away if there’s a misalign-ment. Talbert said this feature can bring in extra business.
“For those of you who are doing more than just tires, other services like oil changes and alignments, you can sell them an alignment if it’s bad,” Talbert explained. “You can gener-ate more revenue just because of that one feature on these tires.”
The “Continental Toss” bean bag contest was a big hit for deal-ers and their families. The grand prize of two Apple iPads went to Richard and Deborah Jendrasko of VIP Parts, Tires & Service in Portland, Maine.
A merican Tire Distributors Inc. (ATD) wants “to con-struct the nation’s largest independent tire dealer franchise network,” according to Dan Brown, executive
vice president of sales.ATD plans to do that with the Tire Pros franchise program.
Th ere are 272 Tire Pros dealers in the United States. Th ey represent 348 locations.
Two-thirds of them were in att endance at the 2011 Tire Pros Business Conference in Miami, Fla., on March 29. Th ey were joined by fi ve prospective members.
“More than anything else, Tire Pros is a retail program,” said Brown. It does not promise exclusive territories, per se. “We certainly have no intention of putt ing a dealer on top of another.”
Ron Sinclair, senior vice president of marketing, said at least fi ve diff erent “check off s” have to occur before ATD even talks to a dealer about becoming a Tire Pros franchisee.
“Our goal is 100 new dealers, minimum,” said Brown. (Th rough March, ATD had signed up more than 26 dealers this year.)
Dealers can’t get enough marketingWhat do the Tire Pros dealers think of the program? When
asked to name their favorite benefi t, many of them focused on marketing support.
Phil and Karen Holderbein, co-owners, Phil’s Tire & Auto Care Inc., dba Phil’s Tire Pros, Half Moon Bay, Calif.Number of stores: one (they had three at one time).Years in the business: 30Background: Located on the coast 25 miles south of San Francisco, Phil’s Tire is part of a small community “with a lot of fog,” according to Phil Holderbein. Th e dealership has seven employees, including a second generation worker.
Phil’s Tire has been a Tire Pros franchisee for 20 years. Holderbein says he almost quit the program prior to ATD purchasing it in 2008. “I wasn’t part of the marketing push. I couldn’t take advantage of the brand. When ATD took over, things changed, and I couldn’t be happier.”Signature brands: Michelin, Continental, BFGoodrich, Uniroyal and Riken
Focus on dealers
Courting100 more
franchisees ATD wants more
dealers to go
with Tire Pros Ron Sinclair, ATD’s senior vice president of marketing, told attendees the Tire Pros program is designed to “drive additional sales” to the dealership.
“I have the opportunity to take advantage of their (marketing) expertise,” says Phil Holderbein, co-owner of Phil’s Tire & Auto Care.
Biggest advantage of Tire Pros: “When we started, it was buying power. I could buy a tire very close to what our largest competitors were buying it for, probably 7% to 10% bett er than we were before,” said Phil. “Now, it’s marketing. (ATD) knows much more about marketing than I could ever know. I’ve had the chance to see how marketing has aff ected our business, driving people into our store.”
Jarid Downey, owner, Downey Tire Pros, Indianola, IowaNumber of stores: oneYears in the business: 19Background: Downey said seven of his 16 employees have been with him a long time. Only Downey “and the tire dunk tank” remain from the grand opening. Last year, he doubled the size of his operation from about 4,000 to 8,000 square feet.
Downey has been a Tire Pros dealer since January 2010.Signature brands: Michelin, BFGoodrich, Uniroyal, Bridge-stone and FirestoneBiggest advantage of Tire Pros: “We’re part of a big group now, so instead of the (car) dealerships and the big box stores coming out with the marketing ideas fi rst, now we’ve got our own promotions. We don’t have to react to them. Tire Pros knows what happens where and how and why and when.”
Ryan Goff , manager/co-owner, Roger’s Wheel Alignment & Tire Inc., dba Roger’s Tire Pros & Auto Care Center, Caldwell, IdahoNumber of stores: one, and “working on another store”Years in business: 33Background: Goff ’s father, Roger, started the business and still co-owns it with Ryan. Th ere is no tire brand signage on the outside of the building. Th e Goff s joined Tire Pros last July.Signature brands: Bridgestone, Goodyear and ContinentalBiggest advantage of Tire Pros: “Th e way you can deal with inventory and the market-ing of it. Th ey have a complete marketing team that frees up a lot of my time.”
Bill Roper, co-owner, Th e Tire Barn Inc., Gainesville, Ga.Number of outlets: oneYears in business: 40Background: Roper co-owns the business with his brother, Jack. Th eir father, the late Bill Roper Sr., started the business in 1971. Th ey became a Tire Pros franchisee eight months ago.Signature brands: Michelin, BFGoodrich, Uniroyal and PirelliBiggest advantage of Tire Pros: “Having a national affi liation, both with warranties and guidance. Having a coast-to-coast warranty is important, because our competition is quite oft en a national business. Tire Pros also off ers expertise in marketing (including Internet marketing) and technology — which our competition also possesses.”
Kyle Schoenthaler, general manager, Treadshed Tire Pros Performance Centers. Pitt sburg, Calif.Number of stores: oneYears in business: 30Background: Th e family-owned business opened its doors in 1982. It has been a Tire Pros franchisee for 15 years.Signature brands: Michelin, BFGoodrich, Bridgestone and FirestoneBiggest advantage of Tire Pros: “Th e marketing support, I’d say, is the biggest advantage for the independent. For a guy like me who doesn’t have the time to deal with the advertising and other marketing things, it’s huge. I’m running the store, and
don’t have time to properly put together a marketing campaign.”
Stacey Bair, vice president, Ocean Air Auto Repair Tire Pros. Virginia Beach, Va.Number of stores: oneYears in business: nearly 11Background: Stacey and her husband, Ken, added tires to their automotive service offerings when they moved into a larger facility more than a year ago. “It kind of threw us into the world of tire retail,” she said. (Ken Bair is the president.)Signature brands: Bridgestone, Fires-tone, Michelin and BFGoodrichBiggest advantage of Tire Pros: “Th e ability to provide nationwide warran-ties for us is huge. Our area has a large military population. Th ere are a lot of bases around us. Th e ability to have a warranty follow them wherever they go is important to them.” ■
Focus on dealers
“The facility we moved into had done tire retail previously,” said Sta-cey Bair of Ocean Air Auto Repair Tire Pros. “It was a perfect fi t.”
ATD and ACCCThere is no confl ict with Tire Pros,
says Brown American Tire Distributors Inc. (ATD) is the largest member-distributor of American Car Care Centers Inc. (ACCC).
Dan Brown, executive vice president of sales for ATD, says being a Tire Pros franchisee and an ACCC member is not mutually exclusive. “We remain committed members of ACCC.”
ACCC dealers sell in exclusive territories. In areas where ATD holds those rights, a Tire Pros dealer automatically becomes an ACCC dealer as well.
“We have specifi c states and counties where we can promote ACCC,” says Brown. “There are some marketing components to ACCC that we feel have value for a dealer. We have a vested interest in expanding it.”
ATD has been a member-distributor of ACCC since 2004. Modern Tire Dealer estimates ATD dealers represent close to 40% of ACCC’s membership.
SUBJECT VEHICLES: Nissan Quest/Mercury Villager minivans (up to the 2002 model year).COMPLAINT: Left /right rear brake is locking up.CAUSE/SOLUTION: Check ABS codes. Verify that the ABS actuator is not causing the dumping unit to hold brake fl uid pressure before replacing the master cylinder to get a new dumping unit.
If you encounter a Nissan Quest/Mercury Villager minivan (up to the 2002 model year) with the left front brake locking up, see if the right rear brake is locking up as well.
Th is vehicle has a component called a “dumping unit” that is screwed into one of the outlet ports of the master cylinder. Th e brake line for the left front and right rear brakes come out of this dumping unit. It has been common for the dumping unit to prevent brake fl uid from returning back into the master cylinder and releasing the left front and right rear brake, thus resulting in the left front and right rear brakes staying applied.
If the left front and right rear brakes are locked up, loosen the brake line from the dumping unit and verify the brakes free up, which indicates that the brake fl uid pressure is not releasing on its own. Th e master cylinder can be pulled away from the brake booster to eliminate the possibility of a brake pedal free play or pushrod adjustment problem; however, one of those problems should aff ect all four brakes.
We have had several shops tell us that replacing the dumping unit (which comes with a new master cylinder) fi xed the brake lock-up problem, but we have also expe-rienced cases where this has not corrected the problem. Th e dumping unit is only used in the brake circuit for the left front and right rear brakes. Th ere is no dumping unit in the brake line off the master cylinder for the right front and left rear brakes.
(NOTE: Drilling out the dumping unit as a means of eliminating its ability to lock up the left front and right rear brakes is not advised as this can aff ect brake pedal feel.)
Recently, one of our Hotline subscribers in South Carolina called about a Nissan Quest with the left front brake caliper and rotor melted down. Th e left front brake rotor, caliper and brake hose were replaced — no change; the left front and right rear brake were still locking up aft er the vehicle was driven for a period of time. When the brake line was cracked loose at the dumping unit on the master cylinder, the left front and right rear brakes freed up. Th e master cylinder was replaced (to get a new dumping unit) and the problem was believed to be corrected. But aft er an extended test drive, the temperature of the left front brake rotor was considerably hott er than the right front brake rotor.
Information gathered from a local Nissan dealer indicated the problem was in the ABS actuator. A problem in the ABS actuator was supposedly preventing the dumping unit at the master cylinder from releasing brake fl uid pressure causing the brake lockup problem.
Th e ABS actuator was then replaced with a used component but the problem persisted.
Th e ABS light was now “on,” so ABS codes were checked manually. Th ere was a normal code 12, and a right front wheel speed sensor open circuit code 21. Not knowing if the original ABS actuator had the code 21 stored, the ABS actuator was replaced again. Th e left front brake rotor was
still gett ing considerably hott er than the right front brake rotor and the code 21 returned.
Diagnosing the right front wheel speed sensor open circuit code showed a defective right front wheel speed sensor. Th e speed sensor was replaced and the code 21 did not return.
Checking brake rotor temperatures aft er a long test drive now showed the brake temperatures to be about the same, fi xing the vehicle.
Th e ABS code was aff ecting the ABS actuator and the ABS actuator was aff ecting the dumping unit, causing the dumping unit to hold brake fl uid pressure on the left front and right rear brakes.
If you get one of these vehicles in your shop with the left front and right rear brakes locking up, fi rst verify there are no ABS codes that might be aff ecting the ABS actuator. It is important to also verify that the ABS actuator is not causing the dumping unit to hold brake fl uid pressure on the left front and right rear brakes before replacing the master cylinder to get a new dumping unit. ■
Identifi x Inc. markets itself as the “best source for knowledge on what breaks, which vehicles it breaks on, and how to fi x those vehicles correctly.” For more information, call (800) 997-1674 or visit www.identifi x.com.
NVH solutions
Don’t dump on the dumping unitABS codes may be aff ecting the Nissan Quest actuator
SUBJECT VEHICLE: 2008-10 Honda Accord.SENSOR IN TIRE? No (sensors are installed in wheels).RESET PROCEDURE? Yes. Directions follow.SPECIAL TOOLS NEEDED? Yes (the Honda Diagnostic System or an OBD-II-compatible scan tool, and a TPMS sensor initializer tool).
When vehicle speed in a 2008-10 Honda Accord exceeds 28 mph, the tire pressure sensors begin to transmit. Using a radio frequency signal, the sensors transmit ID and pressure information to the tire pressure monitoring system (TPMS) control unit once very 60 seconds. If the TPMS control unit detects less than 24 psi in a 16-inch tire, or 25 psi in a 17-inch tire, the driver is alerted by the low pressure indicator and a diagnostic trouble code (DTC) in the control unit.
To remove an old sensor, follow these steps.
1. Raise the vehicle and support it with safety stands.2. Remove the wheel with the faulty sensor.3. Remove the tire valve cap and valve core, and let the
tire defl ate.
4. Remove any balance weights, and then remove the tire from the wheel. To avoid damaging the tire pressure sensor, follow these steps:
a. Do the outside of the wheel fi rst. b. Position the wheel so the valve stem is 90 degrees
from the bead breaker.
TPMS
‘Accord’ing to HondaMemorizing is required when these sensors are replaced
c. Do not position the bead breaker of the tire changer too close to the rim
d. Position the wheel so the tire machine and tire iron are next to the valve stem, and will move away from it when the machine starts. Th en remove the tire from the wheel (see Figure 1).
5. Remove the valve stem nut and washer, then remove the tire pressure sensor with the valve stem from the wheel. NOTE: Th e valve stem grommet might stay in the wheel; make sure to remove it.
6. Remove and discard the valve stem grommet from the tire pressure sensor.
Make it new hardwareWhen installing the new sensor, make sure to use a new nut,
valve stem and screw. To install the replacement sensor, follow these steps.
1. Clean the mating surfaces on the sensor and the wheel, before installing the sensor.
2. Install the tire pressure sensor and washer to the wheel, and tighten the valve stem nut fi nger-tight. Make sure the sensor is resting on the wheel (see Figure 2). NOTE: Do not use air or elec-tric impact tools to tighten a valve stem nut.
3. Tighten the valve nut to the vehicle’s specifi cations torque while holding the tire pressure sensor toward the wheel.
4. Lube the tire bead, and position the wheel so the tire machine and tire iron are next to the valve stem, and will move away from it when the machine starts. Th en install the tire onto the wheel. NOTE: Make sure the tire bead is seated on both sides of the rim uniformly.
5. Infl ate the tire to 44 psi to seat the tire bead to the rim, then adjust the tire pressure to specifi cation as indicated on the tire and loading information placard, and install the valve stem cap.
6. Check and adjust the wheel balance, then install the wheels on the vehicle.
7. Remove the safety stands and lower the vehicle.
A memorable experienceNow you are ready to reset and memo-
rize the sensor(s), as follows. NOTE: To ensure the control unit memorizes the correct ID, the vehicle with the new sensor must be at least 10 feet from any other TPMS sensor not installed on that vehicle.
1. Turn the ignition switch to the “lock” position and wait fi ve minutes for the tire pressure sensor to enter into “sleep mode.”
2. Connect the Honda Diagnostic System (HDS) to the Data Link Connector (DLC) located under the left side of the dashboard.
3. Turn the ignition switch to the ON position and verify that the HDS is communicating with the TPMS control unit.
4. Select “Sensor ID Learning” on the HDS tool. NOTE: If the vehicle’s ignition switch is turned to the “Lock” position before all pressure sensors are memorized, the memorizing ID is canceled.
5. Aft er turning it on, hold the TPMS sensor initializer tool near one wheel, and memorize the pressure sensor ID by fol-lowing the screen prompts on the HDS. If the TPMS control unit is still having trouble learning ID(s), refer to the appropriate service information.
6. Repeat step 5 for each wheel until all four sensor ID(s) are memorized. When all are memo-rized, the low tire pressure indicator will blink.
7. Turn the ignition switch to the “Lock” position and disconnect the HDS from the DLC.
8. Test drive the vehicle at 28 mph or more for at least one minute. Monitor the low pressure indicator to be certain it does not blink.
9. Turn the ignition switch to the “Lock” position; reduce the pressure in one tire until it is below
24-25 psi, then turn the ignition switch on.10. Test-drive the vehicle at 28 mph or more for at least one
minute. Verify that the low pressure indicator turns on, then reinfl ate the tire.
11. Repeat steps 9 and 10 for all other tires. ■
Information for this column comes from Mitchell 1’s “Tire Pressure Monitoring Systems Guide” for domestic and import vehicles through 2010. Headquartered in Poway, Calif., Mitchell 1 has provided quality repair information solutions to the automotive industry for more than 80 years. For more information, visit www.mitchell1.com.
Dear Editor:In the article in the March 2011 issue on “You survived...
Now what? Avoid these six mistakes as you put the recession behind you” by Norm Gaither and Pat Brown of Dealer Stra-tegic Planning Inc., it mentions that the expenses (including benefi ts) of the “ideal tire store” should be no more than 23% to 25% of sales.
Does this include all expenses except direct material (including wages), or are wages not included in this percentage? Th anks.
Jim DeVries, Finance ExecutiveWonderland Tire Co. Inc.
Wayland, Mich.
We turned to Norm Gaither, president of Dealer Strategic Plan-ning Inc., for an explanation. He tells us:
“To understand how to maximize your bott om line profi ts, it might be helpful to look at my ‘ideal tire store.’ Of course, each business varies slightly, but here are the ratios that work to make a 10% bott om line profi t:
Payroll plus payroll taxes 45% (This should always be a percent of gross profi t, not sales).
All other expenses 23% (as a percent of sales)
Net profi t before tax 10% (as a percent of sales)
“Specifi c to your reader’s question, ‘all other expenses’ do not include payroll. Here is a breakout of what we include in that category:
Join Modern Tire Dealer’s National Advisory CouncilEach month, Modern Tire Dealer is guided and infl uenced by a select group of readers — members of our National Advisory Council. Th ese members’ opinions are the heart of the monthly Ludwig Report, compiled by well-known industry analyst Saul Ludwig. If you’d like to join this prestigious group, please let us know. We’d love to hear from you. Contact Editor Bob Ulrich at [email protected] or call (330) 899-2200, ext. 11.
Maximizing your bottom line profi tsIt helps to examine elements of the ‘ideal tire store’
“We expect our business to continue to grow. Opening Price Point (OPP) tires are very challenging. We need retailers in our industry to move away from the lowest price OPP tires and condition the public to pay a fair price.”Jeff Kruse, Vice PresidentBelle Tire Distributors, Allen Park Mich.
“Business was fantastic — if you could get tires for the right costs. I am very concerned about $4 a gallon gas in the Midwest, and it’s even more on the coasts.”Nate Zolman, PresidentZolman Tire, Mishawaka, Ind.
“Th e price of diesel fuel and gasoline is squeezing our customers’ budgets. I am not as optimistic now as I was before the big spike in fuel costs.”Bill Anders, PresidentBurlington Tire Service Inc., Burlington, N.C.
“Many of the independent dealers who belong to our 20 groups are achieving these ratios, and some are performing even bett er.
“Of course if your gross profi t is lower than 60%, then your expenses should be lower than 23% in order to achieve my goal of 10% profi ts for all retail tire stores.”
Norm Gaither, PresidentDealer Strategic Planning Inc.
Virginia Beach, Va.
Gross profi t (as a % of sales)Tires 25%Parts 50%Labor 100%Other 96%Total 60%
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