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Still rolling despite tough market

Feb. 22, 2008
Though sales are down and raw material costs are up, tire makers still think opportunities abound in the North American trucking industry as fleets strive to re-examine every cost in their operations

Though sales are down and raw material costs are up, tire makers still think opportunities abound in the North American trucking industry as fleets strive to re-examine every cost in their operations.

“We feel that 2008 will be a very competitive year in truck tire sales,” Aaron Murphy, vp of China Manufacturers Alliance (CMA LLC), which produces the Double Coin line of truck tires sold here.

“The OE market is still well below what it was at this time last year and experts say that it could be into the second half of this year before it rebounds,” he told FleetOwner. “The replacement market is now flat, mainly due to the U.S. economy and dealer inventories are high with tires and trucks. We also feel that when economic times are challenging, many fleets are looking to maximize the value.”

Murphy added that “value” is the key word in the U.S. truck tire market – and not just as it relates to price. “Fleets and [other] end-users of truck tires look at product quality as well as the organization that supports the tire, no matter where it is manufactured,” he explained. “If the product performs, the service organization supports the sale and the cost per mile for tires is lowered, then … their goals are being met.”

“We continue to try and raise the bar for truck tire technology through continued innovations that improve tire life and durability,” said Marc Laferriere, vp-marketing for Michelin Americas Truck Tires, in discussing recent improvements to the company’s XZE2 regional truck tire. “This is turn helps … fleets reduce their total cost of operation over the long run.”

That includes beefing up truck tire warranties, too. Bridgestone Firestone North American Tire (BFNT), for example, recently introduced an extended warranty for its premium truck tires and casings for tires bought after September 1, 2007 and retreaded using Bandag’s process.

If a premium Bridgestone-brand medium commercial truck tire becomes unusable before wearing to where 2/32-in. of tread depth remains within seven years from the date of manufacture, BFNT will credit the owner $130.00 ($160.00 in Canada), the company said. And if a premium Bridgestone-brand casing becomes unusable before three Bandag retreads are completed, the owner will be credited $100.00 ($125.00 in Canada).

The challenge is to do all of that while managing higher tire costs. Goodyear, for example, noted in its year-end earnings release that sales for 2007 reached a record $19.6 billion – a 5% percent increase over 2006 – despite a 6.2% decline in tire unit volume. Goodyear’s revenue per tire increased 8% compared to 2006 due to improvements in pricing and product mix of approximately $639 million, offsetting 3.5% higher raw material costs – some $195 million – over 2006.

Murphy said CMA plans to pursue greater market share across the board, despite such cost pressures. “We are actively pursuing greater market share within our current OEM customers and are reviewing strategic placement of Double Coin in others,” he said. “We have introduced a National Fleet Program that will enhance the offering of our tires to medium and larger fleets that require consistent pricing and service programs over a large geographic area and we fully intend to enhance distribution of the products by partnering with truckstops.”

About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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