Why did you buy ’em there?

The August 2019 edition of Tire Review’s Source Book is stuffed with facts and figures on our business. Mostly ho-hum, but I did spot this gem. A nice big graph titled Consumer Study “Why did you purchase tires where you did?” They broke it down into 18 categories. Coming in at number 1 with 52% of respondents choosing was ‘Price, sale, discount, rebate.” From there the list goes on with convenient location, good past experience, fast service, yada yada… and then, at the very bottom of the list, with a whopping 7%, “Car was already there for service.” I knew it. These are the all-important cars that are on the rack for a state inspection or oil change and the dealer did his job and recommended tires. BUT ONLY 7 PERCENT. The other 93% are possibly cheating on their favorite mechanic and buying their tires from someone who is more aggressively marketing themselves as a great place to buy tires. For you automotive repair shop owners: Do most of your tire sales only occur when you happen to catch someone who is in for unrelated service? If that’s a ‘yes?’ Would you like to sell more of these good folks (the other 93%) their tires? Even when you don’t have them up on the rack? Well that’s where K&W comes in. We have tried and true methods to help shops that want to sell more tires and make more money doing it. Email me back or call 717.314.4949 and we’ll talk. And to see the whole list on ‘Why you bought them there’ click HERE

NEXEN Hero!

Purple Heart – NEXEN Hero

NEXEN has partnered with the Purple Heart Foundation. This organization raises money to fund programs and services across the country to support veterans and their families. They pick a Purple Heart Medal recipient to honor with a cool customized vehicle and promote the organization. This years NEXEN Hero is Army Master Sgt. Brian Porter. NEXEN reports, “Porter’s military career spanned nearly three decades, and more than half spent with special forces. He volunteered for the elite 75th Ranger Regiment and completed the Special Forces Qualification Course to earn the U.S. Army’s coveted Green Beret. In 2004 during his second combat tour in Iraq, Porter was returning to base after a combat operation in Fallujah when an Improvised Explosive Device (IED) detonated under his vehicle. Not only did the IED explosion spawn an ambush of the convoy, Porter absorbed the full impact of the explosion to his face, resulting in a near-death experience. After multiple surgeries to restore his ability to eat and breathe on his own without assistance, Porter courageously returned to active service to rejoin his unit. Porter completed two additional tours to Iraq before retiring in 2013. The injuries sustained by the IED explosion has required more than 33 surgeries and for his actions in combat, and Porter was awarded the Purple Heart Medal. He continues to serve the country as a civilian role as an Exercise Planner for the United States Army.” To see a video of Sgt. Porter receiving his prize

Internet Tire Education

“I read it online…” or “I’ve been doing my research…” Sound familiar? Our friend Andy Torres from Wilson Tire in Lebanon NH relays the following story: “I actually had a customer share this website with me thinking he was making an informed decision based on empirical data requesting the top ranked tire on this list. Interestingly, the Cooper Starfire RS-C 2.0 fell in at number 7 on this list, and also at number 3…” If your customers stumble across Auto Quarterly for their tire research, like Andy’s did, you’ll be in for some deprogramming. Apparently this bastion of higher learning does not know the difference between a wheel and a tire. But that doesn’t stop them from making specific recommendations. Here’s a sample quote: “your drive may not be as quiet in some cases. Why? After a couple of miles they may give off a bad vibration. If you increase your vehicle speed be prepared to experience a bit of shaking. And as time goes on the rattling sound may intensify—even after rotation.” And this is from one of their top 10 rated tires. For a good laugh and some general nonsense read their Top 10 tire reviews by clicking HERE.

I guess you have to figure that whatever consumers think they know, will need some exploring. And if you’re one of those that says, “I get them whatever they want…” well – they are your customers, you might need to protect them from themselves. Thanks Andy!

Falken Tire is growing!

VENCE, France — With sales of crossover utility vehicles (CUVs) surging in North America, Sumitomo Rubber North America Inc. (SRNA) is evolving its Falken-brand tire lineup to serve customers in this segment more effectively.

The aim is to get a step ahead of the competition and offer tires targeted at a market segment that to date, according to Falken, is underserved by the tire industry.

“It’s a new market segment. Everyone knows that CUVs are exploding,” Rick Brennan, SRNA’s vice president, strategic planning, said in an interview with Tire Business and during a presentation at the 2019 Falken Tires Dealer Invitational April 28-30 on the French Riviera.

Car owners are moving to the CUV-type platform, he explained, and car companies are following suit by curtailing passenger car production in favor of CUVs, SUVs and light trucks. But auto makers have yet to segment the CUV vehicle market as they have done with passenger cars, such as for high performance, off-road use, etc.

That has left an opening, he said, for Falken to introduce a tire targeted at the estimated 17% of CUV owners who drive mainly on paved roads but who are likely to go off-road at some point during their vehicle ownership and who want a more aggressive, rugged-looking tire.

Mr. Brennan and other Falken executives talked about the opportunities in the CUV segment and introduced three products and several tire size additions at a business meeting and during private conversations with the 36 key tire dealers and distributors attending the trip.

They also spoke about the company’s recent growth in original equipment fitments in the U.S. and addressed supply issues and challenges the company is facing at its lone U.S. tire plant, in Tonawanda, N.Y., near Buffalo. Parent company Sumitomo Rubber Industries Ltd. (SRI) acquired the former ammunitions plant, the oldest tire factory in the U.S., in 2016 when the joint venture between SRI and Goodyear ended after a decade.

The Tonawanda plant is “really important” to Sumitomo and Falken, Mr. Brennan said, “because we’re adding OE, and we are growing in this marketplace. And right now, we have to order the tires three months in advance before we sell them. And not everyone is really good at looking down the road three months on what you need to have in stock to fill every need.

“So having that Buffalo plant here to make stuff, we can make it more when we need it, and we can supply the market with what it needs without having to have four or five months of inventory.”

Sumitomo is investing roughly $80 million in the plant to increase manufacturing capacity to 15,000 tires per day by 2020, Richard Smallwood, CEO and president of SRNA, said during a hearing last year before the U.S. Department of Commerce on the Trump Administration’s proposed tariffs on imported auto and auto parts.

It eventually plans to more than double U.S. production in the coming years. In doing so, it is striving to increase the ability of the plant to make more tire sizes and types, a complexity the facility and its workers never have had to do previously.

A year ago, the factory was making 33 sizes of passenger and light truck tires and eight SKUs of truck/bus radials, Mr. Brennan said. Today, the plant has the ability to make 137 SKUs in passenger and light truck tires and 27 SKUs in TBR.

In addition it produces motorcycle tires, making it the only factory in the U.S. to manufacture passenger, light truck, truck/bus and motorcycle tires in one location.

While progress has been made in expanding capacity and the range of tires the plant can produce, the factory has not achieved its production goals, and “that’s killed us this year — absolutely killed us,” Mr. Smallwood said. “It hurt us on the PLT side and the truck side. So the Buffalo challenge has to be really solved for us to get the supply.”

Mr. Smallwood, who also is an executive officer of SRI and Falken, said the company has two of its best global production people stationed full-time at the Buffalo factory. In addition, 35 ex-pat advisers from around the world are in the plant training and working on all the issues.

“So we are making a huge manpower investment trying to get that plant going,” he said.

Besides producing replacement tires for the U.S. market, the Buffalo plant is playing an important role in Falken’s growing OE business. In 2015, Falken had “zero” OE tire fitments on U.S. vehicles, Mr. Brennan said. Four years later, that number has grown to 39 with “fitments of some real premium stuff.”

While reviewing the company’s accomplishments in the four years since the Goodyear JV ended, Mr. Smallwood said, “We went after OE, and we went after it big. We’ve done very well getting premium fitments.”

The challenge in OE, he said, is that company doesn’t have the capacity to supply the auto makers with what they want.

“So we have actually had to stop some of the OE because, if we give all the OE all what they want, who else doesn’t get product? You guys are going to be really unhappy.”

The capacity issue also has Falken holding back on signing new distribution, Mr. Smallwood said. “We need to make our current dealers happy before we do anything else,” he said.

Despite the supply issues and problems in ramping up the Buffalo plant, Falken has achieved replacement market shares of 3% for passenger, 2.9% in light truck and 1.4% for medium truck tires in the U.S., Mr. Brennan said.

Mr. Smallwood said the company’s growth will come from new products.

For 2019 those products include the Wildpeak A/T Trail, an on-/off-road CUV tire; the Wildpeak H/T HT02, targeted at light trucks and pickups; and the Ziex ZE960 performance passenger tire.

Falken is targeting the Wildpeak A/T Trail at CUV owners who want adventure, Mr. Brennan said. These are people who use their CUVs off-road and are replacing SUVs with CUVs, “but they still want that rugged feel. And the consumer research we have done shows about 17 percent of the current CUV owners would really love to have something that makes it feel more rugged, even if they never go off road.”

The A/T Trail will have a more-rugged appearance and off-road capability. In addition, it will be marked with the industry’s Three-Peak Mountain Snowflake symbol for winter performance and carries a 65,000-mile limited treadwear warranty.

Falken has secured an OE fitment for the A/T Trail on the 2020+ Toyota RAV 4 TRD model. That tire, in size 225/60R18 100H, will feature the same sidewall look as the replacement version but will have a different tread design for better rolling resistance and lower noise, Mr. Brennan said. It will be called the Wildpeak Trail 01AA.

The Wildpeak A/T Trail will be available starting in September in 30 sizes, including nine replacement OE sizes. Falken is looking to price the A/T Trail 5% above the Falken Ziex CT60 CUV line, Mr. Brennan said.

Falken is targeting the Wildpeak H/T HT02 squarely at light-truck and pickup-truck owners, Mr. Brennan said. It will replace the HT01 and come with a knobby-looking tread design that “kind of wraps around the shoulder, so when you look at it from the side it kind of looks like a truck.”

The tire offers 27% better treadlife, 20% more durability (especially in LT sizes), a 19% improvement in snow traction, 12% better wet performance and a 5% improvement in dry handling versus the HT01, Mr. Brennan said.

Unlike the HT01, Falken will focus the new tire solely on light trucks, with Euro-metric sizes for half-ton and mid-size trucks, and LT sizes for three-quarter and 1-ton trucks and some HD vans. And unlike the HT01, the HT02 will not have any sizes for CUVs.

The tire will have a beefier look with solid outlined black lettering on the outer sidewall and serrated lettering on the inside.

Falken will offer the tire in 38 sizes, with 30 made in the Buffalo plant and eight others at the company’s factories in Japan and Thailand. The LT sizes will carry a 50,000-mile treadwear warranty and the Eurometric sizes will have a 70,000-mile warranty.

The HT02 will be available starting in November and come with road-hazard protection and a 30-day ride guarantee on all sizes. Desired pricing will be 5% higher than the HT01, Mr. Brennan said.

Falken said the size offerings will provide 95-percent market coverage for the half-ton and mid-size pickup truck tire market and 97-percent market coverage for the three-quarter- and 1-ton truck tire market.

Ten CUV sizes previously offered in the Wildpeak H/T HT101 will be transitioned to Falken’s Ziex CT60 A/S crossover-specific product line and will not be offered in the Wildpeak H/T HT02, Mr. Brennan said.

In addition, the HT02 will feature 10 sizes not offered in the Wild Peak H/T HT01 — LT275/70R18, LT245/75R17, LT235/80R17, LT215/85R16, LT245/70R17, LT265/70R18, LT265/60R20, 285/45R22, 255/70R17 and 255/65R17.

The new Ziex ZE960 is the successor to the ZE950, a mega tire line with more than 105 sizes including touring sizes and those for CUVs. Falken has redesigned the ZE960 with a goal of providing a more-consistent performance throughout the tire’s life.

To achieve this performance, Falken has built grooves, which it is calling Flask sipes, into the tread. These grooves actually widen as the tire wears, maintaining good water evacuation. Designers also improved snow traction through the use of a dual-sloped groove.

Overall, the ZE960 has 10% better wet braking and about 15% better wear than the 950, Mr. Brennan said. Wet handling, dry handling, snow traction and rolling resistance also have been improved, he said, while noise, comfort and dry braking are similar to the previous tire.

Falken will offer the ZE960 in 53 sizes, roughly half the number of the outgoing ZE950, starting in September.

“We have been able to enhance the safety aspects of the tire, make it a bit more refined and really focus on sizes where we need this type of tire and speed rating and capability,” Mr. Brennan said.

The company will shift former ZE950 sizes not carried over to the ZE960 to other tire models including the CT60 CUV tire and Sincera SN201 A/S all-season and the Sincera SN250 all-season touring tires.

In truck and bus tires Falken is adding four new sizes to its product lineup, Mr. Brennan said, including 255/70R22.5 for the GI-388 and size 11R22.5 for the CI-637 truck tires designed for use on mixed-use trucks.

In addition, Falken will add size 315/80R22.5 20-ply to its RI151 regional steer tire and size 12R.22.5 to its BI850 open-shoulder drive tire.

Shifting to marketing and training, Mr. Brennan said the company last year put 1,396 dealers through its Falken Academy, a two-day classroom and on- and off-road driving experience on the company’s tires.

“Seventy to 80% of the purchase decision is really driven by the guy behind the counter, and there is no better way than to get him on your product and tell him about it and let (him) go try it,” he said. The goal is to put 2,000 people through the program.

To make the Academy even more beneficial, Falken is continuing to add content. “We’d like to make it a one-stop shop for everything you need for training,” Mr. Brennan said. “Hands on and do it in a first-class experience.”

The company also is expanding Digital Falken TV, a programming network that features original videos from Falken’s on- and off-road racing teams in action, product overviews and training, general automotive shows and news of interest for dealer personnel and retail consumers.

Launched in 2018, the company now has Digital Falken TV in 1,200 dealer and retail tire locations, with the programming turned on an average of 10-plus hours a day in the sites.

“We will add content to this to make it more meaningful and usable for us to promote our product, not only to you but your customers as well,” Mr. Brennan told dealers.

It’s all about the customers experience

Price vs Value – How to Win by Focusing on Value.

It was a busy Friday morning when Tom called me for an update on his vehicle. I let Tom know his car would be ready at the end of the day. There was a pause, and then he blindsided me with this, “You know Joe, I did a little research on that water pump you’re replacing on my car. I can get that same part for $30 less, why does your part cost so much?” I fired back at him by saying, “that’s impossible, it can’t be.” I went on and on attempting to defend myself, but I could tell I wasn’t getting through to him. After a few more words back and forth, Tom finally said, “Look you started the job, so you might as well finish it.”

You’re probably thinking Tom went online to check the part. Well, this happened in 1980, my first year in business, and years before the internet even existed. Tom simply called a local part store. The parts store gave him a discounted price and then figured he would challenge me.

Consumers checking your prices is nothing new – it just a whole lot easier these days with the internet. Now, let’s clarify one thing: I am not going to tell you in this article there is a foolproof way to train customers not to go online to check your prices or call other shops. However, what I can tell you with certainty is that if you continue to focus on products and not the customer experience, you are telling people to please check your prices.

Consider this: you’re out to dinner at a fancy restaurant and you ask the waiter to bring you the wine list. As you scan the list you recognize a brand and then look at the price. Do you google the bottle of wine to see what it really costs? Probably not. We all know that a $10 bottle of wine in the store can cost over $40 at the restaurant. But you order it anyway. Why?

The restaurant is selling more than wine and food, it’s selling the experience. If all goes the way it should, we pay for the meal and the bottle of wine, and we are okay with it.

Our business is not different, we need to focus on the experience, not the products. Yes, we install water pumps, control arms and radiators, but that should not be our main focus. Our focus should be on the value and benefit of doing business with US. Now, with that being said, there’s a delicate balance between being competitive and being profitable. However, as value goes up, price becomes less of an issue.

Here is the difference between our business and product driven business; when you buy a product like a watch or a cell phone, the experience lives on long after the sale. Every time you put the watch on or use your phone, you are continuing the experience, and if the product is high quality, the experience gets reinforced over and over every time you use it. With auto repair, what we do does not live on much after the sale. Once a customer leaves with a new timing belt and water pump there’s not much about that repair that lives on in the eyes of the consumer, except the customer experience. Your entire sales process – your marketing, the look of your shop, the people you employ, etc. – must tell the customer what you sell is worth the price.

Let’s remember one thing, your prices will be challenged from time to time, so here are a few more tips. Get the right training for your service advisors, especially in the area of customer service. Ensure your marketing communicates your brand and your culture, and please be careful with discounting. Claims that you have the best price on tires or brakes only challenges customers to check online to see if its true. Most importantly, communicate the benefits of doing business with your company.

Let’s get back to Tom. After 39 years, Tom and his family are still my customers. I have to believe it’s because Tom appreciates the level of service we have given him throughout the years and the relationship we have built. Tom has learned what Warren Buffet has often said, “Price is what you pay, value is what you get”.

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