Month: April 2015

It’s been a little over 6 months since we announced the additions of Hankook, Toyo, and Yokohama to our lineup. The K&W crew has been busy learning all about our new brands. Thinking about how they compliment our existing line up and what new opportunities they might have for our customers. Initially it’s intimidating when you look at a catalog with so many different types of tires, but after a little while you learn the key lines. We thought it would be helpful to share some our findings with you.

Hankook

Hankook sales are tracking like a rocket. Straight up. There seems to be an incredible amount of raw market demand for their products.

Currently we see the following lines leading the way in passenger tires:

* Optimo H724 (broadline 70,000 mile S and T-rated)

* Optimo H426 (luxury H and V-rated all season touring, 60K warranty)

* Optimo H727 (Hankook’s flagship 100,000 mile T-rated touring line)

For light truck and SUV:

* AT-M leads the field. Consumer Reports call this the best deal going in an all-terrain tire.

* Next is their H/T line that goes by RH-12. Hankook also offers a special CUV line called the HP2.

Toyo

With Toyo we’ve seen very strong sales of their Extensa tires. Extensa is Toyo’s entry-level line that performs with other brand’s premium offerings. Toyo recently adjusted their pricing on Extensas and we saw our sales double during the second half of March. As of last week, our data shows that we have 70 dealers buying Toyo products.

Interesting Toyo Case Study With Our Customer

I’d like to give you an example of what one of those dealers is doing with the brand. Craig sells several brands, one of which is Cooper. At the beginning of the year, Craig decided that he wanted to try his hand at promoting Toyo, but only if there was something in it for him. That “something” included making a better margin. Craig decided to increase his standard profit per tire by an extra $15 for every Toyo that he sold. He said, “I’ll be your guinea pig and let you know if this works.” Today I called Craig for an update. I let him know that he had purchased 116 Toyos year to date. I asked him if he had to deviate from his pricing plan. He just laughed and said, “No way.” Then he told me how much it meant to him that K&W’s marketing support team had made him custom Toyo brochures that feature his name and logo. Craig said, “My customers are impressed. They tell me how professional they make me look. It’s like I have the resources of a chain store.” So 116 tires at an extra $15 each, is $1,740 in extra profit for the first quarter. Figure in the rest of the year and he’ll make an easy extra 8 to $10,000 in profit.  And, one more thing you should know… Craig’s Cooper sales are up 55% this year.

Yokohama

Yokohamas continue to sell well throughout our regions. The standout bestsellers are the Avid Ascend and Avid Envigor lines. The Ascend is Yokohama’s best touring tire. The Envigor line occupies what Yokohama calls a “Grand Performance” category. That means all-season, high performance, low rolling resistance, and long tread life.

Avid Ascends, Avid Envigors, Geolandar G055s, and Geolandar G056s. If you know these 4 lines, you are off to a running start with the Yokohama brand.

Cooper

Those familiar with K&W know this is our bread and butter brand. Though we have many years of experience with Cooper and aren’t learning from scratch about the lines like we are our new brands, we still see interesting trends and transitions. Here are some:

* The Discoverer SRX is really taking off and looks to be the perfect replacement for the CTS

* Discoverer S/T MAXX sales have doubled since last year, of course all the new sizes help

* CS5 sales are strong—The transition from the CS4 was a little rocky for some dealers, (always touch and go when replacing a “best seller”) but things smoothed out once we got a handle on the mounting issue. Click here for more on mounting CS5s: CS5 Mounting Update

If you are new to K&W, Cooper is our “go-to” brand. For a quick initiation, check out the CS3 and CS5 for passenger cars and for light trucks check out the Discoverer SRX, H/T, and the AT3.

We hope this information is helpful and maybe gives you something to think about. If anything here strikes an interest and you’d like to know more, or if you just have some questions we are happy to help. Just say the word and we’ll help you think through the best options and opportunities.

Goodyear is going to sell tires direct to consumers online. Their stated motivation is getting their market share of the 80 million “Millenials” who prefer to shop online. Let’s consider the implications for the tire industry and your independent shop.

This plan was unveiled at their January 2015 dealer meeting and involves participating dealers getting an installation fee and a commission for their services instead of actually making their normal markup on the sale.

As soon as I read this news a few things came to mind:

1. This is big news
2. If it sells tires, then Michelin and Bridgestone might not be far behind
3. Some dealers are going to be upset.

So far, numbers 1 and 3 were dead on. I’m not writing this with any ill will towards Goodyear. I know a lot of people that have made a great living selling their products. I do know that this is a major step to take with the hope that they’ll get a piece of the online tire business, which in the US is only 6% of the market. According to Modern Tire Dealer magazine editor Bob Ulrich, that share hasn’t really increased much since 2008. (Maybe that’s because tires might not be the greatest thing to buy online. I get books, skateboards, and toasters, but tires are a little more complicated.)

And then you’ve got to go face the INSTALLER. You know, the guy that tells you that you really should have bought them from him and gotten a better price, different tire, saved the shipping expense, gotten the proper size/ load range/ speed rating and asks the ever popular “take yer ground beef to McDonalds too? So Goodyear is hoping that going directly after the online shopper is worth aggravating their dealers. But as Kyle Stock of Bloomberg News says, “…it’s not a riskless strategy. The Akron-based tire maker’s gambit could run roughshod over it’s best sales staff: the thousands of small businesses… that can easily nudge a customer from one manufacturer to another.”

From the comments I’ve heard and read, the nudging has commenced. Here are just a few examples: Bill Denvir, a tire dealer from Connecticut wrote a letter to Tire Business saying that over the past 10 years independent dealer’s market share has eroded from car dealer, big box store, and price club competition. He states that Goodyear’s plan would convert him from being a tire dealer to “simply be a convenient installation station for online retailers.” He further states, “The Denvir Tire Shop will no longer sell any Goodyear product.” It’s not just him. So far it’s been a negative with everyone I’ve spoken with. I asked Mark Pollard, who operates 3 Wilson Tire outlets in New England, for his thoughts. He said “2 thumbs down.” When I asked if I could quote him, he said “sure, but make it 3 thumbs down.” So who are the potential winners in all of this? My best guess is the “Tier 2” players. And not just Cooper, Hankook, Toyo, and Yokohama because we sell them. General, Conti, BFG, and Firestone might be where dealers turn. I know the reps that supply us with our brands all tout PROFITABILITY as the number one reason why a dealer should consider them. Time will tell if this all blows over, or becomes a turning point. Independent tire dealers, as the name implies, can be awfully independent. Smart manufacturers would be wise to remember this.