LAVERGNE, Tenn.-Nokian Tyres Inc., well-known for its winter tires, is broadening its reach in all-weather products-a strategy that already helped push 2004 sales for the subsidiary up 57.7 percent to $62 million.
The LaVergne-based subsidiary of Finland´s Nokian Tyres P.L.C. will kick off its i3 all-season tire in January 2006 with 32 sizes, 16 of which are already available.
The i3 stands for intelligent, informative and interactive, said Michelle Hogan, marketing manager for Nokian Tyres. The tire includes an "info pin" that shows the outside temperature and a driver safety indicator that indicates treadwear on the tire itself, among other features. The tire also will carry T-, H- and V-speed ratings for more high-performance characteristics to compete with the Michelin HydroEdge and Goodyear Assurance tires.
"What we found is that more and more people are buying cars (and) they want them to be sporty," Hogan said. "So tires need to act like all-season tires but also perform like high-performance tires. So that combination has become a little bit more needed in the market."
The i3 follows the momentum of Nokian´s WR all-season passenger and light truck tire as well as the Vatiiva light truck tire. Those lines were launched a few years ago but have grown well for Nokian, with the WR up to about 70 sizes from its initial 40. The all-weather tires are billed as products that drivers can use year-round but especially in the winter.
"Those two products have really taken off for us," Hogan said.
Just last year, the subsidiary´s sales hit $62 million from $39.3 million in 2003. She said a major factor in the sales increase was a better product mix. To improve distribution, the firm is looking to open a warehouse this year in Indianapolis.
The company also is shoring up its product availability by sourcing up to 500,000 Nokian-branded summer tires this year from China´s GiTi Tire. The deal with GiTi-also known as Grandtour Tire China-allows Nokian to expand the supply gradually to 1.5 million tires, the firm said.
One of Nokian´s challenges is to make independent tire dealers see the benefit of the wider product line.
Hogan said many dealers who carry Nokian use it to fill in gaps in their product lines instead of an exclusive or majority share. As a result, some dealers are knowledgeable about specific tires but not Nokian´s full range.
With that in mind, the company is launching a series of online programs to make dealers more aware of the company and its products. Dealers who participate in quizzes about product information, company facts and selling suggestions can receive gifts and other premiums.
Nokian´s efforts get a mixed review from one dealer.
Chuck Caira, owner of Great Lakes Tire & Service in Kimball Township, Mich., said he added Nokian tires last fall and is very pleased with the quality of the product but is less enthusiastic about its sales so far. He is working primarily with the WR passenger and light truck tires plus the Vatiiva. He added the lines "mainly because we´re looking for something no one else had," to avoid playing the pricing game.
Caira said sales have slowed, and although he´s not sure why, it may be a price point issue in the summer when few people are thinking about heavy traction needs. He´ll track the line´s progress over the next few years. Great Lakes Tire is primarily a commercial dealership and also carries Michelin, BFGoodrich and Uniroyal brands, and Michelin retreads.
As part of its online programs, Nokian hopes to prod dealers to push the tires´ safety in addition to the usual selling points of mileage and warranties. "We really want to emphasize the dealers selling to the consumer the safety aspect and of course right now the fuel economy," Hogan said.
Nokian considers its all-weather tires to be "reverse engineered," meaning the company established itself in the winter realm first then added all-season features such as the mileage in a delicate balance to improve ride and noise while still having aggressive traction.
"Now that we´ve gotten the winter tire out there to more and more people and we have gained some market share, now is the time we felt to introduce the all-season tire," Hogan said.
The company still is careful to stick to its roots, she said. In its annual report, parent Nokian Tyres said fierce competition in the tire industry means that a small tire maker´s chances lie in being focused on a niche. "We will remain a niche player," Hogan said. "We don´t have any desires to go for a quantity product. We more delve in the quality product."