GREENVILLE, S.C.—Michelin North America Inc., coming off what should be a record year for consumer tire sales, is encouraging its Alliance Associate Dealers to increase their purchases of Michelin- and BFGoodrich-brand tires.
Company executives told a group of Alliance dealers at a meeting in Green-ville Sept. 20 to “Bib up”—as in Bibendum, the Michelin mascot—and the tire maker is encouraging the dealers to buy the brands by increasing the rebate percentage for three of its levels in its Bib program, and budgeting more money for rebates in 2011.
“Our goal this year is to pay you for every tire you buy,” said Bob Schaffner, Alliance sales program development director.
Michelin has 3,500 Alliance dealers in the U.S., operating more than 4,500 outlets. Scott Clark, Michelin chief operating officer, said the AAD program is a “critical foundation” of the company's replacement market success in this country.
Overall, Michelin is expecting aftermarket demand to continue to grow next year after experiencing a “much needed and welcome rebound” so far this year, Clark said.
Pointing to market indicators that show miles driven in the U.S. has started to trend upward again after nearly two years of slowing, Michelin expects consumers will have to start buying again soon after delaying tire purchases throughout much of 2009 and 2010.
Michelin sees U.S. consumer tire demand recovering by as much as 8 percent. The company also is urging its Alliance dealers to look at additional sources of revenue—especially business-to-business activity from national accounts, local/regional fleets and/or government fleets.
Other key changes in the market that should bode well for dealers are a one-year jump in the average age of personal vehicles in the U.S. to 9.8 years, company executives said, and double-digit growth in demand for tires with H speed ratings and higher.
Unit sales through national account programs count toward AAD rewards programs, Schaffner said, and dealers earn not only the negotiated profit on each tire sale but have the potential to earn from any automotive service business as well. Michelin offers assistance in identifying and cultivating such customers through its website, www.michelinb2b.com.
Michelin executives speaking at the Greenville gathering—the first of 41 such regional AAD meetings—acknowledged the company has had trouble keeping its fill rates at acceptable levels. But they told dealers the company's factories in the U.S. are working 24/7 to rebuild inventories and fill back orders. The company throttled back its production throughout most of 2009 in reaction to the market collapse in late 2008/early 2009, but demand has rebounded strong- er and faster than anticipated, according to executives.
To assist getting more Michelin- and BFG-branded tires into the pipeline, Michelin has started making its top tier brands at more factories, both domestically and internationally.
Supplies of Uniroyal- and associate-brand tires will continue to be restricted until inventories are brought back to accepted levels, the executives said.