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June 15, 2015 02:00 AM

Bridgestone projects aftermarket growth

Bruce Davis
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    NASHVILLE, Tenn.—Bridgestone Americas expects aftermarket tire demand to keep growing steadily throughout 2015 and into 2016 based on based on data that show residents are driving more expectations that gas prices will not rise measurably and indications the economy in general is improving.

    T.J. Higgins—president, consumer tire sales, U.S. and Canada for Bridgestone Americas since last November—discussed these and other trends recently with Tire Business for the “Mid-Year Report.”

    Higgins called the miles-driven data, up between 3 and 5 percent, encouraging because it's the first measurable improvement in quite some time.

    Demand growth is expected to be somewhat stronger in the SUV/CUV/light truck segment than the overall market, Higgins said, based on strong sales of those vehicles in the past three to four years.

    These vehicles are entering their first replacement tire cycle, he noted, and Bridgestone feels it has a strong product offering for these type vehicles, which take larger tires that tend to be higher on the value-added chain.

    Bridgestone also anticipates strong winter tire sales to the trade this summer and fall, based on carryover stocks of winter tires in most parts of both the U.S. and Canada that are “leaner than historically is the case” following the unusually hard and extended 2014-15 winter season.

    Higgins said Bridgestone is working closely with key retailers and wholesalers in tracking winter tire inventories because the firm sources product globally and has to make sure it understands demand trends.

    Last year this practice was particularly critical, he noted, because of the West Coast port slowdowns that affected supply in some cases.

    Bridgestone and its customers also are benefitting from expanded capacity at its Aiken, S.C., plant, which he said is meeting, if not slightly exceeding, expectations in terms of supply. The company expanded that factory by 50 percent, to nearly 38,000 tires daily, with a $346 million investment that came on stream in late 2013.

    The Nashville-based tire maker sees the market divided into four quality grades—best, better, good and “fighting”—the latter being the price-point or entry-level grade.

    Higgins said Bridgestone's interpretation of the marketplace this way reflects a consumer-centric approach where the firm will try to determine what's right for its customers.

    Bridgestone looks at both performance and price characteristics of each market category in order to determine what types of tires fit each, leading to what it says is a careful balancing of price vs. performance, where the latter can be defined by criteria such as wear, wet traction, ice and snow traction, etc., he said.

    In the better and best ends of the market, Bridgestone has high hopes for its Driveguard run-flat and Ecopia 422+ that are still relatively new in the market and which are considered among the higher value-added products.

    In the fighting and good categories, the company is reviving the LeMans brand to shore up the bottom end alongside the Fuzion brand, which is more performance oriented. Bridgestone also sells the Primewell brand, which is owned and produced by Giti Tire Group and sold through the company's 2,200-plus store Firestone Complete Car Care network.

    The LeMans and Fuzion brands are multiple sourced, Higgins said, from third party suppliers in China as well as Bridgestone affiliates in Indonesia, Vietnam and Costa Rica. He stressed that Bridgestone's policy here is to set the appropriate quality standards for these category tires, which apply to both Bridgestone affiliates and third-party vendors equally.

    In terms of supplying the market in North America, Bridgestone's policy is to “make sure we have a full breadth and depth of product offering in terms of peformance and pricing,” Higgins said.

    This thinking is reflected, he added, by the type of dealers in the firm's network.

    “We find that retailers who have created a customized offering to their communities—those who understand the demographics and psychographics of the people in their area—are the ones doing the best,” he said.

    Higgins said the consumer wants his tires in a timely fashion, which means Bridgestone needs to use all resources at its disposal to keep the consumer satisfied.

    In terms of changing customer preferences, Bridgestone is monitoring the trend to on-line sales, but hasn't as yet made any moves in that direction.

    Higgins said that the American market demand was sluggish in the first quarter, a development spelled out in parent company Bridgestone Corp.'s first quarter financial figures. In those, Bridgestone noted North American passenger replacement demand was off by as much as 7 percent in the quarter and likely will be down about 6 percent for the half year.

    OE demand, by contrast, was up 3 percent in the quarter and should be up the same for the half, Bridgestone said. OE truck and bus tire demand was up 20 percent in the quarter.

    Bridgestone also reported sales revenue by the Bridgestone Americas unit was up 14 percent in the quarter, a gain influenced measurably by the shifting yen-dollar exchange rate.

    Higgins joined Bridgestone Americas in October 2014, moving to the tire maker from Pfizer Consumer Healthcare, where he was responsible for a number of recognizable brands, including Advil, Centrum, Chapstick, Robitussin and Emergen-C. Before joining Pfizer, he held positions at Merck & Co. Inc. and Pinnacle Foods Groups L.L.C.

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