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June 07, 2018 02:00 AM

Bridgestone sharpens focus on value-added tires

Tire Business Report
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    AKRON—Bridgestone Americas Tire Operations' TJ Higgins, president of integrated consumer tire group for the U.S. and Canada, shared his observations with Tire Business on how the U.S. tire industry has been faring this year, as well as trends in tire demand, distribution and online purchases.

    Q: How would you describe the tire business in the U.S. so far in 2018?

    A: The consumer business in 2018 has been a bit of a mixed bag. Customers are managing their inventory more tightly than they have in the past, but there also are pockets of strength. Sales for vehicle types, such as crossovers and pickup trucks, remain strong and we continue to see demand for high-rim diameter products.

    Q: Where do you see the market heading for the remainder of the year?

    A: We expect the consumer tire segment to remain relatively flat for the remainder of the year. There will be a market-share focus as manufacturers and customers look to win at retail to drive growth. Certainly, the industry will continue to be very competitive.

    Q: What kind of trends are you seeing in the marketplace?

    A: Let's start with trends in distribution. We have been seeing a consolidation of tire distributors in the market. Of the distributors that remain today, some are choosing to carry less depth and breadth of premium passenger and light truck products, making it challenging for independent tire dealers to access the products their customers want and need.

    There also is increasing complexity in the market due to SKU proliferation, making it difficult for dealers to stock the right products due to limited shelf space.

    On the product side, we continue to see increased demand for high-value-added tires, such as runflat tires and high-rim-diameter products. Sedan sales continue to decline in North America—so much so, auto makers like Ford are stopping production on some of their sedan offerings. Crossover vehicles and SUVs make up a large percentage of the vehicle market, a trend we believe will continue for the next several years.

    We expect to see ongoing growth in the runflat market. More than a third of new vehicles are sold without a spare tire, and today's runflat tires, like Bridgestone's DriveGuard tire, offer an added safety benefit without sacrificing ride comfort.

    Last, but certainly not least, more consumers are going online to research and shop for tires. When consumers walk into a dealer's shop, they are more educated about tires than ever before. They know which product they want and they have high expectations for both the product's performance and their purchase experience.

    Bridgestone

    T.J. Higgins

    Q: How is your company reacting to these trends?

    A: Distribution—we are evolving our distribution strategy to prioritize customers who sell the full depth and breadth of Bridgestone's passenger and light truck tire portfolio. This effort includes accelerating our TWW company-owned distribution strategy to form TireHub with Goodyear, as well as deepening our relationship with key distributors to ensure independent dealers and consumers have access to the products they need.

    High-value-added products—to meet the growing demand for high-value-added tires, we are adding more capacity and more capability at our tire plants in North America. We are increasing capacity at our Wilson, N.C., Aiken, S.C., and Joliette, Quebec, tire plants to ensure we have increased supply of high-rim-diameter products, runflat tires and also winter tires. Many of these products historically have been made in Japan, making lead and turnaround times more difficult to accelerate and predict.

    Online tire shopping/e-commerce—At Bridgestone, we believe every independent dealer should have the capability to sell tires online, which is why we rolled out our TireConnect online sales solution nationwide in 2017. TireConnect is a plug-and-play platform that works with a dealer's existing website and empowers independent dealers to get full credit for a tire sale. In addition to allowing dealers to transact online, Bridgestone dealers that leverage TireConnect are able to ensure a seamless tire shopping experience for their customers, one that begins online and ends in-store.

    Q: Do you expect any major investments the rest of the year?

    A: We continue to make many investments to help our affiliated dealers and distributors grow their business. First and foremost, we want to ensure our customers have access to the full Bridgestone and Firestone product portfolio to meet the needs of consumers shopping in their stores. We're focused on increasing capacity at our North American tire plants to deliver more high-value-added offerings, such as runflats, winter tires and high-rim-diameter tires; it's also why we've invested heavily to accelerate our distribution strategy to launch TireHub and do more business with wholesalers who prioritize the full depth and breadth of our consumer product offering. All of these measures will help to create a more readily available pipeline of the right Bridgestone and Firestone products for our customer base.

    In 2018, we also rolled out 18 new offerings as part of our affiliated dealer program to ensure our dealers can compete in today's dynamic marketplace.

    And last but not least, we also continue to make investments to grow our brands through traditional marketing and advertising efforts, including new television and digital campaigns for Bridgestone and Firestone, as well as ongoing investments to activate our best-in-class sports marketing platforms, which include IndyCar, the NFL, the NHL and Bridgestone's TOP Partnership with the Olympics.

    Q: Do you foresee tire price increases in the second half of the year?

    A: We are continuously monitoring changes in the commodities market and evaluating the cost of doing business. Currently the cost of natural rubber, our most vital raw material, has recovered slightly from the peak prices we saw last year. We will continue to take steps as needed to ensure we can continue to provide our customers with the products they need in a competitive market.

    Q: What are some of the challenges for the tire industry going forward?

    A: The biggest challenge in the short term will be ensuring that consumers have access to the products they want and need.

    Longer term, the tire industry must work collectively to ensure it is at the forefront of new vehicle innovation. Mega-trends, such as autonomous vehicles, an electrified car parc and ride sharing, will have a significant impact on the tire industry. As we look to the future, a durable, reliable, comfortable tire won't be enough. Manufacturers must explore ways to engineer tires that are a smart and responsive part of the vehicle ecosystem.

    Along these same lines, a changing car parc will greatly influence the types of service being performed by independent tire dealers. Dealers should be thinking about ways that they can evolve their business to meet the needs of tomorrow's customers, while still servicing the vehicles of today.

    Q: Does Bridgestone plan to pull back on distributing tires through ATD or other wholesalers in light of the TireHub venture?

    A: Bridgestone is focused on ensuring consumers have access to our passenger and light truck products. As such, we are taking steps to accelerate our distribution strategy by prioritizing customers that sell the full depth and breadth of our portfolio and forming TireHub. Wholesalers will continue to be an important part of Bridgestone's distribution strategy.

    Q: Is there an updated timeline for TireHub?

    A: We are still targeting a mid-year launch for TireHub. More information will be shared once we receive customary regulatory clearances in a

    Q: How do you expect the joint venture to impact tire sales?

    A: Our goal with TireHub is to ensure consumers have access to the full depth and breadth of our passenger and light truck tire portfolio. Our retailers and independent dealers have expressed excitement about this joint venture because it means they will have greater access to the products they need.

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