Battles Loom for Auto Care Service Aftermarket - Tire Review Magazine

Battles Loom for Auto Care Service Aftermarket

Tire dealers stand out among the auto care industry service outlets as one of the only segments to grow in total retail outlet population over the past eight years. Since 2006, the tire dealers have grown in number of outlets by 1.1% to 19,958 locations in 2014, while the rest of the service sector has contracted 0.3% annually over the same period.

The growth in retail outlets is reflective of the 1.8% growth in sales the industry has enjoyed over the past five years, and that growth is expected to continue at 3.6% over the next five years for overall auto service, parts and repair.

Looking at the total for passenger cars, light trucks, medium truck and heavy-duty truck tire sales: after a dramatic post-recession rebound to $37.3 billion in 2011, replacement tire sales have leveled out during the past three years at around $36 billion, five years after the Great Recession low of $25.8 billion in 2009.

Most of the sales rationalization we have observed has been in the medium and heavy-duty truck tire segment, which saw a dramatic 71% increase in sales between 2009 and 2011, but has since receded 36% to $4.6 billion in 2014, while passenger and light truck tires remain within range of their 2011 high at nearly $30 billion.

For the seventh consecutive year, independent tire dealerships dominated the domestic passenger tire retail market, maintaining their more than 60% marketshare, while mass merchandisers have experienced a gradual sales decline down to 13% marketshare, as auto dealerships have steadily been encroaching and growing marketshare, up to 8% in 2014.

Finding trained and qualified technicians, margin pressure, e-tailing, telematics, legislative/regulatory issues and competition from new car dealers are among the top issues that keep independent tire dealers up at night.

Along with this increase in business comes numerous opportunities and challenges familiar to the independent service and repair shops. Finding trained and qualified technicians, margin pressure, e-tailing, telematics, legislative and regulatory issues and competition from new car dealers are among the top issues that keep independent tire dealers up at night. I will focus on the last three.

Tire Registration

We were as surprised as anyone while attending the National Transportation Safety Board’s (NTSB) Tire Safety Symposium last December, when the Rubber Manufacturers Association announced that it would be introducing legislation calling for mandatory tire registration. I certainly believe that we have to recommit to increasing tire registration overall to as close to 100% as possible, but I don’t really think legislation is the way to go.

We have a number of concerns that come up with a legislative approach. First, this is another regulatory burden on what are mostly small businesses. Second, mandatory registration opens up tire retailers to tremendous legal liability. Third, from the outside looking in, we wonder why tire manufacturers haven’t done more to incorporate 21st-century technology regarding the ability to track an individual product through the supply chain and, ultimately to the consumer. We think stakeholders can get together and solve this one without resorting to legislation, and we’d be glad to participate in those efforts.

Magnuson-Moss Warranty Act

Speaking of surprises, the Federal Trade Commission’s announcement at the end of May that it was clarifying the interpretations of some provisions in the Magnuson-Moss Warranty Act was welcome news. We’ve only been waiting for about four years for the FTC to respond to comments we helped draft back in October 2011 as part of the FTC’s review of the Magnuson-Moss Act, which called for better communications by the manufacturers regarding consumer warranty rights.

The clarification published by the FTC this past July specifically addressed the prohibition on conditioning warranties on a consumer’s use of a replacement product or repair service tied to the brand. It should go a long way towards clearing up the language vehicle manufacturers and their dealers use when communicating with car owners about warranty coverage and the use of aftermarket parts and services.

And then, out of the blue, there was one more Magnuson-Moss surprise coming from the State of Connecticut. Everyone probably knows by now that Connecticut State Sen. Rob Kane (R-Watertown) introduced legislation that requires new car dealers to deliver to a customer at the time of the sale, a printed explanation of the prohibition on conditioning warranties that are part of the Magnuson-Moss Warranty Act. As soon as the bill was introduced we contacted the senator, offered our support and celebrated when the bill was signed it into law on July 8. We do view this as model legislation and we hope to move this forward in other states.

Right-to-Repair Victory

As the use of sophisticated technology on late model vehicles continues to grow, so does the need for the independent auto care industry to continue fighting for a competitive level playing field with the new car dealers. For years, that battle focused on Right-to-Repair legislation, where the Auto Care Association and the Coalition for Auto Repair Equality (CARE) fought to ensure that independent repair shops had the same access to the tools, software and information needed to repair late model vehicles from the vehicle manufacturers that were available to franchised car dealer technicians.

Many experts in the repair industry believe that the future of diagnostics and repair may be through telematics systems that permit technicians to receive vehicle health information wirelessly while the vehicle is on the road and before the car has arrived in the shop.

The massive pro-competitive effort by the independent auto care industry resulted in a hard fought victory when the Commonwealth of Massachusetts enacted Right-to-Repair legislation in 2012. Subsequent to the victory, a national memorandum of understanding was inked whereby the vehicle manufacturers agreed to abide by the Massachusetts law on a nationwide basis. That agreement also requires that, beginning with model year 2018, car companies to maintain all of their software in clouds that are accessible to independent shops on a subscription basis using a generic laptop computer; and connecting to a car through a standardized interface meeting a Society for Automotive Engineers (SAE) 2534 industry standard.

While the victory on Right-to-Repair was huge, vehicle technology continues to rapidly evolve and so must the industry’s pro-competition efforts. Many experts in the repair industry believe that the future of diagnostics and repair may be through telematics systems that permit technicians to receive vehicle health information wirelessly while the vehicle is on the road and before the car has arrived in the shop.

Having that diagnostic information in advance means that the shop can have the information, tools and parts ready when the vehicle arrives, increasing the efficiency of the shop and the entire chain that supplies the repair shop. This concept even extends to replacement tires, where advanced TPMS sensors can report tire conditions – even treadwear – directly to a waiting tire dealer.

The use of telematics also could have the ability to collect extensive amounts of data from vehicles that will help develop the ability of the industry to predict failures before they occur, further helping the auto care industry better serve customers while increasing supply chain efficiencies at the same time.

Telematics Barriers

Notwithstanding the benefits of telematics, the threat to the independent auto care industry is that currently only the car companies can access the data being generated by embedded vehicle telematics systems. This means that only the OEMs and their franchised dealer network are able to use the data generated by a vehicle to improve its relationship with the motorist and increase the efficiency of car dealer service bays.

The Auto Care Association believes that the long-term survival of the independent auto care industry depends on the ability of car owners to direct information from the telematics system to service providers other than those sanctioned by the vehicle manufacturer. 

Permitting universal access would require the car companies to modify their telematics system or at least provide a gateway that would allow information from the telematics system to be sent in a standardized format to entities outside of the manufacturer. The gateway would also permit car companies to protect certain information within the system that the auto care industry does not need in order to repair a vehicle, but could create either security or safety concerns should it be used improperly.

In order to address the issue of telematics access by the independent industry, the Auto Care Association has spearheaded the establishment of the Aftermarket Telematics Task Force. Comprised of most of the major trade groups in the auto care industry, the task force is in the process of meeting with representatives of the OEMs in an effort to better define the concerns of the auto care industry and to determine if a solution can be developed and implemented without the need for legislation. 

The task force has attempted to educate the industry and car owners on telematics and how it might impact their privacy and ability to choose where their vehicle is repaired.

In addition to the task force efforts, it is also vitally important that the industry begins looking at this new technology and possible business models that will permit independents to better serve their customers and compete with new car dealers. Additional information on telematics and the task force can be found at

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Retreading Faces Pressures

  When I was asked to contribute an article forecasting what the future held for the truck tire retread market during the next 12 months the first thought that came to my mind was “China.” Although I am writing this while sitting in my office in California, I am well aware that Tire Review has

When I was asked to contribute an article forecasting what the future held for the truck tire retread market during the next 12 months the first thought that came to my mind was “China.”
Although I am writing this while sitting in my office in California, I am well aware that Tire Review has readers in many countries outside of North America, and based on both my travels and speaking to many of our members worldwide, I know that China comes to the forefront in nearly all of our conversations with retreaders.
The low price of Chinese medium truck tires is giving many of our retreader members fits, especially when they receive emails soliciting them to buy popular size truck tires at prices that are often actually lower than what they charge to retread a similar size.
I have a number of additional emails from various companies in China offering similar sizes and pricing. Pretty scary.
Since these emails are often finding their way to trucking companies, they become very tempting to fleet managers when they see that they can buy a new radial tire for less money than they pay to have their tires retreaded. Sometimes even less than a retreadable casing.
As we know from past experience, many of the low price “no name” Chinese medium truck tires turned out to be a very bad deal for the trucking companies that bought them, and, in the short term at least, the trucking companies that have had negative experiences decide to not touch a Chinese made truck tire ever again.
But the Chinese are not dumb, and they quickly realized that they had to improve their quality if they want be able to continue to sell their low-priced truck tires in other countries.
So we are now seeing an improvement in the quality of radial medium truck tires produced by many Chinese truck tire manufacturers. In fact, many brands of truck tires – steer, drive and trailer axle radials – produced in China are now SmartWay-verified (for a current list of SmartWay truck tires, contact the Retread Tire Association by phone to 831-646-5269 or by email to [email protected]).
As a matter of interest, our association, in addition to having scores of retreader members, has many casing dealers as members and for those of you on our mailing list, you know that over the years we have published hundreds of RTA Casing Memos for our members (both casing dealers and retreaders) who want to either buy or sell truck tire casings.
At one point in time we were publishing RTA Casing Memos on an almost daily basis, but in recent months the number of RTA Casing Memos we publish has dropped dramatically, and we can only attribute this drop to the fact that new Chinese truck tires at extremely low prices has had – and continues to have – a serious detrimental effect on the sale of retreadable casings.
We know this based on the many conversations with our members who are looking to us for help with the problem. Regrettably, we have to inform them that it is not in our power to help and we can only suggest that they contact their congressmen and air their complaints about how the low-priced new Chinese truck tires are affecting their business.
Before I move on, there has been a sea of change in the quality of many brands of Chinese truck tires, and a number of our members have reported that they now are having no problems with these brands and that in addition to providing good performance they are very retreadable.
The good thing about the quality improvement of these new truck tires being produced in China is as the quality improves, the price rises, bringing them very close to Tier 3 tires produced in other countries, including in the U.S.
Only time will tell whether retreaders in North America and other countries throughout the world can learn to live with the influx of Chinese truck tires because they are not going away.
Improvements in Quality
I try to speak to a few of our retreader members weekly and one of the questions I always ask is how low is their adjustment rates. Before going on, let’s define “adjustment.” It does not necessarily mean that one of their retreads is going to fall apart causing serious damage. Rather, it might mean that for some reason the retread in question is not handling well or might not be holding air, etc.
In many cases, I am hearing that their adjustment rate is 1% and most of our members actually report that their adjustment rate is even less.
A story I like to tell: A while ago I was visiting the retread plant of one of our very large members and while walking through his retread plant, which produces an average of 500 truck tire retreads daily, I said to the plant manager, “I bet I can tell you what your adjustment rate is.” He said, “Go ahead.” I said, “It’s under 1%.”
“You lose, “ he said. “It’s under 0.5%.” When I asked how he was able to keep it so low he stated that every tire was subjected to shearography testing during the retread process and then again before leaving the plant. The adjustment rate in this plant is close to zero.
Thanks to technologies such as shearography, X-ray, and non-destructive testing, retreaders are producing a better quality product than ever before.
However, there are still too many ex-users who will not touch a retread because of past problems years ago, and it is our job, along with other associations, to continually tell the story of how top quality retreads produced in modern top quality retread plants can reduce their tire costs while delivering the same safety, performance and handling as higher-priced new tires.
We will probably always also fight the battle of explaining why there is so much tire debris (road alligators) on our highways. We in the retread industry know that these road alligators are nearly always caused by improper tire maintenance – underinflation, overloading, mismatching of tires in dual wheel positions, etc. But fight it we will, by publishing news releases and articles explaining that retreads are not the cause of this tire debris and to blame retreads for road alligators is the same as blaming a vehicle for an accident caused by a drunk driver. The blame is simply misplaced.
Knowledge IS Power
I like to think that I know a fair amount about tires and although I’m not the smartest guy on the block, I do know that I can always learn more, which is why I want to tell you about a really great article entitled, “The Facts Behind Low-Rolling Resistance Tires,” which appeared in the February 2015 issue of The Trailblazer, a publication of the Technology & Maintenance Council (TMC) –American Trucking Associations.
This article opened my eyes to many facets of low rolling resistance tires that I never had thought about. To obtain a copy of this article, contact the TMC at 703-838-1763.   
Another good source of ongoing information about tires, including retreads, is to subscribe to at least two or more trucking magazines. I know that too many retreaders do not even know the names of the major trucking magazines. A quick Google search will provide you with the names of five or six top-of-the-market magazines.
I hope you have gained a bit of knowledge by reading this article, and I will leave you with my offer to always try to be helpful with additional information about retreading and also about the Retread Tire Association.

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