Chinese Tires, Internet Pose Threats to Commercial Dealers, Fleets: BFNAT

Commercial truck tire dealers are under constant pressure – some from outside, some from within. The Internet, low-cost ‘no name’ imports and fleet demands for comprehensive services – all have made life more difficult for today’s typical medium truck tire seller.

So says Bridgestone/Firestone North American Tire (BFNAT), which told some 600 attendees gathered at its 11th annual BizCon commercial dealer conference that the answer to those pitfalls was for dealers to be prepared to deliver “integrated solutions” to their fleet customers.

It was no surprise that the phrase “integrated solutions” permeated much of BFNAT’s commercial truck market conference, held this past April in San Francisco. After all, Bridgestone Americas Holding’s $1.05 billion deal to buy global retreading supplier Bandag Inc. is now a done deal. As of June 1, BFNAT has its own vast “integrated solution” for truck fleets.

While Security & Exchange Commission regulations prevented BFNAT from saying much about the pending Bandag purchase – though presenters mentioned the deal numerous times – the obvious suggestion was that a Bridgestone-Bandag alliance offered commercial dealers the best option of integrated solutions to meet modern truck fleet needs.

A lot of discussion was centered around BFNAT’s preceived threats to dealers and fleets.

Art Campagnoni, vice president of commercial tire sales, admitted to BizCon attendees that “Chinese truck tire imports” were a concern for BFNAT and its dealers, primarily because of their availability and low prices. While the level of importation has slowed, he said, and some dealers have limited their use to specific price-point applications, for others the Chinese brands “may have become [their] lead brand.”

He cautioned dealers about being overly reliant on those products and the “transactional nature” of selling those brands. The better play, Campagnoni said, was “solutions-based selling,” which “cements the relationship between your company and your customers that withstands personnel changes and your competitor coming in with a lower price.” Solutions-based selling includes an array of products, technology and comprehensive services, he said, that “deliver lower lifecycle costs that fleets demand today.

“If you tilt the equilibrium of your businesses towards more transactional selling based solely on price, you will lose the ‘brand differentiation’ you’ve all worked so hard to achieve,” said Campagnoni.

With regard to Bandag, Campagnoni said BFNAT wants to “capitalize and expand upon our leadership position in the national fleet channel by offering a total tire solution that consistently delivers the highest value to the fleet in ways our competitors can’t match.”

Another threat is the Internet, according to Singh Ahluwalia, president of BFNAT’s commercial division. “Whether we’re talking about competition from China, India, Korea or anywhere…the Internet, more than any other technology in history, has leveled the playing field of competition faster than anyone could have ever imagined,” he said. “Any fleet – any time, anywhere – can dissect the sales offering and selling price of virtually any product sold today, all with a click of a mouse.”

The advantage, though, lies in the services dealers provide. “Products can be manufactured and imported from almost anywhere,” he said, “but services like mounting and dismounting, emergency breakdown assistance, preventative maintenance or retreading – can they (fleets) bid on these from 8,000 miles away?”

The Internet has “yet to exert significant pressure on the price and earnings of specialized services like those that you offer your fleet customers,” Ahluwalia said. But it is a key part of a fleet’s business model, and it is important that dealers seek ways to leverage its power – through information sharing, recordkeeping, tire management, even scheduling and billing.

Many top fleets, said Ahluwalia, are looking for “a total tire solution that delivers the lowest variable cost and the highest return on investment.” And, he added, they want it all “on one invoice.”