The future is looking brighter for Goodyear Tire & Rubber Co.
According to a report from Longbow Research, TireHub is seen as a financial positive in the long haul for Goodyear with foreseeable financial benefits for 2019 and beyond.
Under the TireHub joint venture, Goodyear and Bridgestone Americas are combining the distribution of their passenger and light truck tires. The venture will be headed by former Mattel exec Peter Gibbons.
“Concerns over lost market share and pricing risk due to TireHub are overblown based on what we’ve seen in the channel in the past 30 days,” the report, penned by Longbow’s Anthony Deem (also a Tire Review contributing editor) and Brian Bollenbacher, says. “We believe Goodyear’s market share is not at risk due to the withdrawal from the ATD (American Tire Distributors) network since competitors’ gaining shelf space won’t necessarily translate into more sales.”
The report says retailers are moving forward with their procurement strategies ahead of TireHub’s official launch next month.
“Several contacts are telling us that retail customers are beginning to dual source Goodyear for supply continuity reasons, especially in the dealership channel where OE fitment penetration is materially higher.” the report reads. “In fact, regional distributors are already seeing some benefit with Goodyear sell-in from this shift.”
In, 2019 Goodyear should recover the $40 million in lost volume from 2018 and add an incremental $40-60 million from improved costs since it won’t be paying third-party distribution margins and should be able to go to market more efficiently, the report says.
The report also questions if Bridgestone will start to rely on ATD less once TireHub is up and running due to the perceived financial benefits of TireHub.