Although 2009 was a tough year across the entire industry, the medium truck tire segment was hit particularly hard. The economic tailspin saw consumers tightening their budgets, which in turn resulted in diminished orders and less shipping. Trucks and other types of freight haulers sat idle, and demand for new tires plummeted.
Freight tonnage was down roughly 25% from 2008, trucking revenues were off more than 20% and Class 8 truck sales were down significantly, according to Rick Phillips, manager of commercial sales for Yokohama Tire Corp.
“In 2009, we endured one of the worst economies of our generation,” he says. “Many fleets downsized their operations, some were consolidated and some went out of business altogether.”
As a result, OE tire sales were off by more than 40% from the previous year, replacement tire sales were off by more than 20% and medium truck tire Inventory levels were at, or near, all time historic highs, which eroded pricing, Phillips says.
“2009 was a horrible year for the trucking industry, maybe one of the worst years that most of the people in this generation has ever experienced,” said Walt Weller, vice president of China Manufacturers Alliance. “Unfortunately, there’s not a lot to be optimistic about coming into 2010. Everyone is hoping to see an uptick this year, but I also think everyone is preparing for that not to happen.”
“Looking forward, we see an economy that will gradually get its feet back under it and move forward – albeit slowly,” says Clif Armstrong, director of marketing for Continental Tire the Americas commercial division. “This will pull the freight market, which in turn will pull the replacement tire market up throughout 2010, with a stronger 2011 on the horizon.”
Moving Forward
Despite the segment’s downturn, each tiremaker has not altered its strategy when it comes to delivering new, innovative products.
Continental introduced seven new truck tires in 2009, and six more are slated for release this year. “In 2009, Continental was able to grow market share in every country we service in the Americas. We did this by offering competitive products and leading edge programs for our dealers and our fleets,” Armstrong says.
“We will maintain our aggressive stance in the marketplace: having tier one products, offering leading edge programs and helping our fleets lower their overall driving costs,” he says.
Continental also introduced several new programs for customers in 2009, including the Untamed Innovation Tour, a rolling classroom to train dealer salespeople on the company’s products; ContiTireManagement, a program designed to allow the dealer to build individual, professional presentations and agreements for their fleets; ContiFleet, which allows dealers to offer emergency roadside service for small fleets and owner operators; Engage360, an online training platform for commercial salesmen to learn product, programs and selling techniques; and ContiEdge, an associate dealer recognition program for distributors that sell Continental brands.
In these troubled times, CMA sees itself as having an advantage when it comes to giving fleet customers what they’re looking for, according to Weller. “The segment of this industry that we participate in is the value segment – the people that are looking for high quality products that run very competitively but don’t necessarily cost as much as the major brands. Mainly, those that deliver outstanding performance on a cost-per-mile basis. We are continuing our very aggressive new product development plan and we’re going to continue to focus on that strategy, which is especially an advantage in this environment.”
Aside from CMA’s most popular tires in this segment – the RT606+ regional steer and RLB400 closed-shoulder drive tire – a new, fuel-efficient steer, drive and trailer tire will be available this year, Weller says.
“We are optimistic about the future and continue to invest in our growth plan by acquiring good people and developing ‘best in class’ products, says Yokohama’s Phillips.
“Another issue that is very important to us is our commitment to the environment. Even through the recent economic downturn we remained on course with our global initiatives like working toward zero emission production facilities and reducing or totally eliminating waste wherever possible. We already have several plants that have been able to achieve these goals.”
Through Yokohama’s Servicing Dealer & Distribution Network, the tiremaker strives to do everything it can to help dealers be successful, including delivering world class products at competitive prices, utilizing the latest technology to integrate with dealers’ systems and streamline business flow, and offering the best customer service and the most accommodating programs possible, Phillips says.
“The bottom line is we consider ourselves partners with our servicing dealers,” he says. “We don’t own retread plants and we don’t own mobile service trucks. This helps to create a very strong interdependence between the two cultures – and for us and our dealers, it’s a very successful formula.”
Latest Innovations
The latest trend in medium truck tires is fuel economy and the EPA’s SmartWay program, which pushes manufacturers to develop fuel-efficient tires that meet certain fuel economy requirements and fuel savings targets, according to CMA’s Weller. In fact, the new tires CMA will bring to market this year are in the process of attaining SmartWay certification, he says.
“At Yokohama, we continue to push the envelope developing new technologies like orange oil compounding, which is found in our newly released dB Super E-spec performance tire,” Phillips says. “Orange oil technology not only makes the tire environmentally friendly, but actually improves its performance. We are looking at implementing this type of technology into medium truck tires in the future.
“Also, our Z.environment commercial line encompasses a new casing design, advanced rubber compounding and a revolutionary manufacturing process,” he continues. “This allows us to produce incredibly fuel-efficient products and still deliver the deepest original tread depths in the industry. In fact, our 103ZR steer tire and 703ZL drive tire have the deepest original treads of any SmartWay verified products in their respective classes.”
When working toward fuel efficiency, of key importance is a tire’s compounding, according to Conti’s Armstrong. “Through compounding you can lower a tire’s rolling resistance properties. While diesel prices have decreased from the highs of 2008, it is still a major item in the cost structure of a fleet. Anything we can do to decrease a tire’s rolling resistance while maintaining or improving overall mileage and irregular wear is profit to the fleet customer. Continental will continue to advance our technologies in this area.”
Supplying Service
In order to stand out in this market, dealers must deliver quality and timely service, as well as be flexible enough to respond to the needs of an ever-changing environment, according to Yokohama’s Phillips.
“It all falls back to service. Good commercial tire dealers get involved with their customers – they understand their business and their needs,” he says. “They are able to implement custom service programs to help protect a fleet’s tire investment, which in turn lowers the fleet’s cost of ownership.”
In addition, dealers have to provide value, especially during a down economy.
“Dealers have the opportunity to help the fleet lower their overall driving costs by providing the fleet with a value driven tire program – providing the right tires for the application, following the tires in the fleet, addressing tire maintenance issues, and most importantly, being the expert for the fleet for tires,” says Conti’s Armstrong. “It is a symbiotic relationship; both parties rely on the other to lower their costs.”
In advising fleets, the most successful dealers will make sure every effort is made to save tires that are damaged, in addition to taking advantage of tires that are no longer of use – even if it means selling them to another fleet that can use them in a different application, CMA’s Weller says.
“The dealer’s goal is to reduce downtime and make sure the customer is managing tires so that they aren’t generating any unnecessary expenses. Downtime is a huge cost in the industry, but it’s a cost that a good tire program will go a long way toward improving,” he says.
