Dan King, 47, has spent his entire life in the tire industry, first with his family’s Bymar Tire & Brake in Mission Viejo, Calif., where he started working at age 12, and today as vice president of sales and marketing for Yokohama Tire Corp.
Like many children of tire dealers, King benefited with a good education, graduating from California State University Fullerton with a business degree, and earning an MBA from USC.
He started with Yokohama in 1988, and held a number of sales and marketing posts before being named to his current position in 2007. King recently visited Tire Review to discuss Yokohama’s new products and industry changes he sees on the horizon.
This month, Yokohama will release the new Avid ENVigor, a tire that you are claiming delivers the best all-around performance of any tire ever produced. Talk about how this product came about.
What we were looking to focus on was what we saw happening in the marketplace. There are two primary things that we see changing, and we’ll see more and more of this in the future. And the first is how the consumer is going to talk about the tires they want to buy. For the longest time, most consumers had little to no information about tires. And even some of the enthusiasts were not really experts on tires. But we’re seeing some things changing. One is the government’s impact on our industry. Ever since the Ford-Firestone recall, there has been a renewed interest in tires and whether legislation is needed. That’s when tire aging became a major issue and now rolling resistance is a big issue.
There are two major pending pieces of legislation that your readers probably don’t know a lot about and they should, because they’re going to impact them. One is California legislation and the other is federal, which is definitely the biggest. What the federal government is trying to do through NHTSA is create a brand new testing parameter and labeling requirement. So basically UTQG would go away, and the new labeling would be focused on three factors. One is fuel efficiency, which is predicated on rolling resistance. The second is one they are calling “safety,” which concerns us quite a bit in that they are using the word “safety” to describe what is basically wet traction testing. And the third is treadwear. So they want to take away UTQG, use new testing parameters and mandate that the test results have to be on the label and that dealers have to be educated on it and be able to educate the consumer.
This could then also change how the consumer comes in and asks about tires. Because the average consumer is never going to be an expert, they will get this limited information and that will be enough to confuse them. It’s just going to be about these test parameters and this grade scale, which is from zero to 100. It’s not like a five-star, four-star system. So one tire could be a 77, another could be 76 and another could be 75. And those differences are completely meaningless. But the consumer is going to think there is a difference; it’s only one point out of 100 points, but it is still different in their minds. So we think there is going to be some confusion.
The other change is going to be the impact of the Internet. As consumers are researching tires on the Internet before they go to the tire dealer, they are going to be getting these bits and pieces of information just enough to make them feel like they have some power when they go into the dealership. So the salesperson is going to have to explain different things than maybe what they were explaining 10 years ago.
In the end, these things are going to force tiremakers to not accept any tradeoffs with performance. So it can’t be “Let’s just create the lowest rolling resistance tire.” If you do that, there are sacrifices that will be made, like traction. Well, if the consumer now has this interest in rolling resistance and traction because it’s “safety” then you can’t give up traction. So the question is: How do you push technology in product development so that you don’t sacrifice any of those? What we are doing is we want to create technologies that not only don’t sacrifice attributes, but actually improve all attributes. In the past that has not been the case because traditionally everything has been a trade-off; lower rolling resistance has meant less traction.
So how does ENVigor address those issues?
What we were able to do with ENVigor is develop a tire that’s a great rolling resistance tire, a great performance tire with significant treadwear for its category, and delivers significant comfort for its category. We created a H- and V-rated core tire that is different than any other in the category. Where others might have been one- or two-dimensional, ours is four-dimensional.
We back it up with testing. We looked at handling, braking, skid pad, rolling resistance and looked at a bunch of attributes where we came out number one, which is what we wanted. We wanted the best all-around tire. We think maybe this is the direction this category is going to have to go, that the days of an H-rated tire that’s just a nice handling tire are gone. You need nice handling and treadwear and strong rolling resistance; it has to be everything now.
This tire doesn’t fit with everyone else’s tires, to the degree that we think it actually lends itself to a new category, which we are calling “grand performance.” It’s not just “high performance.” It incorporates more than that. The high performance category has been basically viewed the same for the last 20 years. It’s not the same anymore. The vehicle that’s coming with an H- or V-rated tire today was coming with a S-rated tire 10 years ago. It’s the same vehicle. At the same time, a Honda Accord of 10 years ago is a much different vehicle today, and has greater requirements. Night and day difference in vehicle performance, night and day difference in tires, but it’s the same consumer.
We think its going to change the category a little bit in that everyone is going to have to recognize that things are changing enough that we have to reevaluate how our technology is being applied to the products. This is an example where we think that is going to happen. And when you link it up with changes in legislation and changes with consumers and the Internet, this may raise the bar a little.
What other elements of your technology are in this tire? Are you using orange oil or the new Airtex inner liner in the tire?
No. Right now those are the two unique technologies in the Super E Spec tire that we introduced last year. We decided to wait a little bit longer before we put those into core products because they are very expensive technologies to execute from a production standpoint. We need to develop production techniques and mange the technology to get it to the point where we can put them into a tire like this and not have to raise the price dramatically to cover it.
The orange oil technology is very new and very unique. The oil has to be extracted from the orange peel and then converted into a powder. Because this is a very new technology, there are not a lot of suppliers, and we’re working on that. Airtex is another technology could change the industry once we really master it from a production standpoint. It’s one-fifth the thickness of current innerliners, so that means less tire weight. The unique property is that it incorporates natural rubber with plastics at the molecular level.
When Airtex was introduced, our understanding was that it was going to be deployed in new products pretty rapidly.
Hopefully it will now. We’re looking at capacity right now. The reason we didn’t put it into a product like ENVigor is because of the way it has to be manufactured. We need to get Airtex to the point where it can be produced more efficiently so that we don’t have to do some major price changes in order to make it worthwhile. But we’re going to get there. We’ve decided that it is going to be a focal point. I think we will start to see it in some of our UHP products first and then in these types of tires in the future.
In terms of where you see consumers, talk about the UHP and light truck segments and how the changes we’re seeing are impacting tires.
We still see the performance market as a primary growth market, and you can see that in the numbers. A lot of it has to do with the fact that a lot of the vehicles are coming OE with those sizes and speed ratings. For the last several years we’ve seen that vehicle designs are moving towards a larger diameter, lower profile look. It fills the wheel well, and it allows for larger brakes, which helps the OEM. That has definitely been the trend for some time now.
The big question is how dramatically we move into fuel efficiency. If it’s really dramatic, then, of course, tire sizes will have to change because wider and bigger is not necessarily delivering lower rolling resistance. At this point, we see that it’s not just going to be a focus on fuel efficiency, it’s going to be a combination of things. I don’t see, for instance, the 17-inch market going away and 14- and 15-inch coming back. I don’t see that. Now, that 17-inch market has to do a better job of delivering the attributes consumers want. But moving back to 14- and 15-inch changes the entire look of the vehicle and I don’t know if the average consumer is ready for that. We’ve definitely seen the growth of hybrids, but even with hybrids are coming with 16- and 17-inch tires.
With light truck, yes, we’re seeing less and less sales but it’s still a very big category. We are seeing a change in the category, with smaller SUVs and CUVs. If you look at our size lineup for the ENVigor, we thought about that for crossovers and smaller SUVs.
Though we don’t know all of the details of NHTSA’s tire testing and labeling program, how do you see that impacting what’s left of the run-flat market?
That’s really a tough one to answer because run-flat has not at all gone in the direction that people saw 10 years ago. It’s still being forced by OE, and I think it will only change because of OE, not consumer demand. It has not gone over well with consumers and there has been a consumer backlash because a lot of the car dealerships are inexperienced and all they have is a little pamphlet. Consumers don’t realize run-flats don’t deliver the same mileage as conventional tires and that they are not inexpensive to replace. They thought, “Well, I got a flat so all I need to do is put air in it.” That’s not the case. So that factor will have a bigger impact on what will happen with run-flat, rather than NHTSA’s regulations.
How do you see tire fuel efficiency testing and labeling translating into the medium truck tire market?
EPA’s Smartway does its testing and tires have to be tested and verified in order to get approved. We understand that EPA is actually going to raise the parameters to make it harder to get Smartway certified. We are also seeing states like California step up and pass legislation that says all tires used in the state must be Smartway certified.
What are other states going to do? Where is this all going? After they get done with consumer tires, will NHTSA look at tire labeling for commercial tires? Those are some of the questions being asked, and I don’t think anyone has the answers yet. But we would say there’s a greater likelihood that commercial tiremakers are going to have to evaluate fuel efficiency the same way we’re doing on the consumer side while still improving the other attributes. Even if it’s not legislated, it will be demanded by the fleets. From a technology standpoint, over the next 5 to 10 years we’re probably going to see a greater demand on tire manufacturers than maybe what we have seen over the last 10 years.
Are you satisfied with where the industry is with educating consumers about tires and tire care?
Are we educating consumers? As an industry the education process has been done via many different outlets, forcing the consumer to piece it all together. From an industry wide standpoint, I don’t think that’s been successful. I don’t think the average consumer knows that much more about tires than before.
At the same time, I don’t think consumers want to know that much about tires. But when it’s time for them to replace tires they realize there are a lot of options like the Internet out there where they can at least attempt to find information. But even with that, I think they get just enough information to maybe confuse them.