Modern Tire Dealer

JUN 2019

Magazine for the professional tire industry

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M T D J u n e 2 0 1 9 76 F o c u s O n I n d u s t r y which the company began in April. "We say, in order to sell our product, it must be at this price point. It cannot be a conversation. And we must enforce it at 100%." is also means that there will be times that Falken will have to send a letter to a violator. "A couple of years ago we sent out a letter to our dealers telling them we would not support them selling to inventory aggregators, because they were driving down pricing. Our letter stated the first time would be a warning, the second time they would lose the program and the third time they were out." Smallwood said they sent out the letter and talked with some of their dealers, and they lost some volume. "But this is a long-term play. If dealers can't make money selling our tires, they won't do business with us. In the long term, we'll have more support and volume from our dealers." One of the biggest challenges facing dealers today, says Smallwood, is how to handle the consolidation that is happening in the market. "Who is my competitor and who is my partner, and where will I fit in this thing? "Falken is not trying to sell to the end user. We're number five in the world; from that power perspective, we have better staying power than other brands out there. We are strong from an R&D (standpoint) and on the OE side, we're a Tier 1 OE supplier in other countries." During the meeting, it was mentioned that Falken currently has 39 OE fitments in the market. Smallwood told the dealers, "We said we'd go aer OE — now you see what we've done. We don't want to just sell OE tires — (we) don't make money selling those — we are going aer very strategic fitments at OE. e challenge is to supply them what they want. We are not helped by selling OE, but then upsetting you. It is a balancing act." Continuing, Smallwood said Falken has no interest in a direct-to-consumer website. "But, I wouldn't mind — make that I have no qualms — about someday selling discontinued products on the internet or using some e-commerce website. is would be only for those tires that are tough to sell. "I think it will be a different game all together in 10 years. I don't think branding will be a major factor at all." Smallwood, who spoke at length about the future of vehicles at the Tire Industry Honors Banquet in 2017, believes the future holds autonomous vehicles, shared owner- ship fleets, Uber and other ride sharing services and that this will translate into "fleet purchases, not people purchases." Car manufacturers are already saying they are transportation providers, not new vehicle manufacturers, says Smallwood, "so, a few years from now, somebody will have a whole different model on how the vehicle is serviced; but at this point, who knows what it is?" He is also amused by the current conversation about smart tires. "What a waste. It's the soware that's plugged into the on-board computers that's the future. Tire by tire, inflation pressures, and more, that's all uploaded and com- municated with all the vehicles that will be surrounding you. at's the future, not a chip in a tire." He does admit that his visionar y view of things does come about since his company is being asked to bid on products that won't hit the market for a number of years from now. Circling back to the present, Small- wood says he sees the overall tire demand slowing down during 2019-2020. But he also sees M&A activity at very high levels in the distribution channel. "I can guarantee you that at any given time, there are 30 deals in play. As a tire company, our policy is that we always do the right thing. We don't know who we'll be doing business with tomorrow. at's the reality of the business today." ■ While not listening to Falken's plans (see article on page 8), dealers were treated to sight-seeing throughout the south of France and Monaco. They're shown here witnessing the changing of the guard at the Prince's Palace of Monaco. ONE OF THE BIGGEST CHALLENGES FACING DEALERS TODAY IS HOW TO HANDLE THE CONSOLIDATION THAT IS HAPPENING IN THE MARKET. 'WHO IS MY COMPETITOR AND WHO IS MY PARTNER, AND WHERE WILL I FIT IN THIS THING?'

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