Magazine for the professional tire industry
Issue link: https://mtd.epubxp.com/i/244093
HARDWORKING, JUST LIKE YOU From Radial To Bias Tires, We Offer Complete Market Coverage, Providing You And Your Customers The Best Value In The Field. For more information on products, please contact us at info@harvestkingtires.com or call 866-822-4968. Industry analysis MTD: What is happening with raw material prices? Mitchell: I expect the raw material cost component of building the average passenger tire will remain fat through the frst six months of the year before starting a gradual ascent in the back-half of the year. I think the move higher will be slow enough to allow the manufacturers to efectively recover the higher costs in a timely manner. I do not expect to see a lot of pressure on price/mix-to-raw spreads among the manufacturing community, especially Tier One players. MTD: What predictions do you have for the Big Tree — Goodyear Tire & Rubber Co., Bridgestone Americas Inc. and Michelin North America Inc. — this year? Mitchell: I do not think that the Big Tree will make any acquisitions in 2014, but I would not be surprised to see consolidation or strategic alliances — platforms to share technology, gain purchasing capital, and capital alliances — formed among some of the manufacturers in the Tier Two or Tier Tree segments. MTD: How about any of the smaller companies? Mitchell: Hankook is doMitchell expects Mitchell expects raw material material ing an excellent job gaining Mitchell expects raw material at the frst traction in the OE market, prices to remain frise slowly. half of 2014, then with notable wins on some high profle luxury vehicles, including the BMW X5; BMW 1.3 and 5 series; and MercedesBenz S-Class. Ongoing support by these premium brands should help Hankook further strengthen its image, which ultimately increases its long-term potential in the replacement market. View the Complete Harvest King Line Up. harvestkingtires.com Learn more about our commercial and industrial tires at powerkingtires.com 20 Quik-Link: 800-687-1557 ext. 11111 MTD: What impact on the U.S. replacement market will Chinese tire companies have going forward? Mitchell: You defnitely cannot ignore the fact that the Chinese manufacturers are growing their presence at SEMA and in the North American replacement market. Most of the players in the North American tire industry that I have spoken with in recent months noted that they were surprised by the strong impact the infux of Chinese tires had on volumes and pricing in 2013. I think the Tier One and Tier Two manufacturers underestimated the consumer acceptance of Chinese products. I also believe the manufacturers that use a portion of their production capacity for entry level private label product realized that the increased supply of opening price point tires from overseas exposed defciencies in the breadth of their product oferings that will clearly need to be addressed if these branded producers want to continue to make value/ opening price point tires. Some manufacturers delayed price investments due to the fact that they misread the strength of their relationship with distributors and underestimated the need to lead with price in this segment of the market. Tis, MTD January 2014