Original equipment tire market, sold by tire manufacturers directly to automobile and truck manufacturers. Goodyear is the perennial market share leader for this market while capturing 38% of this segment in 1991. And there is the replacement tire market. This segment has broad product lines and grades to appeal to most buyers, to provide many different types of vehicles driven under different road and weather conditions. Goodyear is the market share leader in this segment as of 1991 (Ex. 5 pg 404 – Goodyear Case). Competition
In recent years, consumers have become more price-conscious and less brand loyal. Since car and truck owners could easily switch to a different brand for cheaper prices, price competition among tire manufacturers is fierce in the fight for market shares. The major tire producers often used network TV campaigns to promote their brands, introduce new types of tire, and pull customers to their retail dealer outlets. Through them, tire producers could increase substantial sales of brand-name replacement tires to vehicle owners.
Several tire companies also sponsored auto racing events to promote the performance capabilities of their tires. Since price was the dominant competitive appeal, tire dealers ran frequent price promotion ads in the local newspaper, on outdoor billboard, and occasionally on local TV to get attention of price-sensitive buyers. These advertising mediums also help them to establish and maintain their market shares. In general, competition in this industry in the future will be more dependent upon innovation as issues of performance, quality, safety, and fuel efficiency become increasingly important for consumers.
Technology For a century, the tire industry has made the same product in the same way by many of the same companies. But there have been changes, for instance, improvements in materials and changes in design have all helped to make tires cheaper, more effective and longer lasting. New designs of tires (radial tire*), the development of run-flat tires (such as the Michelin PAX concept) will have a major effect on the design of vehicles and on the future size of the market.
Tires are not fabricated just from rubber; they would be far too flexible and weak. Within the rubber are a series of plies of cord that act as reinforcement. With run-flats, a driver can travel at least 200 kilometers at 80 kilometers per hour without having to stop to change a deflated tire. That means added safety and convenience if a tire goes flat in the countryside; where services may be few and far between, and a sense of security should misfortune befall a driver in specific urban areas.
Political, Legal, and Social Economic Factors The market for tire-derived materials, for recycling, is very promising from economic, environmental and political standpoints. Used tires should be recycled for reuse in the manufacture of new tires and other products. Tire recycling as an industry is growing in size, scope and numbers of companies engaged in. Recycled rubber can be very used to produce rubberized asphalt for road building, material for playgrounds and athletic fields, and much more…
Companies are looking for solutions for their scrap that will have environmental impacts, and TDF (tire-derived fuel) could be the strongest markets for recycled tires. For your information, tire-derived fuel is composed of shredded tires, which are mixed with coal or other fuels such as wood to be burned in concrete kilns, power plants, or paper mills. Industrial Guidelines and Trends There are two remarkable industrial trends in the tire industry. First, decreasing growth rates for entry-level tires has caused large tire manufacturers to move operations into low labor cost environments, like China.
Secondly, the demand for higher performance, increased safety concerns, and want of greater fuel efficiency have resulted in many innovative product offerings by tire manufacturers. This rise in innovation has allowed tire companies the ability to increase margins on their tires and ultimately revenues. Structure Goodyear Tires offers the broadest line of tire products than all of the tire manufacturers. For the original tire market, they have captured approximately 38 percent of the market share.
For the replacement tire market, they are considered the market leader in replacement tires for cars, light-weight trucks, and highway vehicles. In terms of sales, 60 percent consists of sales in the replacement tire market and 40 percent is original tire sales. For production, Goodyear dedicates 25-30 percent of its manufacturing to the original equipment tire. Then the majority, as much as 75 percent, focuses on replacement tires. Goodyear accounts for a quarter of the world’s tire manufacturing capacity and 37 percent of that is within the United States.