General Products & Real Estate - Business Overview
The lifetime of tires differs by driving distance and situation
Automobiles are in the midst of huge changes featuring the advance of electric and hybrid cars and the improvement of safety through information technology. However cars may change, though, we can be pretty sure that they will still need tires. In countries where long-distance driving is vital, necessity of replacement tires mounts up, since there are no everlasting tires.
Our company is actively involved in the tire business in the United States, where it is now operating U.S.’s top independent tire retailer; Our involvement in the tire business actually has a half-century history stretching back to the 1960s. In the beginning, we turned its hand to the export of Japanese-made tires, and sales of ‘Sumitomo’ brand tires (*) in the U.S. market got underway. But then, in the second half of the 1980s, the export climate suddenly changed with the rapid strengthening of the yen, and it became difficult to exist in a business involving only the export of tires. At that point a decision was reached to become more directly involved in the U.S. market.
About 250 million tires are replaced for a year in the U.S.
Within the tire industry there are three global makers with powerful brand appeal, and they sell most of their products through dealers affiliated with them. Sales of other tires, including private brands are handled mainly by mass merchandisers and independent tire stores. Under the circumstances it was possible for private brands to snare a share of about 25% in the market for replacement tires. This was the segment of the market our company set its sights on. We acquired a wholesaler handling the products of local private brand makers, and this gave us an entering wedge into the wholesaling business.
Early in the twenty-first century, though, the situation started changing. As in other industries, companies were seeking ways to arrange shortcuts in business transactions, and wholesalers saw their territory being eroded by incursions from tiremakers on one side and retailers on the other. At this point we decided to move into retailing in order to fortify our business base. Such was the situation in which we acquired TBC Corporation, the largest marketer of private brand tires in North America.
(*)There are not many retail products that consumers can easily identify as being from Sumitomo. ‘Sumitomo’ tire is one of the few products.
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