Across the Atlantic they are called tires, while over here we use a “Y” and say tyres. This tag provides the latest tyre business news emanating from the United States of America (USA), whichever way you spell it.
Continental Teves has been awarded a contract by Ford in the USA for the supply of advanced brake and chassis systems. The company will supply complete systems, including front calipers, booster, park brake system, four-wheel anti-lock brakes (ABS), brake assist and electronic brake force distribution as well as Conti Teves’s Traction Control (TCS) and Electronic Stability Program (ESP) technology.
J.D. Power and Associates has released details of its 2002 Replacement Tyre Buyer Behaviour and Satisfaction Study. Over 9,400 motorists in the USA who have recently purchased a tyre were questioned and the results were as follows. In the passenger tyre section, which includes cars and compact vans, Michelin came out top for the fourth year running, followed by (in order) Toyo, Uniroyal and Kelly (tied), Cooper and Goodyear (tied). Brands rated as performing at or below the industry average were, in alphabetical order, Bridgestone, Dayton, Douglas, Dunlop, Firestone, General, Sears and Yokohama. In the light truck category, Michelin and Cooper tied for first place, followed by BFGoodrich. Other brands were ranked at or below average and these were, again in alphabetical order, Firestone, Goodyear and Uniroyal. When it came to rating retailers, Les Schwab Tire Centers came out top for the third year running, followed by Big O Tires and Goodyear Auto Centers.
In the USA, analysts UBS Warburg have downgraded GM stocks from “Buy” to “Hold”. This is in response to GM’s large pension liability, which UBS Warburg now considers represents a risk large enough to warrant a change in the company’s rating.
Goodyear shares fell to just 17 US$ on Friday; a loss of 6 per cent over the week. Asian companies fared better, with gains for Hankook (+10 p.c.), Kumho (+ 9 p.c.), Sumitomo Rubber (+ 8 p.c.) and Bridgestone (+ 8 p.c.).
Goldman Sachs Japan has upgraded Bridgestone to Recommended List from Market Outperformer. This is in view of in view of the company’s success in expanding sales of the Bridgestone brand in North America, unexpectedly swift earnings recovery at its US subsidiary Bridgestone/Firestone America and prospects that stock-price valuations may revive as litigation risk wanes and North American earnings recover, and only modest exposure to other risks.
Kwik-Fit, the fast fit chain snapped up by Ford for 1.6 billion US$ has proven to be a step too far for the motor manufacturer. Not only has the originally touted ticket price of 800 million not been reached in the sale, but the highest bid looks to be nearer 300 million pounds. The potential buyer, CVC, is still undergoing negotiations with Ford. However, in the wake of Enron, WorldCom and rumours of unusual accountancy practices at General Motors (denied by GM), there have been irregularities found in Kwik-Fit accounts. PwC, Ford’s auditor has found that liabilities for the fast fit chain have been understated by £3.4 million. The “error” came about by accounting for goods supplied, without taking the unreceived invoices into account.
30,000 Phantom A/P tyres that Michelin produced between 1997 and 1999 can, in unusual and extreme situations, fail before the profile is under the limit. These tyres can now be exchanged free of charge as Michelin North America announced a voluntary and absolutely precautionary issue, clarifying that this is not a recall.
Auto safety pressure groups in the USA are suing the Department of Transport for allowing car manufacturers to use inferior tyre monitoring equipment. They claim that despite the NHTSA (National Highway Traffic Safety Administration) recognising that direct tyre pressure monitoring is superior to indirect tyre pressure monitoring, the Department was allowing the use of the inferior product on a cost basis. The groups filing the lawsuit include the New York Public Interest Research Group, Public Citizen and the Center for Auto Safety in New York.
Malaysian conglomerate, Sime Darby Berhad is to concentrate its tyre businesses and float it independently from the parent company (sales of around 3.2 billion US dollars). Key elements of these companies are tyre maker DMIB Berhad with a factory in Selangor and Sime Tyres Int. with factories in Alor Setah and Kedah. A spokesman for Continental confirmed that the German tyre giant wishes to buy 30 per cent of the tyre business, and signed a letter of intent with Sime Darby Berhad on the 26th June. Continental will have the opportunity to increase its share at a later date. This follows an earlier agreement in January between Continental and DMIB and Sime Tyres to share technical support. A former agreement between the Malaysian manufacturers and Sumitomo Rubber Industries had at that point concluded.
Pirelli unveiled its automatic Continuous Compound Mixing system (CCM) which complements its MIRS tyre production system and allows extremely accurate and environmentally-friendly mixing of up to 40 components. Seven patents have been applied for, with the first one granted in North America. Together, says Pirelli, CCM and MIRS will mean “a new generation of tyres, with performance unimaginable up to now.”
Goodyear has responded to the increasing number of recreational vehicles (RVs) by introducing a tyre specially designed for such vehicles, the G670 RV Unisteel. There are an estimated nine million RV owners in the USA and Goodyear members of its Truckwise commercial vehicle tyre service network in the special requirements of RVs.
In the USA, Moody’s Investors Service became the second credit-rating organisation this year to downgrade Goodyear’s credit rating. Weak sales, and the prospect of little improvement this year, were the main reasons given. The cut means that Moody’s have reduced Goodyear’s credit rating to junk status.
A judge in a US court case has allowed sanctions against Cooper Tire. Two brothers are suing Cooper over the death of their parents in an accident, which they allege was caused by a tread separation. The defendants claim that Cooper destroyed documents relating to production records from 1992, but Cooper says it is uncertain whether the documents were relevant. The judge said that he would allow the plaintiffs to inform the jury of the destruction of the documents, and that they could draw whatever inference they wished. He also awarded attorney’s fees and expenses concerned with the destruction of the documents. Cooper said it would appeal the decision.
Hyundai is considering a joint venture with DaimlerChrysler, said president Kim Dong-jin, and will make a decision by October. DCX would pay US$ 418.5 million in cash and Hyundai would offer its Jeonju plant as part of the j.v. If the deal gets approval, it could go ahead from January next year.
In Michigan, used tyre dealer Vernald Cole has been accused of selling recalled Firestone tyres on the wholesale market. The tyres have had the US DOT number removed from the sidewall – in accordance with recall instructions, but experts believe that this could have weakened the tyres. Dealers are then supposed to cut the tyres to make them unusable. Cole, whose slogan is “Cole Tire, the poor man’s friend”, is believed to have sold the tyres in Miami and Mexico. If convicted, he faces fines up to $20,000 and ten years’ imprisonment.
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