Unique Tire Offering Needed for Unique Vehicle MarketMon, 09/01/2014 - 10:43
Q: How does Mexico fit in Goodyear’s strategy for the Americas?
A: Latin America is a very important market for the tire industry in general. Mexico is our second largest market in Latin America after Brazil, and is considerably larger than the third largest market. Latin America was the first place Goodyear expanded to outside the US, entering the Mexican market in 1973. Since I took up this post in January 2013, my strategy has been to exploit the unique nature of the Mexican market to drive growth. Chile might be as open as Mexico for foreign trade but Mexico’s geographical location and business climate make it unique. Vehicles come from all over the world into the Mexican market, creating a very varied vehicle mix. Goodyear is seeing great results here, growing 38% year-on-year in a tire industry that is globally quite flat.
Q: How has Mexico allowed you to buck this stagnating industry trend?
A: A main reason for this strong growth is the time we have spent conducting market research and analysis. This allowed us to identify the right products for the market, in the right place and for the right price. Doing that is a must for the Mexican market, where the tire industry is heavily dominated by major tire producers who are manufacturing tires locally. Nevertheless, around 60% of the tires used in Mexico are imported due to the vast number of different segments that need to be catered to. Some companies assume that the low-cost, second-hand vehicle market is the most active in Mexico, but it is not. A lot of premium cars have been brought in from the US and Europe. Roughly 40% of the tire market is within the Tier 3 segment, but that means around 60% is made up of midtier premium tires. The market is very interesting not only because of the volumes of tires we can move but also due to the diverse range of vehicles we can service.
Q: Where does Goodyear see the most appealing opportunities for growth?
A: We have a major competitive advantage in the mid to upper tier premium segment. Mexico has seen a major penetration of premium light trucks and SUVs, and Goodyear can offer a superior product in these areas, for which our sales projections forecast continued growth.
Premium sports cars are also becoming more popular, which is another segment we want to grow in. Trucks are also very important in Mexico and many are imported from the US but nobody is producing radial-ply tires here for those vehicles. We are not pursuing volume for volume’s sake, as we only want to expand in segments that offer the best growth projections for us and our dealers. Premium cars, premium radial light trucks, and premium SUVs present the best growth opportunities. Our runflat Dunlop and Goodyear tires are very successful with premium cars coming into Mexico from Europe, as the road quality here means the right sort of tires are necessary. In the commercial vehicles segment, trucks tend to be overloaded here so our high-technology, heavy duty tires help give a better performance in those instances.
Q: What is the current brand perception of Goodyear in Mexico?
A: The end user that wants to buy a set of premium tires has different expectations to the one buying a set of economy tires. We want the end user to really understand our products, and we have launched a new brand awareness campaign in Mexico to achieve that. All of our studies show that we have the strongest brand awareness profile and purchasing intent in Mexico. The last study we conducted showed that we have between 20-24% of purchasing intent in the market. We need to keep increasing that level and keep investing in attracting the younger customer. The US has a big influence in Mexico when it comes to brand perception and desire to purchase.
Q: What are your major sources for imports into Mexico?
A: We closed our production plant in Mexico in 2001, so we are now supporting the tire business by importing products from all over the world. Most truck tires come from the US, the economy truck segment is covered from Asia, we import car and SUV tires from the US and Europe, and our high-tech plant in Luxembourg provides most of our high-tech products. The new cars that are imported into Mexico are heavily dominated by Goodyear tires. We also sell to Nissan, Volkswagen, and Navistar locally to support their production in Mexico. We mount 100% of Navistar’s tires for the Mexican, American, and Colombian markets, even when they are not Goodyear tires.