Tire industry analyst John Healy discusses tariffs, private equity ownership of tire dealerships, M&A and other topics in this exclusive interview.
A full-length version of this interview with Healy, managing director and research analyst with Northcoast Research Holdings LLC and author of MTD’s monthly Your Marketplace column, can be found in MTD’s 2025 Facts Issue. (Editor's note: The interview was conducted several weeks before MTD's 2025 Facts Issue went to press.)
MTD: The International Trade Commission recently issued its final decision on tariffs for TBR tires made in Thailand. What effect, if any, will tariffs have on the flow of TBR tire exports from Thailand into the U.S.?
Healy: The International Trade Commission has reached their decision and has determined that imports of TBR tires are causing material injury to the U.S. industry. As a result, the Department of Commerce has issued an antidumping duty order on imports from Thailand. Most tire manufacturers and importers will be subject to a 12.33% tariff, but Bridgestone will pay a 48.39% tariff for its tires imported into the U.S. We are likely going to see reduced import volumes from Thailand. The increased tariffs are going to make TBR tires from Thailand 56 well as operational complexities, it prob ably creates a nice window of opportunity for domestic TBR operators.
MTD: Speaking of commercial truck tires, we’re hearing that the replacement TBR tire segment is doing better-than-anticipated in the U.S. Is this what you’re hearing, too, and if so, what do you think is driving this growth?
Healy: Several factors are helping drive growth in the TBR tire segment, including the continued stabilization of freight rates. Additionally, the implementation of greenhouse gas regulations could be leading fleets to replace their tires to comply with new regulations. Specifically, the Environmental Protection Agency is enforcing stricter standards starting on Class 8 diesel trucks in 2027. We believe this will lead to a pre-buy of trucks that are likely lower-cost and not required to be compliant, providing a tailwind to original equipment TBR tires over the next two-three years.
MTD: Four of the 10 largest independent tire dealerships listed on the 2024 MTD 100 are owned by private equity firms. Do you foresee a continuation of this trend now that economic indicators (inflation, interest rates, etc.) are moving in a more favorable direction?
Healy: Looking at the top 10 dealerships, I think you would find various operating and ownership structures that make each of those entities unique. While always difficult to say never, I wouldn’t expect many additional entities of the top 10 to be private equity-owned.
That said, I think private equity will still be interested in being a stakeholder in the sector and being active building scale with smaller and mid-size tire dealer outfit chains. Acquiring big companies typically comes with more risk and integration complexity, so I expect the mid-tier of the market to be the ripe market for activity. Bolt-on, geography-expanding deals and tuck-in scale building targets are typically the most attractive for platforms owned by private equity and I would expect this to be the area of the market that remains most attractive in 2025.
Interest rates going lower and perhaps more clarity relating to regulation and economic trends likely creates a better track for M&A activity. Given this, we think 2025 could be more active than 2024, given recent macro-developments.
MTD: It’s now been several years since several private equity-backed entities have bought tire dealerships. The average length of time for ownership by private equity used to be between three and five years, but in recent years that time has increased. Nevertheless, some of these companies are reaching the tail-end of ownership. What do you see happening with those companies?
Healy: While private equity does typically only own assets for three to five years, they care more about making money than sticking to their original timelines. I think right now, owners are in more of a waiting period for some level of retail stabilization/ growth to firm up their multiples.
MTD: What’s your take on internal changes that continue to take place at TBC Corp.?
Healy: The recent changes in selling its retail tire and auto service holdings have allowed TBC to focus more on the core of its business, which is being the franchisor/distributor of choice, and removing the distraction of trying to operate their own retail sector. The transaction they completed with Mavis strengthened their already extensive wholesale business, as well, by allowing them to provide wholesale distribution for Mavis retail locations. (Editor’s note: Mavis Tire Express Services Corp. — the largest tire dealership in the U.S., based on store count — acquired nearly 600 retail stores from TBC in 2023.)
MTD: American Tire Distributors Inc. (ATD) has “entered into a restructuring support agreement with certain lenders” — marking the second time the company has filed Chapter 11 in the past six years. What does this mean for ATD, its suppliers and its customers?
Healy: From a day-to-day basis for customers, I am not sure it means a lot in the near-term. My guess is the new set of decision-makers will want to keep the tires moving and cash flow arriving. That said, with the new slate of owners, they likely will decide what to change. The goal of the business appears sound, but whether it’s costs or leverage, some thing needs to change. Hopefully, this restructuring relating to debt/liabilities will give them the relief to probably get leaner and more direct, as they approach their daily goals of filling dealers with the product they need to get consumers back on the road. Regarding what it means for suppliers, the court system will largely have a big say in those decisions, so stay tuned.
MTD: How will the ATD bankruptcy change the landscape of tire distribution in the U.S.? What percent of the overall wholesale tire market do you think ATD represents?
Healy: We are not expecting a shift in the next few months, but the reemergence of the business post this second bankruptcy one would think will be different. Perhaps the company gets smaller and perhaps it changes the lines it carries, which to us seem to be the most reasonable outcomes. Right now, we think ATD moves about five percent to 10% of the replacement market annually in the U.S. and likely closer to the low-end of the market. Given the noise related to the restructuring, it without a doubt creates a window of opportunity for other wholesalers to step up and serve the customer and capitalize on any distractions or potential changes in manufacturer product availability. Dealers like consistency. If a wholesaler can provide that, it’s powerful.
MTD: Do you see ATD downsizing its operations, perhaps in the form of closing or selling some of its distribution centers?
Healy: Hard to know as an outsider, but my view is that if you need to restructure twice in a short period of time, perhaps more sizeable changes are needed to the strategy or reach of the operations. In the distribution business, scale and density are important. Perhaps redrawing the map of how the business competes might be a reasonable thing to do.
MTD: Goodyear Tire & Rubber Co. accomplished one part of its Goodyear Forward plan in 2024 when it sold its OTR tire division to Yokohama Rubber Co. Ltd. How does the spin-off of this business unit impact Goodyear’s overall position? How does it benefit Yokohama? (Editor’s note: Yokohama’s purchase of Goodyear’s OTR tire business was finalized on Feb. 3, 2025.)
Healy: The sale of the OTR division allows Goodyear to make significant progress on its Goodyear Forward plan, enabling the company to reduce its leverage and fund strategic initiatives. Goodyear can now shift more concentration on enhancing its profitability to its core consumer and commercial tire markets.
For Yokohama, the acquisition aligns with their medium-term management plan, Yokohama Transformation 2026, which puts a heavy emphasis in growth of the off-highway sector. Yokohama has said that globally the OTR tire market is expected to grow around 6% per year, which is considerably higher than the projected 2% annual growth for the consumer tire market.
MTD: What progress has Goodyear made on the more than $1 billion in cuts that it has pledged to make by the end of 2025? Do you think that goal is achievable?
Healy: Goodyear has been able to make significant progress on its Goodyear Forward plan. In the company’s third quarter earnings call, they reported segment operating income (SOI) of $933 million through the first nine months of the year, up from $348 million at this point in 2023, with $285 million coming from Goodyear Forward benefits. Management also highlighted the company had achieved four consecutive quarters of SOI expansion. Based on the significant progress made, the company increased their target for gross run-rate gains from Goodyear Forward to $1.5 billion by the end of 2025. We believe this goal is achievable, with the company showing strong execution so far of its transformation plan.
Click here to read the full interview in MTD's 2025 Facts Issue!
