Yokohama Tire Corp (YTC) is in a strong position as it enters the second half of 2024, says Stan Chandgie, the company’s chief operating officer and executive vice president of sales.
MTD: Tell us about YTC's performance during the first half of 2024. What were some of the highlights and challenges?
Chandgie: Overall, the first half (was) good. As in any year, there are some challenges along the way, but we’ve been able to post results consistent with our expectations in the U.S. in what I would describe as a soft market.
I think the biggest highlight has been the announcement and launch of our new all-terrain tire, the Geolandar A/T4. This replaces our highly successful Geolandar A/T G015 and represents an improvement in every performance area, along with a much more aggressive look. This is really the centerpiece of our Geolandar line and we look forward to the continued roll-out of this product throughout the balance of this year.
MTD: How would you assess the state of the U.S. consumer tire market, including demand?
Chandgie: I think overall end user demand has been consistent with previous years, but as always, the devil is in the details. The economy, particularly the current state of inflation and the subsequent high prices on the entire basket of goods, is definitely having an impact on the consumer. For the most part, we’ve benefited as consumers continue to look for value.
MTD: What's your take on commercial truck tire demand?
Chandgie: Demand for the Yokohama brand of commercial truck tires has been very strong. We’ve seen the U.S. Tire Manufacturers Assocation reporting a year-over-year reduction, with really the only growth coming from the bottom end of the market, but to this point, we’ve been able to buck that trend and have gained share.
I think this is going to continue to be a challenging year, though. We still see utilization rates below average, truck loadings relatively flat and low consumer confidence in the face of high inflation. So we believe the second half will be a challenge, but through our unique ability to provide solutions and our servicing dealer and fleet relationships, I think we’re well-positioned to see continued success.
MTD: YTC recently broke ground on a new consumer tire plant in Saltillo, Mexico. What portion of production at the plant will be shipped to the U.S.?
Chandgie: To start, we expect 100% of that capacity to stay in the North American market. Over time, it may end up serving other markets, but we have the demand locally to consume all of that production.
MTD: How are ramp-ups at YTC's truck tire plant in Mississippi helping the company become less-reliant on product from off-shore plants? Why is this a priority?
Chandgie: It’s made a huge impact. Being closer to the market and having that near-source capability has allowed us to be closer to our customers and create unique solutions for a variety of situations. On a more global scale, it ultimately increased total capacity. So not only has this allowed for growth here domestically, but it’s opened up capacity off-shore, which has allowed (Yokohama Rubber Co.) to pursue growth in other regions.
MTD: YTC CEO Jeff Barna has said that YTC will continue to invest in its tech center in Charlotte, N.C., in order to "de-emphasize our reliance on Japan's R&D capabilities." How is that effort coming along? YTC also has continued to maintain a steady cadence of new product introductions. Can you discuss that strategy and why it's been important?
Chandgie: It’s been a two-fold strategy, which has been given a boost by our tech center, just outside of Charlotte, N.C. The progress there has really opened up our development capacity and being in the market, it has allowed for more new products directly suited for the U.S. The market is so competitive now and there are so many options that can outcompete an outdated product. So product lifecycle management has become extremely important and has been the bedrock of our cadence for new product introductions.
Additionally, we’ve been successful at finding incremental opportunities and (have) expanded into underserved or new segments. Ultimately, the importance of it all is to be able to provide viable solutions for our customers so that they can meet the needs of the end-user.
MTD: YTC recently launched the Yokohama Sport EV A/S, the company's first ultra-high performance all-season tire for electric vehicles. What is YTC's take on the burgeoning EV tire segment and long-term forecast for U.S. EV tire demand?
Chandgie: We think that there is a market opportunity for EV-specific tires at the present time. It’s why we launched the ADVAN Sport EV All-Season tire earlier this year. There was an unmet consumer need amongst EV owners in the market and this tire provides a tremendous value as an OE alternative, particularly as it relates to longevity.
The future growth rate of EVs as a vehicle segment is debatable and we’re all familiar with the arguments for and against, the automakers' forecasts and proclamations and the short-term sales figures. Regardless, the number of EVs on the road will continue to increase and the unique set of challenges that EVs place on tires is here to stay. Heavier loads, higher torque, (rolling resistance) requirements, cabin noise expectations, handling characteristics, etc., are all going to place increased demands on tires in the future. Given our capabilities, we think we’re uniquely qualified to meet those demands.
MTD: What's YTC's OE strategy, both with EV and internal combustion engine (ICE) vehicles? Is the company actively working on any new fitments?
Chandgie: We have active projects with both EV and ICE vehicles, but I’m not at liberty to divulge any specifics.
MTD: During and post-COVID-19, many tire consumers have gravitated - and continue to gravitate - toward less-expensive brands. Has YTC benefited from this and if yes, in what ways?
Chandgie: It’s hard to quantify exactly, but I think we’ve benefited in some ways as consumers have looked for more value in their tires. However, we may have lost a few end users as they’ve traded down to cheaper alternatives. Ultimately, we’ve outpaced the market post-COVID-19, which signals the strength of our customer relationships and the ongoing demand for our brand.
MTD: What will be YTC's biggest priority during the second half of 2024?
Chandgie: Well, obviously we want to finish the year strong. We have a new all-terrain tire, the Geolandar A/T4, coming out this summer, which we believe to be a home run as it represents an improvement over its predecessor in every performance area and provides an updated more aggressive appearance.
A successful introduction for that tire into the market will be a key focus, along with continuing our overall growth path in both consumer and commercial.
