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Michelin defends online strategy, leaving dealers angry

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Michelin defends online strategy, leaving dealers angry

Tire giant Michelin has defended its decision to sell BFGoodrich tires direct to consumers online after backlash from tire dealers.

Tire dealers across the U.S. expressed their anger and disappointment at the trial move to allow the public to purchase tires directly from the BFGoodrich website and have them installed by local service partners.

Michelin North America chief executive Scott Clark said the company had expected a reaction from a “small group” of dealers but saw the move to selling online as a “positive step for both consumers and tire retailers”.

Michelin responds

“Because Michelin doesn’t own any of our own retail stores, this program is successful when we partner with our retailers and create/deliver real consumer value,” he said. “We understand their concerns and we are working hard to detail the components of our program directly with them.”

Michelin would not release the rates it intended to pay service partners for “competitive reasons” but in a statement, said the service partner would be paid by check once the installation was complete. They would then have the option for more timely direct deposits, rather than credit, which concerns many dealers.

The statement, a copy of which was sent to Traction News, said the company would not “seek a short-term gain that actively undermines the valuable dealer relationships that BFGoodrich and Michelin have spent decades developing”.

Clark said the program is being rolled out in the Charlotte, NC, market first and Michelin is in the process of signing up service partners now. In response to a perceived lack of communication leveled by tire dealers, Michelin said it is focusing its communications efforts directly with its dealer network and is “talking personally” with them about the details of the program.

Dealers react with outrage to Michelin’s “betrayal”

But the move outraged tire dealers across the U.S.

Direct Tire owner Barry Steinberg told Traction News the feeling among independent tire dealers was one of a “betrayal of trust” and dealers were concerned they would now be competing against their own vendor.

“It’s just a very greedy, short-sighted thing for the manufacturers to do,” he said. “They are going to garner the revenue that we would normally get; they’re taking money out of our pockets. We’re the ones that have helped build their business over the last 100 years.”

Steinberg said he believed the move would force dealers to lower their prices even further and damage business, or make less money by only receiving an installers’ fee. He was also concerned customers would lose out or face paying even more for tires in the long run because the free services tire dealers offer when tires are bought through them would no longer be included in the tire price.

Dealers won’t sign up

Several dealers have stated they either intend to no longer stock BFGoodrich tires and will not sign up to the program or would at least consider moving into other, more profitable product lines.

“I agree with the previous comments that there are plenty of other opportunities available and remind dealers that we started our businesses because of our desire to control our own future,” said commenter Mike Tracy on Traction News’ article. “Being ‘set free’ can be a blessing in disguise.”

The process of rolling it out nationally, including MichelinMan.com, will begin later in 2016 and Michelin confirmed its goal is to be nationwide in 2017.

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