Michelin Enters into Landmark Distribution Agreement with Sumitomo

Michelin North America Inc and Sumitomo Corporation of Americas (SCOA) have finalized a landmark distribution agreement on the basis of which they would form a 50-50 joint venture which would cater to the distribution of replacement tyres and related service operations in the North American market. The new company would be the second-largest player in the wholesale tire market in the United States.

Scott Clark, Chairman and President of Michelin North America Inc said that the collaboration with Sumitomo would allow Michelin to cater to its retail customers in a better manner so that they have access to Michelin products when and where they need them. As an outcome of the partnership, the company would be able to offer customers a wider geographic footprint, more product choices and better availability and increased delivery frequency. Michelin would also be able to provide its direct customers with better and faster service to our direct customers through an enhanced delivery service program.

The combined wholesale unit formed by both companies will operate under a new brand, National Tire Wholesale and will serve as one of the operating companies of TBC Corporation. National Tire Wholesale will provide a wider range of tyre products at many price points across North America, and is expected to achieve greater scale in wholesale delivery for customers. The JV will also make it possible for both Michelin and Sumitomo to improve their service quality, capacity and speed for customers.

Currently Michelin North America Inc (MNAI) has over 85 Tci (Tire Centers) spread across the United States, which is the fourth largest wholesale tire and service network in the country. Sumitomo Corporation of Americas (SCOA), has TBC, which is one of the largest vertically integrated marketers of tyres for the automotive replacement market in the United Steates, with 59 wholesale distribution centers and over 2,400 North American retail locations.
“This joint venture further supports our mobility strategy in this new, dynamic era in the automotive landscape,” said Sam Kato, Senior Vice President and General Manager of the Auto and Aerospace Group at Sumitomo. “In addition to the competitive edge this joint venture provides in the distribution arena, we believe Michelin’s successful experiences in mobility services will add value to TBC. Sumitomo will continue to pursue investments which support our goal of integrated mobility solutions, such as this.”

Strategic benefits of the transaction are expected to include the following:
• The joint venture is expected to emerge as more competitive player in the growing North American tire wholesale and auto services sector, a key market on the global scene. The joint venture will comprise TBC’s Mexican wholesale business, TBC de Mexico, which is one of the largest wholesale distributors in a growing market.
• The deal will make it possible for both companies to serve their online customers better by combining distribution, reach and speed.
• The joint venture will allow Sumitomo and Michelin to benefit from coast-to-coast coverage of car and light truck service providers, and with the North American tyre market set to grow with increase in fleet maintenance and increasing complexity of service requirements and tire sizes, the collaboration is advantageous for both parties.
• Both companies will be able to increase their market share and operational scale as an outcome of the deal and will hence be able to grow at a faster rate.

The joint venture company will be overseen by a six-member Board of Directors (“Board”). Of the six members, three will be from MNAI and three will be from SCOA.
Erik R. Olsen, the current President and Chief Executive Officer of TBC will helm the company as the CEO. TBC will continue to be based in Palm Beach Gardens, Florida. Don Byrd, the current President & COO of TCi will lead the newly formed NTW wholesale business as its Pre