17 Feb Why Tire Companies Seek OEM Business
Why Tire Companies Seek OEM Business
Supplying tires to the automakers has long been a part of tire companies’ strategy. There is prestige in being fitting to new and exciting vehicles and stability in the long production runs OEM’s demand. When it is time to replace these tires many owners will select the same brand and type. This pull through effect helps with the higher margin replacement tire business.
What many do not know is how rigorous it is to win a supply contract. The OEM’s have significant buying power and are effective in keeping prices low. Once pricing is agreed on the next step is the engineering approval process. Tires are designed specific to the vehicle being developed. This means they must meet objective and subjective requirements. Meeting them requires the latest in tire technology and OEM supply is noted for driving innovation.
The next step is PPAP (Production Part Approval Process). The tire supplier must provide an initial batch of tires built in full production and the OEM will verify the performance is unchanged from the development tires used to gain engineering approval. Once production starts each tire must be individually checked for quality and uniformity to avoid tire related issues in vehicle performance.
At the end of the day long productions runs help keep the tire factories running at optimal capacity and create a market for the replacement tires that follow.
If you would like to learn more about supplying OEM tires check out our case study: OEM Tire Marking