The tire industry is struggling to keep up with demand.
It’s not just that there’s not a lot of space left for tires in the world’s highways and parking lots.
Tire manufacturers have found ways to maximize their market share, even if they are making less money.
American Tire sold more than 1.7 million tires in Europe last year, an increase of more than 20 percent from 2014.
But the company’s business model, which relies heavily on tires sold through its subsidiary, American Tire Distributors, is in disarray.
That’s because tires are sold by many different tire companies, and many are in financial trouble.
In fact, American has lost more than a third of its market share in Europe since the mid-2000s, according to the World Business Council, a nonprofit organization that tracks the tire market.
“I think the tire industry in Europe is really in a terrible state right now,” said Dan McAlister, vice president of marketing and sales at the European Tire Manufacturers Association.
“It’s not in a good place.”
The American tire industry was once one of the worlds most lucrative.
It made more than $1.2 billion in 2016, according the American Tire & Rubber Association, which tracks the industry.
It was even able to offer more than 50 percent discounts to consumers who had used its tires before.
But today, with tire prices falling and competition for supply intensifying, the industry is in danger of becoming a one-trick pony.
“The industry in the U.S. is not in great shape right now, and it’s certainly not healthy,” McAlisters said.
“We need to get our product prices down, and we need to do it through the distribution channels that we have.”
American Tire is in the middle of a restructuring, and the company is considering merging with rival Tire Direct to form Tire Direct International, the largest tire retailer in the European Union.
“What’s in place right now is a business model that has never been profitable before,” McAllister said.
The two companies plan to merge by the end of the year, according a report in Bloomberg Businessweek.
But while the company has made significant investments to boost profit margins, they haven’t managed to attract customers and keep prices down.
As a result, the company lost $4.5 billion in the first three months of 2017, according data from data analytics company Statista.
That was double the loss in the same period last year.
“In Europe, we’re not seeing a lot,” said John Meeks, the chief executive of Tire Direct.
“At the end, the customer is not getting the value from the product.”
A good customer, however, may still be able to buy a used tire from the company for a small fraction of the price.
American sold about $1 billion in tires in 2016 through the tire distribution business, but its profit margin on that sale was only 6.7 percent, according Bloomberg.
“If you don’t have a good customer base, it’s not going to make a big difference,” McALLIS said.
Some European companies are trying to capitalize on that.
The European Tire Industry Association, a trade group that represents the industry, said in a statement that American Tire “is in the process of restructuring its business, which will include the formation of a new company.”
The group is planning to hold an investor meeting in Brussels on April 26 to discuss the next steps in the restructuring.
American’s financial problems have caused it to sell tires at a loss for the first time since it began trading in 2003.
That caused a dip in sales in the second quarter of 2017.
But that’s not the worst of it.
American also announced that it was laying off 7,000 people, about 2 percent of its workforce.
“There are a lot more people than there were when we started in 2004,” McMalley said.
American says it has a plan to sell more of its tires to independent retailers.
But it hasn’t yet figured out how to sell them to consumers.
American could sell tires to retailers like the New York City-based CarMax and the French-Italian retailer Pirelli, but McAlison said that would be too risky.
“That’s one of those areas where we need a much better business model,” McALIS said, adding that “if you don’ want to buy our product, you should just go to another company.”