Selling tires to selling kilometers. Was that strategy successful for the brand Michelin? (PDF)

Seminar paper from the year 2023 in the subject Business economics - Review of Business Studies, grade: 1,0, Hamburg School of Business Administration gGmbH, language: English, abstract: Michelin is a well-known French tire manufacturer with a global representation. They produce high-quality tires for various vehicles including cars, trucks, motorcycles, and bicycles. Michelin is also known for its Michelin Guide, a rating system for restaurants and hotels. The transition from "selling tires to selling kilometers" for whole fleets is a strategic move by Michelin to move from selling tires to offering a complete mobility solution. This transition involves customers receiving tires-as-a-service (TaaS), where they pay based on distance driven, rather than buying and servicing tires independently. And while Michelin had a clear first-mover advantage in the industry at the time (2000 - 2003), this service still presented some downsides for Michelin.

Another company that has established this system successfully is the aircraft jet manufacturer Rolls-Royce. Under the name "TotalCare", the price is calculated on a fixed per-flying hour basis. Thus, maintained engines are "rewarded". Advantages are waste reduction, efficiency increase, and others.

Among other things, Michelin's offer provides advantages such as planning security for the customer in terms of the monthly payment, longer tire mileage, and less impact on the environment. But why was the offer still problematic?

In this study, the analysis of the case studies and further data and references will address the central question: "Was this strategy successful, and should it be extended to private customers?" At the same time, an outlook on possible future developments will be given. A short analytical look at the connection to the Car Subscription sector will be taken.