Innovation and New Product Development Case Study

Michelin: Managing PAX Innovation

OR

Abstract:
In 2003, Michelin Group was the number one original equipment (OE) tire manufacturer in the world with a market share of 19.2%. The group which pioneered the radial tire came out with a new concept of PAX system in 1998. PAX system was based on the run-flat technology, wherein the vehicle could move smoothly even if the tire was flat. It could run up to 125 miles at a constant speed of 50mph. Michelin commercially launched the PAX system in Europe in 2002. It was first made available in the limited series of the Renault Scenic minivans. But as the sales of PAX equipped vehicles fell short of expectations Renault decided to discontinue using the PAX system. Having failed in the European market, Michelin was keen to extend its innovation in the US market. Honda Motor Company first adopted the PAX system on its Odyssey model. The case discusses the structure of the tire industry and the scope of the OE and Replacement Equipment market. Product innovations in the tire industry and the delayed entry of radial tires in the US market are also discussed. The case then talks about Michelin’s product innovation and the various dimensions of the PAX system.

Pedagogical Objectives:

• The state of the tire industry and the acceptance of innovations in the industry
• The role played by the other tire manufacturers in making PAX innovation a worldwide product
• Michelin’s strategy of emphasising on product innovation
• The success of the PAX system in comparison to successful radial tires
• Will PAX have an edge over the radial, since PAX has been accepted in the US market at an early stage of its innovation?.

Keywords : Michelin Group; PAX system; Radial tires; Product innovation; Tire manufacturers; self supporting tires; Original Equipment; Market Delayed Entry; Innovation Management Case Study; Global Tire Industry; Channels of distribution Run-flat technology; Flat tires; Goodyear; Pirelli