The American tire industry has made a big push into the lucrative new niche of self-driving cars.
The companies have bought stakes in several companies that have become pioneers in the field, including Uber Technologies Inc., and are looking to tap into their vast customer base.
The walkers of the future, according to these companies, will be the ones who make the cars themselves.
This week, the American Tire & Rubber Association announced it had entered into an agreement to buy a majority stake in Google-owned self-drive-sharing service Otto.
The ride-hailing service is a big success story in the auto industry, but the deal with the tire giant is not expected to help Otto much.
The deal also doesn’t address the question of how Otto could make more money.
American Tire &s; Rubber’s purchase of Otto’s business was announced Monday in a letter sent to the Federal Trade Commission by American Tire president Chris Karp.
We want to invest in Otto and its customers because we want them to be better, and we want to be part of a sustainable business.
The company’s CEO, Brian McCarthy, said the deal will bring significant financial benefits for the two companies.
The tires, in particular, will benefit from better financing.
The agreement will enable American Tire to leverage its deep customer relationships with ride-sharing and other transportation services to generate additional cash flow, McCarthy said in a statement.
In the deal, Otto will pay American Tire $200 million in cash, a cash dividend of 4.5 percent, and a cash payment of $125 million in stock.
Paying $125 billion in stock to a company that has a market cap of $5.3 billion isn’t cheap, but it’s a big win for the American tire companies, which have seen their market value fall by nearly a third over the past decade.
A report last year from Bankrate.com said the American tires market is worth $4.9 billion, but that analysts expected a drop of almost half in 2019.
“These companies have always been looking to make more and they’ve always been willing to pay the highest possible prices to get it,” said James S. Karp, president of S&P Capital IQ.
Some analysts have speculated that the deals may not help Otto as much as expected.
If the deal is approved, Otto would be the second company to buy Otto, following a $1.2 billion deal by Lyft last year.
It’s unclear if the deal would give Otto a bigger slice of the tires market than Lyft, but if it does, that could increase the chances of Otto becoming more popular with ride sharing services.
One thing that will likely benefit Otto is its ability to use a fleet of Otto cars to ferry customers from one business to another.
That will help the company tap into its customer base in a way that Lyft can’t, said John F. Murphy, chief operating officer of RideSafecar, an app that lets people check if they have an Uber or Lyft in their area.
The ride-share companies are already looking to expand into autonomous cars.
On Tuesday, Uber announced it will invest $1 billion in Autopilot, an autonomous technology that lets cars autonomously drive themselves.
The car company plans to begin using the technology by the end of the year.
“The future is here and we’re in it to win it,” Fadel Gheit, a senior partner at the ride-service company Uber, told reporters on a conference call.