The implementation of ECE 108/109 into German law

The German retreading industry has, for some time now, been concerned about when and how the ECE regulations 108 (passenger tyres) and 109 (truck tyres) would eventually be transferred into mandatory national law. In fact concerns over how the regulations will affect the German retreading market have been lingering since they were put into place in Geneva in June 1998.

Germany and its ministry of transportation was the first in Europe to recognise the new rules. Originally Germany was willing to put the ECE regulations into national law by 1 January 2000. The hold up has been caused by the fact that the European Union became a member of the ECE in Geneva in 1999; before that only single states where members. Because of this national solos weren’t allowed any longer. In other words: the EU was in a position to “rule first”, which meant that it alone made the decision to accept or turn down the new regulations through an EU RICHTLINIE.

The first steps were made possible through the 2001/509/EC and 2001/507/EC rulings of the European Council. The European Community accepted the regulations 108 and 109 of the Economic Commission for Europe (ECE) of the United Nations on the production of retreaded tyres. However, the translation of the regulations into EU law through an EU RICHTLINIE weren’t successful thus giving states no real basis for the implementation of the ECE regulations into national law. All attempts on national or international stages to speed up this process have failed so far, or were simply undermined by other states, retreaders or material suppliers. Nevertheless there are some EU member states that took the original ECE regulations 108/109 and made them mandatory in their realm.

With the support of the German tyre trade association BRV, and the Federal Transport Authority, as well as authorised service providers and PRÜFLABORE, many players on the German retreading market abide by these new regulations and have successfully been certified according to ECE prerequisites.

So far (January 2005) five German retreaders have achieved a certificate according to ECE-R 108 and 42 according to ECE-R 109, which is more than half of the players on the German retreading market. Furthermore, many retreaders are literally in a “waiting position” because they meet the necessary requirements but haven’t undertaken the actual process of certification. This is mainly because companies are still shying away from the costs and haven’t sent their application form to the Federal Transport Authority. These companies believe that it is still not clear when the ECE regulations will finally be put into national framework, although it seems that the day is drawing closer.

As is widely known, the Secretariat General of the European Council has given the 25 member states of the European Union notice of a proposed EU RICHTLINIE in a letter issued on 15 December 2004. With the same letter the Secretary General, Javier Solana, was made aware of this latest step. This will mean that six months after the adoption of the proposal retreads without ECE 108/109 certification will not be sold on the EU market.

So for those retreaders that have not yet attempted to gain certification the pressure is on to do so by the end of the year. However, because of the large number of German retreaders nearing certification we don’t foresee any major problems looming for the German retreading industry, especially with the support of the BRV and the Federal Transport Authority.

In summary, the German retreading industry has taken the necessary steps in order to be prepared for “day X”; they have largely and successfully implemented the required standards on an independent basis, since 1998, and the level of compulsory technology already surpassed the necessary requirement before that date.

Other than the negligible costs of the certification procedure and the annual COP product UNTERSUCHUNGEN, there are few negatives implications to the German retreading industry in accepting the ECE regulations. In fact it is the opposite ECE certified retreaded tyres have a higher value because according to the EU RICHTLINIEN 92/93 they can be regarded as new tyres and are good enough for original equipment.

The German ministry of transportation published the following on this issue: “The ECE regulations 108 and 109 permit retreaded tyres to be regarded as higher quality products than some low-priced products that are currently (June 1998) imported without fulfilling necessary quality and safety standards.”

One could be forgiven for concluding that the ECE regulations have had a negative influence on the German market if you simply look at the developments that have taken place during the last 10 years in terms of the number of retreaders present, sales of retreaded truck, light truck, passenger car and EM tyres. However this is not the case. The most recent changes are a result of general changes on the market that perhaps would have been worse without the necessary changes made by the implementation of the ECE regulations.

For example, the number of retreaders in Germany decreased from about 130 in 1994 to a mere 80 in 2004. This equates to a decrease of 38 per cent. The same accounts for retreaded passenger car tyres: 4 million down to 1.4 million (-65 per cent); and for retreaded light truck tyres: 370,000 down to 50,000 (-86 per cent). Less dramatic was the market for retreaded EM tyres, down 12.5 per cent from 12,000 to 10,500 pieces. At least the market for retreaded truck tyres has remained stable at 1.5 million pieces over the last 10 years.

In other words over the last decade the retreading business has lost ground compared to the replacement market. Retreaded passenger tyres are down from 10 to three per cent market share, light truck tyres are down from 16.5 to two per cent market share, truck tyres from 51 to 42 per cent market share, and EM tyres from 35 to 30 per cent market share.

The passenger car and light truck retreading business has lost the most substantial ground. Most German retreaders present in these segments have withdrawn.

Recent changes on the light truck tyre market have been due to extraordinarily fast development of new products and new sizes, which were previously only produced in small numbers. Hence today, only a few of all light truck tyre sizes are retreads, making the retreading business in this market segment a mere niche to the companies involved.

If one takes into account the large number of retreaded passenger car tyres that came from British retreaders (in 1994 about 2 million pieces which accounted for 50 per cent of the market; today about 100,000 pieces), the market segment in Germany has decreased by 35 per cent in comparison. It has fallen from 2 million PC retreads ‘made in Germany’ to 1.3 million pieces. The market share of three per cent next to the entire German passenger car replacement market says one thing: it is a niche market, in particular for M+S marked tyres.

Unfortunately the small and medium-sized companies that dominate the
German retreading market have not been able to build up the necessary image in the tyre trade to create demand against the growing impact of cheap new tyre imports. This is surprising considering that passenger car tyre retreaders produce according to ECE-R 108 and that German brands Rigdon and Ökon have been recommended by recent ADAC winter tyre tests. Despite this the German tyre trade remains reluctant with regards to retreaded passenger car tyres.

There have been more positive developments on the truck tyre side. Nevertheless there has been consolidation on the production side, which is dominated by small and medium-sized companies, and the national production figures have remained the same over the last 10 years with about 1.5 million retreads. Compared to the whole German truck tyre replacement market the segment has only decreased by nine percent (from 51 to 42) because retreaders weren’t able to claim their share of the growing market. The truck tyre replacement market was made up of 2.8 million pieces in 1994, 10 years later it had increased to 3.5 million pieces. This decrease is easily explained; the building and construction business in Germany – one of the most important customers to the retreading industry – has suffered over the last few years which has had a negative effect on demands in all truck tyre market segments.

The same accounts for the EM tyre market which has also decreased, from 12,000 retreads in 1994 to 10,400 retreads in 2004 (-12.5 per cent). The market share of retreaded EM tyres has also shrunk, (-5 per cent) because the number of new EM tyres entering the German market grew from 34,000 to 34,900 pieces.

In the face of such an unpredictable German economy it is difficult to predict the state of the future retreading market.

Retreaded tyres will remain one of the pillars of the German replacement market, in particular truck and EM tyres. But how passenger car tyre retreads will develop in the near future and whether they will retain their position, as a niche product, especially in M+S marked tyres, is not certain – it is a critical but not hopeless situation.

At the same time the German retreading industry will only prevail over the growing competition of ‘cheap’ new tyres if it can guarantee professional services covering all corners of the retreading business and excellent quality retreads according to the ECE regulations 108 and 109.
by Hans-Jürgen Drechsler, BRV