Ten Great Myths – The Case for Passenger Tyre Retreading

The last issue of Tyres & Accessories carried an in-depth article analysing the future of passenger tyre retreading in Europe. Contrary to the current prevailing opinion, the RMA believes that the passenger retreading sector is far from dead. Indeed, the association believes the overall pessimistic view of the prospects for passenger retreading is based on the failure of the retreading industry to effectively explain the role and position that passenger retreads are capable of having as well as a misunderstanding of the kind of sales levels required by the retreading industry in order to create a viable business proposition for the UK’s remaining retreaders. This viewpoint, I believe, is perpetuated by ten key misconceptions, which I have characterised here as “The Ten Great Myths of Passenger Tyre Retreading”.

Myth No.1 – Passenger retreads can only ever be marketed as a budget product.

In a relatively short space of time passenger retreads have changed from being a mass-market budget product to a niche product. However, because of the historical positioning of retreads, most tyre dealers have great difficulty in perceiving them as capable of filling any other role.

We would argue two main points:

1) It is perfectly feasible to market retreads as a value-added product, in particular by using the “green argument”. If organic food can be sold at a premium to green consumers, why is it necessary to market “green” tyres to the environmentally-friendly lobby at prices that are unprofitable for both retreaders and dealers?

2) This value added argument can still effectively be combined with a budget positioning in other niches – in particular 4×4, high performance and winter, where the traditional price differential between new tyres and retreads still exists.

Myth No. 2 You can’t make money out of passenger retreads.

We are the first to admit that the increased influx of cheap new tyres, primarily from the Far East, has placed increasing pressure on the traditional price differential between new tyres and retreads, particularly in standard sizes.

However, a price differential does still exist and to suggest that dealers cannot make money out of retreads is just plain wrong. Many still do by approaching the market in an innovative manner and by actively selling the value-added benefits of retreaded passenger tyres. We accept that selling retreads may not be for everyone but for many retreads can be sold profitably and can help differentiate a business from the competition.

Myth No. 3 – No-one wants retreads any more.

The historical image problems suffered by the retreading industry are often quoted as a justification for the argument that consumers are not interested in buying retreads any more. This argument does not hold water. Firstly, the image problem also existed in the days when 4 million retreads a year were being sold in the UK. Secondly, our experience with committed dealers suggests that a good proportion of the general public is perfectly willing to take on board the positive arguments in favour of passenger retreads. These dealers sell retreads very effectively with many of them having a very high percentage of their turnover coming from retreads.

We would argue therefore that the problem does not lie so much with the general public but with the distribution trade’s lack of willingness to stock the product.

Myth No. 4 – The quality of retreads is poor and hence the customer won’t be persuaded.

The argument that the quality of retreaded tyres is in some way sub-standard is not new. The image problem has existed for many years and is a problem that the retreading industry has had to cope with on an ongoing basis. Has this been justified? Historically, probably yes – but not any more. Today’s retreads are high quality products manufactured to strict quality standards on high-tech machinery.

There are many arguments to illustrate this, the most powerful of which is the ECE 108 Standard, which has been mandatory in the UK since January 2004 and which stipulates that all retreads by law are now subject to the same type approval tests as new tyres. These involve endurance tests, commonly known as drum tests, which are carried out at the tyre’s approved load and speed rating.

Myth No.5 – No-one stocks retreads any more.

It is certainly true that the nature of how retreaded passenger tyres are sold has changed beyond recognition over the last 10-15 years. It used to be that more or less every tyre dealer stocked retreads and now that is simply not the case. However, to suggest that no-one stocks them at all is a fallacy. Actually passenger retreading is well represented in most areas of the country by committed dealers, especially in the larger urban areas.

Our role as an Association is to make it clearer to the consumer, who is stocking retreaded tyres and to direct interested parties to committed dealers.

Myth No. 6 – The size of the retread market cannot be increased

This argument is based on the fact that the passenger retreading industry has suffered a substantial decline in recent years. However, I would dispute the assertion that the retread market cannot be increased on several grounds.

Firstly, many potential sales are going astray simply because customers do not know where to buy retreads. It is likely that efforts to increase consumer awareness of the network of dealers that sell retreads combined with a more proactive approach to promotion on a local level in support of committed dealers will result in an increase in retread sales.

Secondly I believe there are a number of niche markets, which can be effectively targeted by the retreading industry. The two markets, which have the most potential for passenger retreaders are the “green” consumer and the winter/cold weather tyre market. These are both sectors, which in the past have received very little attention from either the retreading industry or the tyre industry as a whole. However, both markets offer substantial scope for growth for retreaders.

How much can the retread market be increased? Difficult to say. Certainly nobody is claiming that the market can be returned to the halcyon days of the mid-1990s, but, if the current market can be stabilised, if distribution can be optimised and if these two niches can be developed proactively, I don’t think it is unreasonable to target a recovery in the market to around 1.5 million units. If we can achieve this, the remaining passenger retreaders in the market will be more than happy.

Myth No. 7 – There is no point targeting the environmental customer. It’s been done before and it hasn’t worked.

Although individual retreaders, the RMA and others have stressed the environmental benefits of retreads in press releases, articles and at conferences before, I think it’s true to say that the industry has never really attempted to reach the green consumer directly. Certainly, our research suggests that these consumers are barely aware of the environmentally friendly nature of retreaded tyres.

Last year we carried out a trial advertising campaign in magazines such as Earthmatters and the Ethical Consumer and the response has been quite encouraging. We are not naïve enough to think that the green consumer will suddenly start buying hundreds of thousands of retreads. However, we do feel that this sector is large enough, if targeted properly in conjunction with local dealers, to make a noticeable difference to the fortunes of retreaders in this country.

Myth No. 8 – There is no chance of selling retreaded winter tyres in the UK.

The idea of creating a winter tyre market in the UK has received a considerable amount of publicity recently, thanks to initiatives launched by Continental and by the NTDA. The argument is that it should be possible to create a winter tyre market because one was created in Holland in the space of a few years by the Dutch trade association VACO in conjunction with a number of active tyre dealers.

The winter tyre sector is very attractive for retreaders partly because they have historically exported winter retreads to Europe and hence have good product ranges. They are also able to be sold profitably as the pressure on the price differential between new tyres and retreads is not as severe in this sector.

In theory, if it were possible to create a winter tyre market in the UK worth 15 per cent of the total market (as did VACO in Holland) and supposing retreaders were able to achieve, say, 10 per cent of this, we are talking about 450,000 tyres, enough to make a really major difference to retreaders in this country. The RMA is very interested in working together with the various interested parties in the tyre industry with a view to helping make this idea a reality.

Myth No. 9 – The passenger retreading industry needs to return to the sales levels it was achieving in the mid 1990s – anything short of this is a failure.

Not so. In actual fact those passenger retreaders still active in the market are currently operating efficiently at the levels they were operating at before the boom in the 1990s. Indeed today’s passenger retreaders are older and wiser and would not wish to see the boom and bust conditions that caused the industry such problems. As I have already indicated, I believe that an optimisation of distribution and the exploitation of key niche markets could potentially increase the passenger retread market to a healthy 1.5 million units over the course of several years. This would represent a market growth of at least 50 per cent, which would represent a considerable achievement as well as going some way towards securing the future of those companies active in this sector.

Myth No. 10 – The retreading industry is not doing anything to help dealers

This may have been true in the past but the RMA is currently working hard to improve co-operation with retread friendly dealers. The Green Dealer Scheme, launched in 2003, now has nearly 200 member outlets. This year we will be looking to step up our activities with these dealers. Our initial aim for this year is to run a pilot scheme with around ten of the most committed dealers with a view to helping them more closely to reach their target customers in their catchment areas. This will involve help in targeting the local press, the provision of POS material such as depot banners, stickers, posters and consumer information leaflets and well as opening a dialogue with dealers to help find out what support they would like to see from retreaders.

We feel that a proactive approach by the RMA to promote retreads is the only way to move forward and to guarantee the future of passenger retreading in the UK.