Wholesaler Invests In the Future

Traditionally Dutch wholesalers can be among the most important business contacts tyre dealers can have. Their reliable feel for trade business is almost expected in Europe, and company news is often news of expansion. This also applies to Tyre Trading International BV (TTI). The Dutch wholesaler based in Numansdorp (south of Rotterdam) is currently building a new on-site warehouse, which will eventually increase TTI’s capacity from 40,000 to 70,000 units. Talking to Tyres & Accessories, owner Peter van’t Hof and his son Dr Peter-Alexander van’t Hof explained the reasons for this expensive step.

Tyre Trading International remains a family-run company with the fourth generation just about to take over the business. What once began as a one-man company has been developed by family members into an internationally renowned wholesaler. TTI was established in 1988 in Oud-Beijerland. However, 10 years ago the company moved towards the neighbouring village of Numansdorp where it developed a retail business under the name of “S&G“. In the last six years this has particularly received merit as a motorcycle tyre dealer. In the years before 1988 the business was run under a different name. Apart from TTI wholesale and S&G retail business with passenger car and motorcycle tyres, the van’t Hofs have developed an online wholesaling business especially for motorcycle tyres (Motorbandenservice Nederland BV). But most important of all Tyre Trading International developed a worldwide wholesaling business in which, after the south-east Asia markets, the European markets are the most important for the Dutch company.

Peter van’t Hof knows the importance of Germany’s enormous replacement market, without which TTI as well as all the other wholesalers from the Benelux countries would be in a completely different market situation. At the end the millennium about 95 per cent of TTI’s business was with German companies, explains van’t Hof, who thinks that even this figure could be a conservative estimate. But changes in the exchange rate (before the single European currency was introduced), as well as new price structures led to a situation where TTI was less dependant on the German replacement tyre market. Today, co-owner Peter-Alexander van’t Hof explains that only 35 per cent of TTI’s turnover stems from German sales, while another 35 per cent comes from Holland itself, and eight to ten per cent of the annual turnover is generated from sales in the UK. However, in absolute terms the importance of the German replacement market hasn’t decreased, father and son assert, describing an expanding wholesaling business.

The result is today, Tyre Trading International has reached its limits as far as capacity is concerned. The warehouse currently only has enough room for 40,000 tyres, while the new warehouse (opened this month) will add room for another 25,000 to 30,000 tyres. The new facility will mainly store the important sizes. Plans for the new facility go back at least five years, when Peter van’t Hof first bought the real estate for around 500,000 euros. This money, underlines van’t Hof, was a perfect investment.

But its not only general tyre sales that have made a new warehouse necessary. The three tyre brands which are at Tyre Trading International’s exclusive disposal have made all the difference. On the one hand TTI has been distributing Hankook’s secondary “Kingstar” brand exclusively in Belgium, the Netherlands and Luxembourg since 1998. In the UK several wholesalers sell Kingstar tyres, while in Germany there is just one wholesaler. Peter van’t Hof calls Kingstar a “premium budget brand” which “is not the cheapest” and even has “outstanding quality.” According to van’t Hof, in 2003 there wasn’t a single consumer complaint for the Kingstar tyres that are produced in Hankook’s Chinese factory.

Tyre Trading International has used the Kingstar brand for communication purposes on the Benelux market for several years. “In this sense the brand is absolutely important” because with an exclusive brand “a strong relationship with the trade” can be created. Last year about 20,000 Kingstar tyres were sold on the market, although this figure could easily have been much higher had it not have been for the detrimental exchange rates. The “Kingstar H714” which is the basis model in sizes from 13 to 15 inches has even won a tyre test in France (Auto Plus) where it outperformed many other budget brands.

Recently TTI added the Goodyear-Dunlop Corporation’s “Falken” brand to its product portfolio. The Numansdorp based wholesaler introduced the brand last year as an exclusive brand in Holland. Before then Van den Ban distributed the brand in TTI’s ‘domestic’ market. “The brand strongly developed for us and has a number-1 priority,” say the TTI representatives. All possible marketing channels will be used in order to establish Falken on the Dutch market. A complete marketing concept has been developed in order to promote Falken tyres in Holland. For example so-called popular drifting shows are supported by Tyre Trading International under the Falken banner.

Yet another step that made the wholesaler’s expansion necessary was so it could take another exclusive tyre brand, the first containers of which reached Rotterdam at the end of August. TTI is going to exclusively introduce the “Antyre” brand exclusively on the Benelux, German, French, Greek, Cypriot and Austrian markets. The manufacturer of this tyre brand is a Chinese company whose name the Dutch wholesaler does not want to see published for contractual reasons. The products are “decent tyres at a best price,” Peter-Alexander van’t Hof told T&A, and will be available in eight sizes. Next year there should be 20 sizes of Antyre tyres available covering 16 to 22 inch dimensions and W and Y speed ratings. Until the coming year Antyre tyres will only be available as summer tyres. In 2006 SUV tyres will be added to the range. Peter and Peter-Alexander van’t Hof believe that they’ll be able to sell up to 100,000 Antyre tyres during the first 12 months.

Exclusive brands ensure business contacts

For wholesalers like Tyre Trading International exclusive brands like Antyre are an important means of differentiation compared with other wholesalers. Every tyre brand which is offered exclusively allows for a certain independence in setting the price for distribution. The reason is obvious: there is no direct competition, parallel imports aside. “In earlier years there weren’t so many wholesalers,” Peter van’t Hof complains looking back on many years in the tyre business. Today many retailers start their own wholesaling business. In particular the Internet helps get round things that were previously obstacles, Peter-Alexander van’t Hof says. This is why differentiation compared with competing wholesalers is becoming more and more important today; the Kingstar, Falken or Antyre exclusive brands are likely help to make TTI successful in this respect.

Apart from the distribution of these exclusive brands that, due to the contractual provisions, can only be sold on certain markets, Tyre Trading International also does business with all the other major tyre brands. Thus, under ideal circumstances, customers that sell the Dutch wholesaler’s exclusive brands will not need a second wholesaler in order to keep their business running. Because TTI’s customers are mostly retailers in Holland, Germany and the UK etc tyres are delivered by parcel services. There are only a few wholesale customers, so tyres are rarely sold by the container. In Peter van’t Hofs eyes Tyre Trading International has an important service function for the market and its customers in the tyre trade because the wholesaler offers the whole range of products. Therefore, TTI regards itself as a classical wholesaler that can buy en masse at reasonable conditions and can sell in small numbers.

Passenger car, 4×4 and SUV tyres aside, Tyre Trading International also sells motorcycle tyres. The company Motorbandenservice Nederland also runs as a wholesaling business although only via the Internet. Currently about 95 per cent of all orders from Germany (TTI’s biggest market) are placed via the Internet.

The van’t Hof’s only started operating their motorcycle tyre wholesaling business six years ago when one of three existing national motorcycle tyre wholesalers filed for bankruptcy. At that time Peter van’t Hof took over the company and felt that this opportunity could turn into an important part of the family business. Before then, Motorcyclists from the whole country had been coming to van’t Hof’s S&G retail outlet (on the same premises as the wholesaling businesses) in order to get their motorbike tyres changed.

Something that is applicable to many other wholesalers from smaller countries also applies to Tyre Trading International: “If you want to grow you have to leave the country,” says Peter van’t Hof and points out that also in future – despite the decreasing importance of its neighbouring country in terms of sales figures – Germany will remain the most important market for TTI. In any case the company hopes for an increase of its turnover during this year by about 10 per cent to 14 million euros from the 250,000 tyres sold.