Mature Markets

Following on from last month’s Spotlight on Northern Europe, Tyres & Accessories spoke to executives from one of the region’s leading manufacturers, Michelin Nordic. Passenger car and light truck marketing director, Vikram Raman and Krista Sivonen, marketing director for industrial products, trucks, agricultural vehicles and earthmover tyres, answered the questions.

T&A: How do Nordic markets differ from the rest of Europe? How are they different from each other?

Vikram Raman: The Nordic market is a mature market with an average growth of 2 – 3 per cent per year. The main difference is the seasonality of the market. We have two seasons (summer and winter) that require two different types of products. The winter market represents almost 50 per cent of the total market. Moreover there is legislation (in all countries except Denmark) requiring the use of winter tyres during the winter months.
In addition, there is a different mix of products between the countries. Sweden is rather rich compared to the rest of Europe. This results in bigger sizes and higher speed indexes than the rest of Europe.

Krista Sivonen: The truck tyre market in the Nordics is a mature market with a growth rate of 1 per cent (as in Europe). The market can be split into new and retreaded tyres, with new truck tyres representing 45 per cent and retreads 55 per cent. The retread share of the market is higher than in other European countries.
The truck tyre market also has two seasons and the winter season is very strong. 25 per cent of the total market is winter tyres (in countries excluding Denmark). There are no legal obligations to mount winter truck tyres. Here in the Nordics we have maximum truck size of 25.25 metres and 60-tonnes of weight, which is different from the European type of trucks.

T&A: What proportion of studded tyres are used in the various Nordic markets?

Vikram Raman: This varies by country. In Finland the studded winter tyre proportion totals around 80 per cent. In Sweden it is at around 70 per cent and in Norway around 50 per cent. Studded tyres are prohibited in Denmark

Krista Sivonen: Even truck tyres are siped or studded sometimes in the Nordics, but Michelin does not recommend this. Michelin wants to design the truck tyres which have all the characteristics (mainly grip) needed in winter driving conditions.

T&A: Who are the leading manufacturers in the Nordic markets?

Vikram Raman: We have of course the global players Continental and Goodyear. One strong local player is Nokian. Michelin is a leader in the zone and we are determined to maintain this position through the quality of our products and service that we offer our customers and end users.

Krista Sivonen: Michelin is the leader in truck tyre market in the Nordics. Our continuous input in innovations aims to guarantee the safe mobility and the best operating costs for the transport companies.

T&A: Which (car) sizes are most popular in the Nordic markets?

Vikram Raman: This varies by country. In Sweden common sizes are 205/55-16, 195/65-15, 225/45-17. Amongst other sizes, we also have 185/65-15.

Krista Sivonen: In the truck tyre market, eight dimensions cover 60 per cent of the market. The most popular dimensions are 265/70 R19.5, 295/80 R22.5, 315/80 R22.5 and 385/65 R22.5.

T&A: While the economy in markets like Norway is very strong, T&A has also heard that car prices are also very high, meaning people do not necessarily use the latest technology? How does Michelin propose to introduce new technologies such a PAX into a market like this?

Vikram Raman: The introduction of PAX in Norway will depend a lot on if and when the car manufacturers decide the market requires this. Our duty in the zone will be to provide the products and service in the aftermarket.

T&A: How would you describe the logistic situation? Is it more complicated because of the adverse weather conditions that occur is this part of northern Europe?

Vikram Raman: The logistic situation is very complicated in the zone. Because Norway is not part of the EU, this means special goods handling procedures to cross the border. The long distances further complicate the situation. The seasonality in the market also puts a lot of pressure on the logistics in the “peak” periods. The dealers use of “tyre hotels” for storing customers tyres decreases their stock holding capacity and adds “pressure” to the system.

T&A: How important are buying groups, what is you approach to this side of business?

Vikram Raman: Buying groups with retail activity are important. However, the winners in the market are the ones that offer a “concept” to their customers rather than just price. These are the people that we try to work more closely with.

T&A: How prevalent are wholesalers in the Nordic and Scandinavian countries?

Vikram Raman: Wholesaling represents around 30 per cent of the market. They are an important complement to the distribution strategy in the way they service the smaller customers and act as a stock buffer.

Krista Sivonen: On the truck side, we do not work with wholesalers.