Wondraschek: New Business and Old Traditions

For smaller companies involved in the tyre business it is sometimes equally important to stick to good old traditions as it is to find a way to develop the business creatively. A company that has obviously succeeded in both over the years is the retreader and tyre dealer “Reifen Wondraschek” from the Austrian city of Linz. While in the past the company was mainly known for its activities in the retreading business, today the company engages in an increasing range of new activities, such as exclusive distribution of the Cooper brand in Austria or – as of this year – the exclusive rights to market the Nexen brand in Austria. And just as Reifen Wondraschek is embarking on new businesses, old ones are being phased out. At the end of last year the company ceased producing retreaded tyres for passenger cars. This step was necessary, although painful at the same time as passenger car tyre retreading was once the core business of Reifen Wondraschek, which was founded in the 1930s as a vulcanising company.

In peak times Reifen Wondraschek produced up to 120,000 retreaded passenger car tyres at the production facility it established in 1967 in Gallneukirchen, close to Linz. But in recent years it has become ever more evident that the market for passenger car retreads no longer offers much opportunity for a company like Reifen Wondraschek. The decision to quit the passenger car tyre retreading business was finally made when cheap imported tyres from the Far East were being made available to consumers in increasingly high numbers. By the time production ended last year it was already several years since the company had last invested in this aspect of the business. To Christoph Wondraschek, who has run the family business since 1999 together with his two older brothers, Michael und Peter, this decision is an expression of strength. Despite the company’s strong traditions they are foremost a company able to face a changing economic environment and take whatever decisions are deemed necessary.
However, Reifen Wondraschek has by no means given up the retreading business completely. To the contrary, the company has strongly invested into its retreading activities; but it has invested in areas where it expects there to be a future. On the occasion of the Reifen show in 2006 Reifen Wondraschek signed a contract with Bandag to exclusively produce and distribute Bandag retreads in Austria. The cooperation between the Austrian retreader and the American system provider was declared a “strategic partnership” and has brought about a significant number of investments. The company, which has an annual turnover of about 10 million euros, has invested more than 100,000 euros into its pre-cured retreading business in the wake of the Bandag contract. These investments include, for example, the installation of a fully automated buffer plus a new shearographic system. And it appears a new vulcanising chamber will be added in the near future as well as additional warehouse capacity, says Christoph Wondraschek in an interview with Tyres & Accessories.
For the time being Reifen Wondraschek does not expect any changes to its business now that Bandag has been taken over by Bridgestone. Additionally, in Austria Bridgestone’s truck tyres are so well positioned that it’s expected that Bandag will probably also offer Bridgestone tread patterns to its licensees, believes Christoph Wondraschek. Currently Reifen Wondraschek also uses pre-cured tread rubber from the “Bandag Value Line”; about a fifth of retreads produced by Wondraschek are retreaded with Bandag’s new budget line. But the vast majority of retreading – and this is seen as an expression of Wondraschek’s premium approach to retreading – is performed with Bandag’s premium pre-cured tread rubber.
In particular, when it comes to the positioning of the Bandag brand in Austria and the retreads available on the market, Reifen Wondraschek has to fill a gap that’s existed since the beginning of 2006. After Reifen John opted out of its Bandag contract in 2004 and after Vulkoplast, Bandag’s second partner in Austria, finally went bankrupt in early 2006, the American retreading corporation no longer had a retreader and distribution partner in Austria. The gap that opened up due to the lack of a partner in Austria now must be filled by Reifen Wondraschek. During the interim period the market either bought Bandag retreads from outside of Austria or consumers simply opted to buy other retread brands.
Reifen Wondraschek is and always has been interested in its corporate independence, which Christoph Wondraschek explains like this: “We are a conservative company which just does not accept pressure to grow.” However, today doing more and more business with retreaded truck tyres makes it necessary to be part of a bigger organisation. The reason for this is obvious; it is the fleet business that’s becoming increasingly important. Due to the contract with Bandag, Wondraschek can now participate in Eurofleet. Currently Reifen Wondraschek is increasing the ratio that Bandag retreads make up in its overall production of about 10,000 units per year – in the near future Bandag retreads will form the majority share among all truck tyres retreaded by Wondraschek. The remaining number of truck tyres retreaded by the 15 employees in the production facility in Gallneukirchen, close to Linz, are sold under the company’s own retread brand “DOP”.

New businesses

While there have been several new developments in Reifen Wondraschek’s retreading business in the past two years, this is equally true with regards to the tyre trade in general. Wondraschek today operates four outlets in the region surrounding Linz; until last year there were five. These outlets and Wondraschek’s central warehouse combined employ 50 people. Thus, together with the retread production site, the company employs 65 people. Reifen Wondraschek’s tyre trade business clearly took a giant step forward when it was made the general importer of Cooper tyres in Austria. The US brand was introduced to the Austrian tyre market in 1989 and has been particularly strong in the offroad and winter tyre segments – both of which are very important for a market like Austria. At first Wondraschek only imported offroad tyres from the US and sold them exclusively in Austria. When Cooper took over Avon in 1997 the American tyre manufacturer was drawn even closer to the European tyre market and the needs of European customers. Since that time Wondraschek has also imported passenger car tyres made by Cooper. Cooper’s offroad and now also their SUV tyres are mainly produced at production sites in the US whereas Cooper’s PC tyres are primarily produced in England, and since very recently also in China.
Apart from this relationship with China the Austrian tyre dealer does not want to market products from China and has never taken a Chinese make into its brand portfolio. In this Reifen Wondraschek has been just “too conservative” and the company didn’t want “to look at the bottom end of the market”, says Christoph Wondraschek. However, it has also been necessary to offer products in the budget segment of the Austrian tyre market. Such a brand would have to offer a large number of winter tyres. Although there is no general rule requiring the use of winter tyres on passenger cars (there is for trucks) more than 90 per cent of Austrian motorists change from summer to winter tyres.
Apparently, Reifen Wondraschek has found a manufacturer that can offer such a portfolio. Since the beginning of this year the Austrian tyre company has exclusively distributed the Korean tyre brand Nexen in Austria. In spring Nexen tyres passed the “in-house test” with Wondraschek’s customers and the company was “happy and glad that we were able to take up this brand” into its portfolio. Nexen offers a large variety of different sizes when it comes to winter tyres – about 90 per cent of local demand can be supplied. Furthermore, the third largest Korean tyre manufacturer (after Hankook and Kumho) has not yet conducted large-scale business in Austria thus the brand can still positioned in a flexible way.
It goes without saying that a major part of Wondraschek’s wholesale business is covered by the Cooper and Nexen brands as well as the retreading brands Bandag and DOP. Apart from this traditional wholesale business within Austria – the company’s export business is almost non-existent – Reifen Wondraschek mainly sells to regional re-sellers, such as other tyre trades or car dealerships. What is true with regards to Wondraschek’s retreading business is also true for the wholesale business: “We are not putting any pressure on ourselves.” Retreaded truck tyres are sold in the whole of Austria but new truck tyres are only sold on a very regional scale. Passenger car tyres in turn – in particular Cooper and Nexen – are again sold throughout the whole country.
With regards to a possible increase in the number of outlets it operates, Reifen Wondraschek is following the same lines as in the other parts of its business – there’s no need to rush and become over-ambitious. It could even be the case that such a strategy would be contra-productive to Wondraschek’s wholesale business, as the company doesn’t want to become a competitor to too many of its customers. Also, the company does not plan to become a member of one of Austria’s tyre co-operations – Wondraschek does not want to risk its own independence, even though as a regional operator it lacks the cost effectiveness and buying power of a larger, nationwide group.
Although Reifen Wondraschek is quite pleased with the situation in Austria at the moment and it is almost impossible to detect anything approaching an expansionary drive behind Wondraschek’s company policy, the company is investing into the tyre trade in the Czech Republic. For several years the company has held a majority share in a dealership called “Pneuservis”. And this is not just any tyre dealership – it is the dealership currently occupying the same premises where Reifen Wondraschek was founded in 1935 by Christoph Wondraschek’s grandfather. So the Pneuservis dealership in the city of Krumrau represents the company’s origins. About an hour away from Linz, Pneuservis not only sells tyres; the company is also committed to the retreading of passenger car tyres. However, this level of commitment was “no strategic decision” for Reifen Wondraschek.