TWG: 1H 2008 a Record Year for UK Tyre Wholesalers…

When the NTDA’s increasingly Influential Tyre Wholesalers’ Group (TWG) met for its annual lunch in November, the event brought with it news of import quality checks, an update on the current market situation and a polite request for not manufacturers to take advantage of the UK’s detached geographical position when it comes to pricing.

However, in his role as chairman, Ashley Croft began by giving the audience representing the majority of leading manufacturers and wholesalers an overview of how the economic climate is affecting tyre wholesale markets:

“…For many this has been a record year: of record falls, of record lows, and also record highs. We have seen GM business levels in the US drop 45 per cent in a single month; stock markets that have fallen double digit figures in a day; the pound [sterling] at an all time low against the euro; crude oil at almost $150 a barrel. Against such a background, our business must appear to have been relatively stable.

“Members of the Tyre Wholesalers Group report the first half of 2008 as a time of record business levels, as we enjoyed for once the full potential of business within the UK, as the pound dropped against the euro making exports from mainland Europe to the UK largely unattractive.

Cooperation results in better market data and new quality testing

“During this last year, I am pleased to report that TWG members have agreed to co-operate with the Market Study Group of the TIF, supplying figures for the annual volumes of tyres imported by them into Europe, that are currently outside of any recorded data. There is now a general consensus that the annual UK replacement car tyre market is between 31 and 35 million units. Figures supplied by the TWG will assist in this being more accurately understood.

“I am also pleased to announce that members have agreed to a recommendation that sample testing be conducted on tyres they are responsible for importing into Europe. This will be over and above any current statutory requirement, and at ECE30 or other relevant level. It will ensure that tyre retailers can buy product from our members with added confidence of product conformity.

The UK should not be seen as “Treasure Island”

“…I am fortunate to have been in this trade for a number of years; long enough to remember the time when the manufacturers considered wholesalers in the UK “parasites.” I am glad to say that now, by and large, the relationship is regarded as more symbiotic. Any comments that may have been considered negative towards the manufacturers are the result of frustration at the fact we could be achieving so much more through closer co-operation and working together.

“We have a scenario where the second largest market in Europe, with the richest mix of V, W, Y, Z, has a major brand share of 40 per cent at best. As I stated earlier, the first half of 2008 saw record business levels for many wholesalers with parallel imports at virtually nil. Price increases then imposed across Europe were such that the realigned prices once again put UK prices sufficiently above those on the mainland, and the parallel recommenced.

“The rise of the US dollar is putting pressure on budget tyre prices, potentially closing the gap between them and major brands. The current fall of sterling against the euro is once again making imports into the UK from the mainland less attractive.

“As prices for 2009 are currently under review, whether movements be upward or downward, can I urge that you resist pricing the UK above equivalent prices on the mainland. The concept of the UK as “Treasure Island”, as a friend of mine from within the trade would often quote, is one that is no longer beneficial to the development of our mutual business.

“Why should brokers from Mainland Europe be actively supported in the parallel trade of your product? Will they assist you in developing the UK market in a spirit of co-operation? Will they look to support you with training and stock programmes in Dealership business? Will they support your range in stocking the slowest moving items and having them available for delivery this afternoon? I have nothing against the brokers; I have considered many of them personal friends over the years, but why should you support their business in attacking our customers in the UK and under-mining all that we do successfully together in this market?

“You have a unique opportunity, as budget prices come under significant upward pressure, to reduce the differential to your product and regain lost market share, whilst also maximising our volumes in the home market. To coin a phrase: the ball is in your court…”