Deldo Strengthens Budget Portfolio

The frigid winter we all experienced was good news for Deldo Autobanden NV. The Antwerp, Belgium based wholesaler was inundated with requests from unprepared dealers for cold weather tyres, and even in these balmy summer months the memory of Jack Frost is helping propel sales. “We are already having a great winter season,” confirms Deldo’s international sales and marketing manager, Rutger Veerman. “As of June 1 we had already sold 70 per cent of all our winter tyres. This is the first time we have seen people ordering this early in the season; they are doing so because the last winter season was of course cold and people had difficulties finding enough tyres. People are therefore ordering as early as possible to secure some of their winter business.”

One product Deldo’s customers may be ordering for the upcoming winter months is a new range from Minerva and Rockstone, on display for the first time at Reifen 2010. This non-studdable winter tyre is, Veerman tells Tyres & Accessories, produced by a “premium manufacturer in Europe”, with production of the range having started in two factories in mid-June. “This addition to the Minerva and Rockstone ranges represents an upgrade of brand image, quality and size range,” Rutger Veerman adds. “The range will be more expensive than one produced in China but we are confident that winter tyre consumers, especially in Germany, are eager to pay a little bit more for the pattern and the quality.”

While this new winter range broadens the Minerva range considerably, Deldo’s most popular private brand in terms of units sold is Wanli, a make the wholesaler has imported since 2002. A large portion of this budget brand is sold in the UK. “It is the most important market for our Wanli range – volume wise, most of our Wanli tyres go to the UK, Veerman comments, noting that the UK is very much a budget brand market: “I think that the market itself is 40 per cent budget and 60 per cent premium. When you compare this to Germany, where 10 to 15 per cent of summer tyres are in the budget segment, you can appreciate the UK market’s unique composition. In the UK it’s all about the price. It’s the only country in the region like this – all the other European countries are similar in terms of product mix.”

Our national penchant for cheap and cheerful is naturally good news for Deldo, and Rutger Veerman states the company’s main focus remains the budget segment. “It is fifty per cent of our business. We have six budget labels, and our focus today is to optimise the labels in terms of quality, size range, winter patterns. Rather than implementing new labels we will focus on our existing ones. In the last one and a half years the demand for budget brands has grown, thanks in part to the crisis but also because acceptance of Chinese tyres is growing.” The sales and marketing manager adds that some Deldo customers who were not used to the idea of selling Chinese tyres have been surprised to realise they can successfully extend their portfolios with Chinese tyres and make money in an area where they previously didn’t make any.

Deldo’s other focus is the premium segment: “We have everything under the one roof, from the cheapest Firestones to the most expensive Michelin – we stock them all under the one roof. So, for example, if a customer orders two hundred tyres – 120 of which are budget and the remainder a mix of our premium products – it is no problem.”

Returning to the issue of Chinese tyres and their growing acceptance, Rutger Veerman reflects that the introduction of anti-dumping tariffs in the US has had an impact on businesses selling Chinese tyres there. He doesn’t think a similar legislation will be introduced in Europe. “But we believe that restrictions on some Chinese tyres will be introduced in other ways – for example, in terms of quality. So we will see a lot of regulations coming in.

“This will be a challenge for the Chinese over the next couple of years,” Veerman continues. We are talking with our partners in China on a daily basis and we are instructing them on the new regulations and the criteria in order to prepare them. So we will be ready and our manufacturers will be ready, but I can assure you that a lot of our competitors from China will fail because they will either not be ready in time or they lack the knowledge and capacity to implement the required changes. Therefore we are happy with the upcoming European tyre label. We don’t see it as a threat, we see it as an opportunity. It will be to our advantage if the companies selling unacceptable quality products into Europe are kept out after 2012. All in all, we see the upcoming labelling legislation being of as key importance to the Chinese tyre industry over the next two years. The label will definitely bring an image upgrade for those Chinese companies that do well on the test.

Sharing his observations from meeting customers and other industry players at the Reifen 2010 show, Rutger Veerman notes an air of optimism. “They are tired of the crisis and want to move on and do business, make money. Most dealers are quite optimistic and confident, especially after the strong sales last winter.” And judging from the level of pre-orders the company had already received, he believes that there will again be a winter tyre shortage, just as many are now experiencing a shortage of summer tyres. “Manufacturers didn’t forecast this level of demand and lowered their production, so this means we are receiving more and more enquiries from people,” Veerman comments. “It’s hard to say when production will again meet demand, in part it will be determined by weather conditions – if it is a mild winter, there will be no panic.”