So long and thanks for all the tyre sales

After an eight-year long mutually beneficial relationship Maxxis International UK Ltd has decided to part company with its long-term distribution partner Grouptyre. The news came in the form of an announcement that the two companies have ended their exclusivity agreement, which implies that the firm will continue supplying Maxxis tyres for the time being. However, Tyres & Accessories understands that there is more to the story than that.

First of all it is important to say that the relationship between the two companies ended on good terms, with both the manufacturer and the wholesaler at pains to point out the past positives of their relationship. ‘You can’t take anything away from them,’ each side seems to be saying about the other:

Grouptyre managing director Karl Naylor said: “Our two strategies have been served well by the exclusivity agreement in previous years, enabling us to grow Maxxis’s presence significantly and provide a cost-effective value brand solution for our retail customers. However, having reached the stage where our plans are diverging, we have agreed that Grouptyre will not continue to sell Maxxis on an exclusive basis and have amended our distribution agreement accordingly.”

As Maxxis plans the next stage in its development as a global tyre brand, Derek McMartin, managing director of Maxxis International UK, added: “Our very successful partnership with Grouptyre has played an extremely important role in enabling us to establish the Maxxis brand in the UK’s passenger car sector, a position we intend to build on going forward.”

The way the joint statement the two companies put out highlights the fact that the decision to part came following “a review of their distribution arrangements,” and “in light of their future plans” says it rather well. It is not a question of people falling out, but rather a question of diverging strategies. For Maxxis there is the continuing goal from Maxxis International and parent company Cheng Shin Rubber Ltd for the brand to become “global.” And for Grouptyre there is its continuing quest to reinvent itself as a stronger, harder franchised group of economically strong wholesaler than it was before the sales and bankruptcy of some of its members last year. Perhaps both sides saw this move as an opportunity to go their respective ways.

The official statement also made clear that Grouptyre’s distribution of Maxxis products will continue in spite of the expiration of the exclusivity agreement on 30 September 2011. But Tyres & Accessories understands that this can also be seen as ensuring a smooth transition and a way of phasing out the supply of Maxxis tyres to Grouptyre by the end of 2011 in favour of a new distributor. The name has not officially been released, but T&A has been told that it will be announced in September.

However, important questions remain to be answered by both sides. Apart from the obvious “who will distribute Maxxis now?”, there is the question of which brand Grouptyre will replace it with. T&A’s money is on the company moving away from its perceived over-dependence on one brand towards a portfolio emphasis including the up and coming Evergreen brand produced by Shandong Jinyu in China, but  this remains to be confirmed.

Then there’s the issue that dealer partners may well be asking – what happens to the Maxxis rewards programme that they have been so faithfully supporting over the years? It is likely this will be phased out and back in with the new distributor, but again this has not been officially confirmed either. What is clear is that all these questions and more will be answered in more detail in the days and weeks to come. And, as with the coverage of this story, Tyres & Accessories will be there via email, newsletter and of course the magazine the October edition of which includes a section detailing developments in the wholesale business.