Comment: Labelling Chaos?

I don’t want to be overdramatic, but the first round of tyre label unveiling that took place during last month’s Reifen 2012 (see page 46 in the forthcoming July issue for complete coverage of this event) was certainly telling. What we saw was a wide range of different approaches to disseminating this information. What we heard was an even wider range of explanations for all of this. But in the end it was as much about what the various manufacturers didn’t say as it was about what they did say.

Let’s focus on passenger car tyre labelling results first in the interests of brevity. While Goodyear Dunlop was first to shout AA with reference to the companies’ concept tyres in the days before Reifen, Pirelli upstaged everyone by unveiling a production ready model at the show. However even this success succumbed to something of a false start, with the tyre unveiled on the stand during the day before the official launch in the evening. Hankook and Kumho claimed AA-level technology…next year. Michelin obviously believed that honesty was the best policy, fronting up about the underwhelming results of some of its tyres with the two-pronged strategy of presenting realistic expectations for the current range of products (although the most recent information suggests that many sizes and products will look very good in terms of labelling when all the information is released – see August’s T&A for more details) and highlighting the limitations of the labelling system when it comes to things like winter tyres. Meanwhile Bridgestone’s stand was devoid of passenger car tyres and labelling information whatsoever.

This meant that the launch of Toyo’s latest Nanoenergy 1 and 2 products (rated AB and AC respectively) and Nexen’s N’Blue Eco (BB) put the Japanese and Korean manufacturers right near the top of the labelling table, in both cases several places above their station if their respective operations were measured in terms of revenues alone. All of which goes to make the very salient point that this first foray into labelling seems to suggest that budget and mid-range products have the most to gain from labelling. When some of the followers are hitting A and B grades, some of large tyre manufacturers are by default forced into more defensive positions. Even if they are the best and make straight As in such a scenario they are forced to justify their price premium. 

And this could potentially redefine the way products are segmented. For example, Tyres & Accessories has it on good authority that some of the largest tyre retailers are throwing their product marketing handbooks out the window because the age-old linear organisation of premium, mid-range and budget simply doesn’t make sense in light of labelling. With premium products apparently underperforming and some budget and certainly the mid-range over-performing what you are left with is a new application of the term “squeezed middle” that is confusing enough for professionals let alone consumers. Now there are good reasons why a test winning ultra-high performance tyre might score an E for rolling resistance performance, for example, but this doesn’t change the fact that figures like this make an impact on first impressions and legally can’t be hidden from consumers.

Seeing the woods for the trees in the European tyre labelling jungle

Then there is the philosophical point that should not be overlooked. In theory we shouldn’t be able to see AA grades just yet. The whole point of the EU regulation and the particular levels set for each grade boundary was that it was supposed to stretch the industry far beyond where it is now. No-one was supposed to get AA in the first round. Indeed only a month before labelling information hit the public domain one of the top five told T&A that no-one is able to get an AA grade yet. The fact the Pirelli did, Toyo came close and Goodyear, Dunlop, Hankook, Kumho et al are all about to somewhat undermines this key plank of the labelling approach. So how does the consumer differentiate in a year’s time when the top 10 are all able to produce AA tyres? Will A+ have to be introduced?

Now this is all assuming that we can trust the veracity of the labels we see before us. And when it comes to all the companies named in this article, there is no reason whatsoever to doubt this. But let’s just say there are some incredibly ambitious labels out there. Here’s an example that T&A came across during the show. One tyre manufacturer that literally wasn’t in existence four years ago claims that two of its winter tyres are able to achieve BB (with a 73 decibel noise rating) in 225/45 R17 and 255/55 R18 sizes. Compare this with the fact that the Porsche N-rated 225/40 R18 Michelin Pilot Alpin PA4 only scores EC and it sounds too good to be true. Of course one hopes it isn’t because otherwise such flimsy labelling is in danger of undermining the whole process.

Another manufacturer exhibited some other ‘interesting’ behaviour when it progressively added labels to its exhibit during show week. Ask what sizes the various labels refer to and the answer was “all of them.” Now I am no scientist, but even I know that there are likely to be fluctuations across size ranges. The only possible explanation of this is that the company in question had opted to apply a blanket label across this product range, which demonstrates some more of the market’s chaotic understanding of this subject. Despite talking to numerous industry representatives about this precise issue during Reifen week, I lost count of the number of contradictions I heard about how to decide what a blanket grade should be. 

Here are the range of options we heard. In order to apply a blanket label tyre manufacturers apparently can: take the lowest grades and apply them across a range of tyres (this makes perfect sense and should avoid any grade inflation, but also means manufacturers could use this approach to downgrade second line products); take a weighted average across a range using a mathematical algorithm too multifarious for mere mortals (and in so doing make labels more opaque); take a median result from within the range as representative of the rest of the range as a whole (which could lead to some product appearing better than they actually are). If you know better please drop us a line at theeditor@77.237.250.82.

But while we wait for the dust to settle on tyre labelling Tyres & Accessories can offer just two kinds of relief. First next month’s magazine includes a special labelling feature, so look out for more facts an analysis in this. And finally, the wonderfully witty pastiche of European tyre labelling law devised by Van Aalderen Twen-Tyre BV on a tongue in cheek advertising board at the Reifen show (see above).