The beginning of the end?

While some say the Mayan’s predicted the apocalypse would take place this year, the good news is that Armageddon doesn’t appear to have taken place either literally or figuratively. Instead, as we look back on 2012 it is probably fair to say that the year has been dominated by labelling, tough tyre retail sell-out conditions and a resurgence in car sales and production…in the UK at least. Some might gloomily reflect on the fact that our economy as a whole encountered a double dip recession, but there are also signs that the bad times are slowing and in fact things may even pick up a bit in the year to come. (All these themes are followed up in this month’s Review of 2012 feature, which begins on page 40 in our forthcoming December issue)

The mandatory tyre labelling legislation that took effect on 1 November has monopolised the attention of the market for most of the year. For the first six months there was speculation about exactly what the rules meant and how different companies would handle them. Now it’s out, the focus has switched to compliance and the effects this new rule is having on the market. 

Early indications from one survey suggested that – during the voluntary period that began after 30 May – virtually no-one mentioned labels during the sales process at all. This research conducted in July suggested only 4 out of over 700 branches surveyed did so. Now it is mandatory, this will no-doubt have improved (see page 46 in December’s magazine for more on this), but the fact remains that retail, wholesale and manufacturer focused enforcement is the only way the rules are going to work as intended. 

Which leads us nicely onto another important point. I would love share more details with the market about how the process of selecting an enforcement body in the UK is going, but there simply aren’t any. Nearly two months after the rules took effect and years after drafting of the legislation began, there is no-one to make sure that there is a level playing field and that everyone is playing by the rules. In fairness, this quandary is not a UK-only problem. As recently as mid-November, France, another leading market in Europe, was in exactly the same boat.

Whatever legislation is implemented with a view to raising consumer awareness and knowledge of tyres, the fact is that tough times for the population means tough times for tyre dealers. While we all need tyres to get about, pressure on household budgets continues to result in belt tightening when it comes to tyre-buying time. The squeeze is precipitated by high inflation in general, but high fuel costs in particular are having a marked effect. High fuel cost take two chunks out of the tyre market. Firstly, pump sales figures show, high fuel costs lead motorists to drive less. Lack of use means it takes longer for tyres to wear down, reducing tyre sales. At the same time there is ample evidence that motorists are wearing the tyres they do have down beyond the legal limit and when they do buy tyres they are appear to be more price conscious than ever (see GfK: UK tyre market down, but improving for more on this).

UTWG: Part worn tyre sales at an all-time high

All this means that the very bottom end of the tyre trade is growing as fast as ever. According to the latest government Used Tyre Working Group (UTWG) data, the UK part worn market now totals approximately 4.4 million units, approaching 15 per cent of the total replacement market. Not only is this a shot across the bows for those campaigning against abuses in what is a de facto unregulated market (trading standards continues to report that 90 per cent plus of part worns don’t conform to existing regulations), but also it is an all-time high.

To put this figure into perspective, the UTWG numbers have fluctuated around 3 million for most of the time the body has met since its formation in 1998. However, the latest data actually beats the previous record peak of just over 4 million used tyres re-entering the market as part worns in 2005. Apart from the well-publicised safety campaigns initiated by TyreSafe, Tyres & Accessories understands that a number of the trade’s representative bodies are preparing plans to deal with this issue. 

However, while all these challenges continue to face the market, the latest data shows that tyre dealers are still selling tens of millions of tyres a year and for the most part continue to be successful businesses. And the indications appear to suggest this will only improve in the years to come. 

So with all this in mind, Tyres & Accessories would like thank its readers and customers for their support, interest and cooperation in these turbulent times. We would also like to take the opportunity offer all our readers our season’s greetings for a very merry Christmas and a happy, healthy and prosperous 2013.