Plimsoll: Tyre dealer business will pick up in 2013

With 2012 behind us, perhaps tyre dealers can look forward to a more prosperous 2013. That is certainly the view of analysts at Plimsoll Publishing Ltd, who recently predicted a year of growth. A new market report produced by Plimsoll, which looks into the financial performance of the UK’s largest 693 Tyre Dealers, found average growth was as high as six per cent. However the 2013 Tyre Dealers report concludes that this is by no means widespread as this successful growth is being driven by a quarter of the industry – an “elite” band of 190 companies to be precise.

The Tyre Dealers Analysis states these 190 businesses are showing growth as high as 15 per cent compared to the average growth of just over five per cent.

David Pattison, chief analyst at Plimsoll, insists there is reason for cheer as growth and increased productivity begins to spread throughout the market: “What seems to be different this time, compared to the last few years, is that this growth is coming profitably. Dealers are not only seeing increases in volume, but many of them are achieving this with increasing profitability. average margins across these growing companies is still below the industry average at only 1.7 per cent, the current industry average is 3.6 per cent. This is low and shows that the cost of delivering growth is still coming by offering a price advantage. 

Bigger doing better

Pattison continued: “However, the good news is that the trend of selling at a loss is starting to slow and profits are slowly starting to improve, back to the levels of five years ago. A significant difference is that these elite companies are driving up their productivity.  In general, these companies are 25 per cent more efficient than the industry average, averaging over £266,000 sales per employee, compared to the average of around £176,000.”

Something else the report points out is that the largest companies are increasing sales fastest. Typically larger companies are seeing sales increases of almost 11 per cent. 

However, it must be said that the Plimsoll analysis is based on past financial performance of companies and not necessarily trends affecting the market factors that precipitate improvement or otherwise. Therefore predictions about the performance of the companies are based on their relatively fiscal strength rather than their ability to increasing sales or gain market share. Nevertheless the suggestion that certain companies are growing quicker and are investing in growth strategies in order to achieve this stands as a point in and of itself and – balanced with other market perspectives – is an interesting take on what may take place this year. 

Another fascinating question to ponder as the weeks and months pass this year is: how does this thesis compare with data from ETRMA suggesting European markets basically crashed in 2012 on the one hand and further predictions from Continental that the market will bottom out in 2013 on the other?