Dunlop motorsport and more [UK] market shifts?

While it sounds too dramatic to talk about seismic activity in the tyre market, the ongoing long-term effects of the various financial crises are continuing to be felt. At a continental level this has meant continued queries about how the largest tyre makers can better balance supply and demand in Europe. However it is also difficult to say how much of this conjecture is actually manifesting into any kind of practical reality. Indeed, at times like these people can get over-creative in their analyses, along with any legitimate market observations. That said, and without wanting to sound like a seventies pop song, it is as if we can feel the slow undulations of the terra firma under our feet.

As the saying goes: “there’s no smoke without fire”. While sometimes true, the problem is that this doesn’t mean things are always simple. Take the recent news that Jaguar Land Rover had bought the land Dunlop Motorsport currently uses to produce its tyres (see page 14 for more on this). When the news broke it was as if speculation about the reasons behind this development spontaneously came into being nanoseconds after the news was announced. If Dunlop has to move out – and right now even this fact is not absolutely certain as Jaguar Land Rover could for example lease the land back to the tyre manufacturer – then where will the company go? Before any decisions had been made and while the details were still being assimilated at Fort Dunlop and Tyre Fort (T&A has it on good authority that the company only found out about the land sale and its possible consequences a matter of days before), myriad media outlets had proffered a plethora of potential scenarios. These include a suggested transfer of motorsport manufacturing to Wolverhampton, another solution within Birmingham and with some publications pointing out that the company has no fewer than six factories in Germany.

What does it all mean? We simply don’t know yet. But one has to question why a growing Jaguar Land Rover would buy land adjacent to its expanding operations and decline the chance to make cars (its primary business) in preference for entering some comparatively low-level real estate business (which would of course be a distantly secondary business). Truth is though, if we want to really know what happens next, we are better off just watching this space.

But it’s not all about the manufacturing sector. Other shifts appear to be taking place elsewhere in the UK market in another part of the supply chain. As this issue of Tyres & Accessories goes to press a number of credible sources are reporting that a certain wholesale operation is in the process of redefining its ownership structure. We haven’t been able to get any concrete confirmation or third party corroboration of the facts yet, but it appears to be a tragic example of how unforgiving the business world can be. With the credit crunch being what it is, you may expect the prevailing cash flow-constricted environment to squeeze the most leveraged players most harshly. However if the reports we’ve heard turn out to be correct, in what must be an added twist of the knife for those involved, this particular story could be a bizarrely contradictory case of a relatively unleveraged business falling foul of the credit crunch. On the bright side, as is always the case in business, we have also heard that this very situation could also mark a significant step forward for another wholesale/retail business, which has – up till now – done an excellent job of growing strongly, consistently and apparently sustainably without drawing too much attention to itself.

Look out for further coverage of both developing stories in future issues of Tyres & Accessories.