50 years of Deldo – From niche business to global expansion

It’s 1973 and the tyre business in Europe is a very different and disconnected affair, with each national market a self-contained operation. For Jos Delcroix, this structure represented an opportunity, and in October of that year he founded Deldo, a company that has grown to become one of the largest tyre wholesalers in the region and an up-and-coming player worldwide.

Deldo celebrates 50 years this month and we caught up with Philip Delcroix, managing director of Antwerp-based Deldo NV and son of company founders Jos and Paula, to talk about the past, present and future. This year also marks a quarter century since Philip joined the business, making 2023 a combined silver-gold anniversary.

Philip tells us that the Deldo story is rooted in the immediate postwar period. The Germans were gone but had left behind them a serious shortage of goods vehicles, and in 1946 Frans Donckers, grandfather of Philip Delcroix, began purchasing and trading in axles and wheels that he stripped from the wrecked army vehicles still littering Belgium. This small beginning evolved into, amongst other things, a tyre retail business that is still a major chain in Belgium today.

Much later, Donckers’ daughter met a young man at university. “My father, Jos Delcroix, was studying to become a notary,” shares Philip. “In the 1960s Frans Donckers acted as importer for the East German tyre brand Pneumant and travelled to an annual fair in Leipzig. My father could speak German, so Frans asked if he’d accompany him on visits to the Leipzig show. It was during these journeys that my father encountered tyre dealers from various European countries and learned an important truth about how the tyre market functioned.”

Parallel profits

Manufacturers, he discovered, set prices arbitrarily. Philip gives the example of Michelin and Continental, who both sold tyres much more cheaply in each other’s home markets than in their own. Knowledge of pan-European pricing was virtually non-existent within the trade, and Jos Delcroix was the first to see the merit in buying tyres where they’re cheap and selling them where the asking price is higher.

“My father saw an opportunity to start a parallel business under the roof of my grandfather’s company.” With Frans Donckers’ own sons preparing for a generational succession, Jos and Paula Delcroix later formed their own business and began trading as Deldo in October 1973.

Sporadic communication between national markets ensured that tyre makers were initially unaware of the new Belgian firm that was selling tyres below their own prices. “After a couple of years, the manufacturers realised Deldo existed and they took different approaches to us,” comments Philip. “For example, Continental understood early on that a parallel business could reach customers they couldn’t reach themselves.” Other manufacturers were less welcoming and initially refused to do business, but over the years they have also found a benefit in working with Deldo.

Parallel trading ceased being Deldo’s main business long ago, and Philip Delcroix estimates that the wholesaler now obtains “close to 95 per cent” of all tyres directly from manufacturers.

Bringing new brands to Europe

Another early activity for Deldo was introducing little-known brands into local markets. The wholesaler was the first to bring Nexen (then still known as Woosung) to Europe and is also credited with establishing Hankook within the region.

“My father and uncle visited the SEMA show in the USA in the early 1980s and encountered a Korean brand they’d never heard of,” shares Philip. “A little later my father decided he wanted to visit Hankook Tire. He didn’t have an appointment and simply booked a flight to Seoul.” Upon arriving unannounced at Hankook’s headquarters Jos Delcroix struggled to find somebody who understood English. “Eventually my father spoke with export managers and soon the first container of Hankook tyres was making its way to Antwerp.”

Hankook is now a respected brand with an established original equipment and aftermarket business, so it may come as a surprise to hear Philip Delcroix describe the quality of the tyres within this first container as “absolutely terrible.” Many customer reclamations resulted, and the story could have ended then and there had Deldo been dealing with a different company. “Hankook dealt with the problem very professionally,” states Delcroix. “The factory in Korea sent over engineers who examined the tyres, and Hankook rapidly improved its quality. Right from the start we could see that Hankook Tire is a professional organisation that does things very well.” Deldo exclusively distributed Hankook in several countries and did very good business with the brand for a number of years prior to Hankook Tire’s establishment of its own European subsidiary.

Controlling the narrative with private labels

Exclusivity with a tyre brand can be profitable but leaves the wholesaler at the mercy of the manufacturer. Better then to own the brands you work with, and this is the path Deldo eventually took. “Private brands didn’t exist in Europe back in 1973, but over in the USA my father heard of premium manufacturers producing private label tyres for the likes of Walmart,” says Philip. “He approached European manufacturers with the intention of doing the same, and Continental agreed to produce the Minerva brand for us.”

Deldo prospered with Minerva but over time it became apparent that products such as Hankook and Kumho were arriving in Europe at prices that challenged the Continental-made private label tyre. “Eventually it became too expensive to sell large volumes and we needed to look at alternative manufacturers.” Wanli, a brand Deldo imported from China, pointed the wholesaler in the right direction.

“Relocating Minerva production to China made a huge difference,” shares Philip. “Not only could we sell below our cost price from Continental but were also able to vastly increase the size and product range, and we quickly did very well.” To meet customer demand for products that provided national or regional exclusivity, Deldo soon introduced a second private brand, and then another. Today it has six – Atlas, Fortuna, Imperial, Minerva, Tristar and Superia – and is currently planning a further one to two brands. “We see very good opportunities for additional private brands.”

Private brands account for 70% of Deldo’s volumes (Photo: Tyre Industry Publications Ltd / Stephen Goodchild)

Deldo sells its private label tyres in close to 70 countries, with Minerva and Imperial the best sellers in terms of volume. Together, the six private brands account for 70 per cent of the wholesaler’s total volumes and more than half its turnover. And thanks to ongoing improvements in product quality, unparalleled size ability as well as rising demand for affordable products, this is a business that is growing.

“The growth we’re seeing this year is almost entirely in our private labels,” confirms Philip Delcroix. “It’s easy to enlarge this business as we can follow our own long-term strategy without worrying about sudden changes that are beyond our control.” The managing director observes that growth in Deldo’s private brand business is occurring in part at the expense of Tier 2 products. “Our premium business is up this year, but Tier 2 is down. The traditional customers for those brands are more cost-sensitive and are looking for a cheaper solution.”

Deldo’s twin

Philip Delcroix is but a few months older than the family business and he considers Deldo “a kind of twin brother.” After studying law in Belgium and later language and business in the USA, France and Germany, and following a placement at UBS in Switzerland, Philip joined Deldo in 1998, his German language proficiency prompting his placement into that market’s national team. After three to four years, Philip became sales manager for Germany – then and today the company’s largest market – and around 15 years ago he moved up to a general management position within Deldo.

Kathleen, Philip’s younger sister, joined Deldo a couple of years after he did and is today involved in the non-commercial side of this and the family’s other businesses. Philip is the “tyre guy” within the operation. Jos Delcroix is now 79 but both he and Paula remain active within the company.

In 2023, the family business expects to sell upwards of 10 million tyres in total, including 8.5 million through the Antwerp-headquartered wholesaler. Deldo is prospering within a tyre wholesale market that Philip Delcroix believes will further consolidate. “Some independent businesses aren’t making much money and will struggle to implement the investments needed to remain in the front row and achieve qualitative growth. Those who are doing a good job in this regard – and I like to consider Deldo amongst them – will be able to grow in Europe.”

Delcroix also expects the budget segment to continue its ascendency and is thus confident of growing Deldo both within Europe, despite legislation that may ultimately decrease the number of cars on the road, and especially beyond the region. “The world really is a big place, and we aim to expand our private label business globally. Car ownership is growing outside of Europe and many emerging markets provide opportunities for budget tyre brands.”

Deldo, headquartered harbourside just north of Antwerp, will directly sell around 8.5 million tyres this year (Photo: Tyre Industry Publications Ltd / Stephen Goodchild)

Preparing for the future

By the time Deldo is established in these new markets, the third generation may have joined the family business. Philip Delcroix has three children, his sister Kathleen four. All are still studying, but Philip already sees signs of interest amongst the youngsters. The company is structured to facilitate the eventual arrival of a new generation with a view for them taking the reins later on.

“Our scope is long-term family business,” Philip Delcroix emphasises. “We are independent and will remain so. We have no plan to sell Deldo now, and not in the future either. We have grown up with this business and like it. It brings a profit.”

While Philip doesn’t possess a crystal ball that can look 15 or 20 years into the future, the goal is absolutely to continue as a family business into the third generation. “I am confident that the interest and talent is there, but of course we will see at that moment. In the meantime, we will keep focusing on qualitative growth. Growth by keeping a healthy margin – because we need that margin in order to be able to invest and to grow in the future.”