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Nokian Tyres has released its 1Q figures, which show a 17.8 per cent increase in sales over 1Q 03, from 95.7 million Euros to 112.7 million Euros. Group operating profit was up to 10.7 million Euros (3.2 million). Profit before taxes was 9.6 million Euros (1.6 million) and net profit totalled 6.5 million Euros (0.7 million). Sales of passenger car, heavy tyres and retreading materials rose, but bicycle tyre sales fell.
Michelin’s first quarter results show that the group’s net sales totalled 3.799 billion Euro; up 3.9 per cent on the 1Q 2003 figure of 3.654 billion Euro. If currency fluctuations are factored out, the increase would be nearer 9.5 per cent. In tonnage terms, volumes rose 7.6 per cent over 1Q 2003. Net Sales by Product 1Q 04 were as follows millions of Euros: Car/light truck: 1,842.3. Truck: 995.5. Other businesses: 1,187.6. Inter-sector eliminations: – 226.4. Total: 3,799.0.
Continental believes that the company is well-positioned to benefit from the eastward expansion of the EU in May, having pursued a policy of strategic investment in eastern Europe for the past decade. The company has invested upwards of half a billion Euro in the area and now has manufacturing facilities for tyres or automotive components/systems in the Czech Republic, the Slovak Republic, Hungary and Romania (due to join the EU in 2007), employing over 11,000 staff. Continental’s interest in eastern Europe is not restricted to the production advantages, as it views the new member states as potential growth markets for truck and winter tyres as economic growth for 2004 and 2005 in the area is forecast to be four per cent.
Petter Solberg won the three-day New Zealand Rally in his Pirelli-shod Subaru Impreza, after taking the lead on the first day. He and teammate Mikko Hirvonen (who finishes 7th) both used the new KP tyre from the P Zero range, with KP4 tyres in the mornings, when conditions were variable, and changing to harder K2 tyres in the afternoon. Solberg’s winning margin after the 395-kilometre rally was six seconds and he now trails WRC leader Markko Martin by three points.
Michelin Apollo Tyres Pvt Ltd, the Indian joint venture between Michelin and Apollo Tyres, has introduced a new truck and bus radial tyre for the Indian market. The tyre, which features both Michelin and Apollo trademarks on the sidewall is currently imported, although it is anticipated that the tyre will be made in India by 2005. Mr. Herve Dub, who will become CEO of the jv company in May as part of a seven-member board (four members from Michelin, three from Apollo), described the two trademarks on the tyre as “a concrete demonstration of the partnership between Apollo Tyres and Michelin.”
On the truck side, and doubtless on the fleet car side in future, tyre management has become king in controlling ppk and fixed price tyre contracts. The computerised analysis of data is not an uncommon concept and many firms have been utilising computer data management for their tyre contracts for some time. The weak link in the chain has always been at the data collection end of the chain. Fitters or inspectors checking and recording tyre data with clipboards is a slow process, subject to much error and the vagaries of the weather. Once the data is collected it then needs to be keyed into the database, a laborious and tedious process subject to much potential for error. There are systems available where electronic data gathering is made possible with wireless connections from tyre depth gauges to PDAs thence to the computers back at base. However, there is a reluctance to buy into, or use, electronic data gathering equipment. Conventional tyre depth gauges and pressure gauges are still the tool of choice. This leaves the main element (manpower excluded) in data collection the point at which the data is actually collected. InfoRoute had what it believed to be the answer to tyre management software, but time and time again fleet tyre management people would listen keenly and respond to any presentation with the statement that “it is the data collection that is the weak point.”
InfoRoute realised that the challenge to be faced was not so much one of selling the software but creating and perfecting the data collection link to improve the collection and flow of tyre inspection data. This was the challenge InfoRoute faced. Truck Tyre Manager, a powerful tyre management PC program had already been developed but data input had to be automatic with no delays. The traditional data collection route could give information as much as six working days out of date. What was needed was a simple to use, readily accessed, cheap, weatherproof system.
InfoRoute found the ideal solution was already in use by every tyre fitter in the country: a mobile phone. Everyone already knows how to use a mobile phone, so that immediately removes acceptance, training, support and cost issues. One hand operation lets you check tyres and enter details at the same time. InfoRoute calls the system Inspector Link.
InfoRoute developed special programs to receive and send vehicle and inspection details between Truck Tyre Manager on the PC and the phone. Working closely with tyre fitters and managers InfoRoute designed single key input routines to guide the tyre inspector. First of all a vehicle is selected by entering the start of the registration or fleet number. The wheel configuration displays and the speedometer reading is entered. Then the front off side tyre is highlighted. Select the make, enter the depth and if there are no faults move on to the next tyre. If the tyre has a problem simple menus allow the inspector to pick a fault and select the action needed. At any time the inspection can be reviewed and altered. A “view actions” menu highlights vehicles needing attention. At any point the inspection can be completed and details transmitted back to the office. Vehicles not yet checked remain on the phone to be checked later.
The phone operates off line, so there is no connection charge while you are inspecting vehicles and it does not depend on having a signal. Inspector Link can be used anywhere. Protected by a weather proof case, fastened to the inspector wrist by a cord the unit can’t fall to the ground. So far InfoRoute has not had any equipment failures or breakages. It doesn’t need any special computer equipment to transmit data, it is just like sending a text. In about a minute you can send and receive details of hundreds of vehicles.
When Bridgestone bought 19.6 per cent of the Nokian share capital from the then parent company Nokia for 39.17 Euro per share, paying a total of 78 Million Euros, analysts recommended Nokian shares as “Hold”, saying the fair value was approximately 34 Euro and pointing out that Bridgestone paid a premium on top of this. Investors who did not listen but bought Nokian shares anyway are now much better off. They made a fortune due to the fact that Nokian was able to more than double the share price to the current 71 Euro, giving Nokian a market capitalisation of about 780 Million Euros. Nokian made a turnover of 528.7 million Euro last year and managed an operating profit of 79.1 million Euro, which led ultimately to a net profit of 47.6 million Euro. Nokian Tyres is by far the best earning tyre company in the world.
Black Circles is using the Internet as a tool to market tyres in what is a unique route to market. Black Circles is a rapidly growing Internet and mail order tyre operation that carries very little stock and has no in-house retail outlets or warehouses to speak of. It takes on the cost to sell tyres and pays its fitter partners in advance. It offers everyone a better deal from the client buying the tyre, to the retailer getting paid in advance and taking a greater margin. Even the UK tyre wholesalers and manufacturers win for Black Circles has a policy of supporting local suppliers who can offer them repeated standards of high service.
Whilst most tyre purchases remain distress purchases, Black Circles recognise that there is a growing sector of the market where planned replacement of tyres is the norm. Where performance is the key requirement, and we all know that means sales of UHP and higher margin tyres.
Which is where we come to Michael Welch’s Black Circles – the Internet tyre supplier. In actual fact it isn’t quite correct to call Black Circles an Internet Tyre supplier, for the business is as likely to be carried out on the telephone as it is over the Internet. Perhaps a better description would be a remote tyre supply service. People call or use the Internet to request information, obtain a quote, and book a fitting for their tyres.
Now, this is where things start to get interesting. A number of players in the tyre market hold the traditional view that if you don’t buy your tyre from them, they either don’t fit it, or they charge you a premium for fitting the tyre. Which is in some respects short sighted.
Let’s look at this from a consumer’s point of view. He has decided to buy a pair of, or a set of tyres. He has chosen the brand, the size, the pattern and agreed a price. He knows that wherever he goes to collect his tyres they will be what he wants. He books a fitting time and in due course arrives at the appointed time, whereupon the dealer mounts and balances his tyres and sends him merrily on his way. Exeunt one very happy customer.
At this stage in the process the retailer is also a very happy customer because he has gained from the business without having to worry about ordering, about the customer not paying or not arriving, and what is more, he was paid for the job before the client brought his car in.
Let’s look at that from a traditional point of view. The customer wants a set of tyres for a BMW M5 – he has to call in, find out that the retailer doesn’t hold stock of the two sizes required, he has to have them ordered, perhaps pay a deposit, and then return when the tyres are in stock – perhaps the next day. Not an ideal scenario for the client.
Sir Tom Farmer has launched is Tyres and Wheels Autocare operation and it offers the trade a new opportunity.
“The plan is,” explained Sir Tom, “that we will help people realise their ambition to develop their own businesses. We understand that there are people out there in the automotive sector who want to go out on their own, but who don’t have access to the funding. They may be excellent salesmen, mechanics, tyre technicians, but be lacking in administration skills. We can help the people with the right attitude to achieve their ambition.
“We will put up, for the right people, 100,000 poundsw to finance the co-owned business. They will have to put in between 25,000 pounds to 45,000 pounds of their own money to become a Farmer Autocare co-owner. They will have to locate the premises and we will take care of fitting out the business, developing the branding and carrying out all the administration work for the business. That leaves the co-owner free to operate the business.
“If the project requires the purchase of premises, then we will buy the premises and lease them back to the co-owners.
“Many small businesses fall down because the owner is too involved in one area or another of the business. If they devote their time to the customers and the physical side of the business they end up working till all hours doing paperwork. That isn’t good business practice. On the other hand, if they do the paperwork well they often don’t have the time to devote to their customers. Few people have the ability to run every element of their business nowadays. We can take the administration load away from them and allow them to do what they are good at, dealing with the running of the business and the customers. That’s not to say that we expect our co-owners to be out there fitting tyres, but they will have the time to manage their business, to look after the suppliers and the staff. If they don’t get the people and the suppliers right then they won’t get the customers.
“This is an opportunity for the more mature person with the energy and the enthusiasm, who wants control and who wants to work to live rather than live to work.”
Winter tyres and the UK market are a standing joke. Nobody buys winter tyres in the UK. At least that is the perception. However, when we talk to people in the tyre trade, be they retailers, wholesalers or manufacturers they all understand that winter tyres are not just about driving on snow or ice for the three days a year when our roads are clogged with the white stuff. They are largely aware that winter tyres are about dealing with temperature conditions that adversely affect the performance of summer tyres. That below seven degrees Celcius the winter tyre starts to outperform the summer tyre in terms of safety. Yet, the general response on winter tyres is that nobody wants them in the UK.
Why might that be? Could it be that three days of snow on the roads each year doesn’t warrant the expenditure? Could it be that the tyres are being marketed in completely the wrong way? Could it simply be that people, in general, hate spending money on their car? Could it possibly be that the tyre retailers simply don’t like having to work to sell product? Think how difficult many find it to sell pairs of shock absorbers, or indeed anything but the basic tyres and exhausts.
So, why do we need winter tyres in the first place? In layman’s terms a summer tyre is manufactured with the function of keeping the tyre in contact with the road surface in both wet and dry conditions. It’s compound has a designed in level of adhesion. Its chemical make up creates an interaction between the tyre and the roadway. However, the compound utilises an oil in the mixing process that allows the various components in the compound to blend and mix and work together as one. This polymeric oil can, and does migrate in time leading to the deterioration of the tyre. In practice it migrates inwards in cold climates towards the lining of the tyre. Thus degrading the tyre tread, hardening it and making it less effective in its interaction with the road surface. The point at which it does this is around seven to eight degrees Celcius. So, the efficiency of summer tyres in the wet or dry in winter is diminished. Even without snow and ice, a winter tyre becomes a safer option in colder weather.
The Annual Autosport International show is without question one of the UK's most successful motor shows. What began as an off-season showcase for the motorsports industries has developed into a glittering exhibition that few involved in motorsport can afford to ignore; though both Michelin and Bridgestone did just that this year.
Here we found Dunlop, Goodyear, Pirelli, Yokohama, Avon, Hoosier, Kumho, and Silverstone represented by Sport and Service. Each taking a very focussed approach to motorsport tyres and the motorsport sector. There were some odd men out, Vredestein and Technic both had stands and from a promotional point of view one had to wonder what the relationship between their display and motorsport was. Having said that Vredestein went home happy, reporting that they had gone to the show to contact independent dealers and made plenty of contacts. The company also took home the award for Best Stand in The Aftermarket Show. The company was also first to confirm its intention to return next year for the 2005 event. “We hoped to meet independent dealers and they were there in large numbers. It’s been a great show,” said Bert Stellinga. A similar statement came from Ian Smith at Technic, "It's been a very successful return to exhibitions for Technic. We have seen independent tyre dealers, previous customers who have recognised the brand name and come on to the stand to re-establish contact, plus we are going away with some very promising leads."
Technic took the opportunity of the show to display some clever blue retread tyres on a Smart car. The 'blue tyre concept' featured tyre casings with a blue pigment silica rally-type compound, rather than the traditional carbon black. "It was a move that has raised a great deal of interest and we are now considering adding coloured tyres to our range" said operations director Ian Smith.
Pirelli is to be the new official tyre supplier to the Volkswagen Racing Cup in the UK. All competitors in the 2004 championship, which gets underway in April, will run on Pirelli P Zero tyres. The Volkswagen Racing Cup joins the UK’s Seat Cupra Championship and the Pirelli Maranello Ferrari Challenge in using Pirelli tyres. The company also supplies its product to the American Le Mans Series and to GT teams internationally. Since its inception in 2000, the Volkswagen Racing Cup has grown to become one of the best-supported and most successful club championships in Britain. Last season more than 30 drivers took part, handling cars ranging in size from a 1.8-litre turbocharged Lupo to a four-wheel-drive Golf R32.
The group recorded a 96 per cent increase in net income in 2003, to ¥88.7 billion (0.8 billion US dollars), on a 2 per cent increase in net sales, to 21.5 billion US dollars. Operating income was basically unchanged, at 1.7 billion US dollars, and ordinary income rose 13 per cent 1.6 billion US dollars. Net return on shareholders’ equity was 10.5 per cent, compared with 5.6 per cent in the previous year. Contrasting geographical trends characterized the operating environment. In Japan, economic recovery was weak. In the latter half of the year the weakening of the dollar affected Japanese exports adversely. Escalating costs for natural rubber and other raw materials undercut profitability in all principal markets throughout the year. Sales of tyres increased 2 per cent to 17.2 billion US dollars. However, operating income in the tyre segment declined 4 per cent to 1.4 billion US dollars. Sales in Europe rose 20 per cent to 2.7 billion US dollars, and operating income climbed 87 per cent to 0.14 billion US dollars, reflecting success in focusing sales on high-value products and the results of a financial restructuring in the previous year.
Toyo Tire & Rubber Co Ltd has announced its decision to build a new manufacturing plant in the United States for the production of passenger car and light truck tyres.
Rising real income in booming economies like China and Thailand are driving sales of automobiles there, Singapore companies YHI International and Stamford Tyres are poised to ride the strong tide of demand.
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