Michelin Is Leaving The Competition Behind
Related news: Michelin to Leave Formula One After 2006 Parker Hannifin Supplies Nitrogen to BMW Team Completely Different – Michelin MotoGP Tyre Michelin Enters FIM World Endurance Championship
Related news: Michelin to Leave Formula One After 2006 Parker Hannifin Supplies Nitrogen to BMW Team Completely Different – Michelin MotoGP Tyre Michelin Enters FIM World Endurance Championship
For their 2003 racing programme, Michelin will become Bentley’s exclusive supplier in competition. This partnership involves the development and supply of tyres for preliminary testing at Sebring and the Le Mans 24 hour race. On the production car side, Michelin will become the supply partner for the new Bentley Continental GT.
Consolidated results from 2001 for China Enterprises Ltd. show a varied year for the group with as many ups as downs. The company states that Chinese tyre prices fell by 3-5 per cent during the year due to 2001 high inventories and high levels of competition. Although raw material costs remained low, warranty claims were higher than expected – a result, according to the company of end-users overloading their vehicles.The Company’s gross margin fell from 9.90 per cent for 2000 to 8.87 per cent for 2001. The decline was substantially due to Yinchuan CSI, whose margin was adversely affected by weak selling prices and provisions for warranty claims. On the other hand, Hangzhou Zhongce increased its margin to 11.8 per cent in 2001 compared to 10.1 per cent for the previous year.Revenues for 2001 were up by 20 per cent on 2000, mainly due to increases in sales of radial car tyres in the domestic market. Export sales though dropped by 3.7 per cent in value.China Enterprises sold 6.2 million vehicle tires, 34 million bicycle tires and 2.5 million wheelbarrow tires in 2001.
Under the slogan “This is Your Road To Success”, tyre producer Fulda invited 150 of its retailing partners to Berlin for a dealers’ conference. The audience heard a clear confession towards the tyre-retailing companies and a towards a marketing strategy which will in the future be mainly oriented on qualitative items. Sales trainer Joachim Bullermann added some sarcastic pieces of advice concerning the right methods of managing your personal shop.In times during which market growth is slow and is reduced to just a few segments (UHP, Off-Road) according to Bernd Joachim Hoffmann, CEO of Fulda, the two aspects of “brand values” and “customer loyalty/trust” fulfil an important function of distinguishing the brand from the competition. Today brands symbolise more than ever “light house” qualities in an ocean of products that are perceived as becoming increasingly similar.The value of a brand is determined by different qualitative and quantitative factors: product quality, brand trust/sympathy, brand identities, brand awareness, market share, pricing behaviour of the brand distribution quality and sales presence, the advertising and marketing spending, earnings and EBIT of the company, sales efficiency, organisation of international distribution and the age of the brand. Concerning this aspect Hoffmann could point to a positive summary for the Fulda brand, saying: “We are already doing things today, while others are just starting to think of tomorrow.”
EU Competition Commissioner Mario Monti is to investigate Continental’s decision to switch production to Portugal while closing its Gislaved factory in Sweden. Some sections of the Swedish media have suggested that the move was prompted by EU grants and tax breaks. The Portuguese government said that an EU aid financial package worth 23 million Euro had been approved last summer for the expansion of a Conti factory in northern Portugal. Continental says that overcapacity is responsible for the Gislaved closure and the company says that no significant amount of tyre production has been moved to Portugal.
Sir Tom Farmer is making a bid, rumoured to be in the region of 650 million pounds, to buy back Kwik-Fit from Ford. The bid is supported by the Royal Bank of Scotland and the HSBC. However, there is serious competition from other interested parties and the result of the sale is not a foregone conclusion.
Michelin and Porsche have signed a partnership agreement with Porsche for the exclusive supply of racing tyres, effective from the first of January 2002. It concerns all Porsche’s competition activities, the national Porsche cups, plus the current and future official entries of Porsche Motorsport. The Porsche Super-Cup, which traditionally runs alongside several Formula 1 Grands-prix, including the Indianapolis GP, will henceforth be known as the Porsche Michelin Super-Cup. The German Porsche Carrera Cup will also be run under Michelin colours. Michelin, as the official partner, will be involved in all future motorsport development for Porsche.
DaimlerChrysler has announced that it is to cut 26,000 jobs globally over the next three years, which equates to 20 per cent of the group’s workforce. Production will be stopped or curtailed at 13 factories, cutting capacity by 15 per cent. DaimlerChrysler has also told suppliers to reduce prices by 5 per cent.
Following an old tradition, we take a close look at the alloy wheel business in the March and April issues of NEUE REIFENZEITUNG. The only thing that has changed is the order in which we intend to do this. Usually the first part of the analysis is concerned with the original equipment sector, which is followed by the replacement sector. This year we will look at it the other way round and begin with the aftermarket business in Germany. While the German aftermarket for alloy wheels has been flat for some years – although at a high level – the OE-suppliers have registered a significant growth in their figures. Competitors of the aftermarket sector observe negative trends, pessimistic voices are dominating the discussion. The growth of some happens at the expense of other companies who are not able to face the intensified competition. In the end there will be tremendous competition, fought with price as the weapon; a process which already started some time ago. In the first part of the alloy wheel report, these topics will be discussed, as will be the chances that still exist in this market. In addition, actual trends and developments of the sector will be described.
On 5th April the consultant company had invited more than 150 experts from the car parts and accessories sectors for its third conference concerning the car component aftermarket. As tyres are counted as part this segment as well, trends from this part of the business were presented and discussed as well. In times where sales of new cars begin to drop, the importance of the aftermarket business begins to grow again. But on the other hand the competition in this field is fiercer than ever -due also to the internet and e-commerce. This was the reason why the event was subtitled “The good times are over – means for success in hard times”. And the topics of the internet and e-commerce were at least mentioned by almost every speaker, sometimes being even the main topic. These new media enable the industry to provide products directly to the end consumer, leaving behind the old traditions of trade via wholesaler and retailers.
Sixteen, mostly young, people were participants in the first “Fulda Challenge”; a sporting competition held at the end of February in the North-west of Canada. Dog sled racing was only one discipline of the Challenge. Each member of the winning team receives a gold nugget worth 5,000 Canadian dollars. Driving is the most important discipline in the competition. Over 1,500 miles by car were covered by the participants in the ten days. The tour led straight across the North-west of Canada. With their jeeps, the competitors started in Whitehorse on the Yukon River, travelled to the old gold-prospecting town of Dawson City, up the Dempster Highway, and into the Arctic Circle. Along the way, various tasks awaited the participants. For example, the participants had to climb up a 20-m high ice wall in the dark, then master a ski slalom, or race through snow-covered forests and over frozen rivers on skidoos. The tour was jointly worked out and planned by Fulda, the rally driver, Jutta Kleinschmidt, the racing driver, Hans-Joachim Stuck, the Olympic skiing gold medallist, Markus Wasmeier, and the mountaineer, Olaf Reinstadler. The four celebrities accompanied the tour as well. And then in Tuktoyaktuk, everything came to an end – the American continent included. Only those who drive over the frozen Mackenzie River got to Tuk on the Arctic Ocean. Almost only Eskimos live in the town, which has 1,000 inhabitants and colourful wooden houses – a suitable backdrop for the igloo building competition. The inhabitants of Tuk were amused by the diligent Europeans who had taken over their village for several hours, and who, at minus 40 degrees Celsius, and dazzling sunshine, were stacking up lumps of snow to make wonky igloos.
Bridgestone/Firestone UK has won the contract for the sole supply of tyres to the BRS commercial vehicle rental fleet. The fleet consists of around 3,000 vehicles, ranging from 3.5 tonnes to 44-tonne tractor units and will now follow a policy of using Bridgestone new and retread tyres. The three-year contract was won against fierce competition and it is the first time that BRS has used a single tyre supplier. The contract will be serviced through Truck Point, the 220-depot organisation of independent tyre dealers established by Bridgestone/Firestone UK.
The Indian tyre manufacturing industry may be under threat from cheap imports from China. The lifting of trade restrictions with China has already created trading problems for many of India’s smaller industries. Presently imports from China form only 2.87% of India’s imports, but the arrival of cheap, mass produced products from China has indicated the lack of preparedness of Indian industry to meet the new competition. Tyre manufacturing has been highlighted as a potential victim as businesses move from manufacturing to importing.
Continental AG is going to increase its involvement in motorbike tyres and the OE-market. So far, the Hanover group has concentrated mainly on passenger car, truck and industrial tyres. All this is now subject to change. The fact that, after belonging to the commercial tyre business unit, two-wheeler tyres were merged with the group’s passenger vehicle tyre unit from January, 1st this year, could be an indication for the company’s reborn interest in the motorbike tyre market. As stated by Continental, the group achieved a 50 percent increase in turnover of motorbike tyres last season, and according to their motorbike tyre marketing leader Jörg Essiger, entering the radial ply tyre segment with the “ContiForce” would be another step in the right direction. The new two-wheeler tyre had already been presented to public at the Intermot fair in Munich last autumn, and was officially presented to the press at the Contidrom fair in May. Essiger explains, “the ContiForce offers both excellent handling and a very reasonable price, which is 10-15 percent lower than the competition.” He says, that ContiForce would be the appropriate tyre for sports-bike riders, and real sportsmen can also demonstrate their efficiency on it. Who knows, whether with their next new motorbike tyre the Hanover group might enter into the pure sport machine segment. Already next year, the tyre manufacturer will probably put another newly-developed motorbike tyre on the market; so said Jörg Essiger at the Contidrom presentation – however no further details were forthcoming.
Despite the difficult environment which is not likely to lead to improvements in the coming half year Deutsche Bank is recommending Michelin shares as a “Buy”. The analysts believe that the focus on high performance tyres will pay off and they believe also that, due to the anticipated sale of the Pirelli truck division, competition will be lower in the future for Michelin, which is very strong in that market.
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