Fleet Business
Hull-based demolition/tipper hire fleet DJ Broady Ltd has switched to an ATS Euromaster/Michelin tyre policy across its mixed fleet of 11 tippers, following a six month Micheline trial. The new agreement will see ATS Euromaster work in partnership with DJ Broady’s in-house maintenance team fitting Michelin XDY3 tyres – replacing a previous policy which saw tyres fitted by a local independent tyre dealer.
As reported previously, the line dividing company fleet vehicles and ‘private’ company vehicles is becoming harder to define in regards to vehicle maintenance. With so much emphasis being placed on care of duty and the impact this has upon drivers who use their own cars for work, it is unsurprising that when looking at the fast fit retail sector in 2008, one cannot escape also thinking in terms of fleet business. Kwik-Fit Fleet chief Mike Wise reports that many motorists who previously would have come under the retail umbrella are now, for legal reasons, being afforded the same vehicle service arrangements as those driving company vehicles.
“A number of customers that already have tyre safety checks undertaken by Kwik-Fit Fleet on their company cars already extend the offering to cover so-called ‘grey’ fleet vehicles because they understand that existing corporate health and safety legislation extends to cover all vehicles driven on business, irrespective of ownership,” comments Mr. Wise. “As a result, I expect Kwik-Fit Fleet to undertake an increasing number of tyre safety checks on ‘grey fleet’ vehicles as well as company-provided cars and vans.”
In total, the company’s mobile servicing fleet expects to perform more than a quarter of a million tyre safety checks at the customer’s premises, a little over 13.5 per cent more than the number carried out in 2007. “We expect checks to increase by at least 30,000 this year,” Wise says. While Kwik-Fit Fleet does not release month by month figures, he notes that this increase should be fairly uniform, however he does add: “Although, as more companies wake up to the importance of the new legislation and its impact on fleet safety we would expect tyre safety check demand to rise significantly in the second half of 2008.”
“In addition, numerous industry surveys highlight the ‘grey fleet’ as being an area of occupational road risk management weakness in the vast majority of companies,” Wise further comments. “Therefore, as more businesses start to react to the legislation and best practice advice and monitor issues around ‘grey fleet’ vehicles such as service schedules and MoTs I expect more work to be directed towards Kwik-Fit centres due to their accessibility and seven-day-a-week opening – something that franchise dealers cannot compete with.”
The head of Kwik-Fit Fleet gives the case of Crewe based mobile phone company 20:20 Mobile as an example of how many drivers not previously covered by fleet service agreements are now benefiting. Not only does the company’s fleet of 147 vehicles receive monthly safety checks, 20:20 Mobile assistant manager Andrea Shipman reports that steps are taken to ensure the on-road safety of all employees. “Employees who are not au fait with how to check tyres for pressure and wear and tear have nothing to worry about; and we ensure that qualified and fully trained technicians carry out the checks and any repair and replacement work. The company employs more than 1,050 people and tyre safety checks are part of the benefits package that is available to all staff as part of 20:20 Mobile’s suite of affinity programmes.”
Ms Shipman adds: “Safety of our drivers is paramount. The forthcoming corporate Manslaughter and Corporate Homicide Act further underlines the importance of tyre safety checks.”
Kwik-Fit’s all makes fixed price menu has proven popular with retail customers since its introduction two years ago, however Mr. Wise reports that there has been concern from some quarters that undertaking servicing on the late model vehicles typically used for business purposes, including company fleet vehicles, could compromise manufacturer warranties. Kwik-Fit has acted to counter any such fears. “Our new manufacturers’ servicing initiative will enable technicians to download each vehicle manufacturer’s exact service schedule on a model-by-model basis. The cost of each service will be individually calculated by adding together ICME service time, hourly labour rates and spare part prices.
“Most retail customers drive cars that are more than three years old and therefore outside of the warranty cover offered by most carmakers,” Mr. Wise points out. “Vehicles are serviced using long-established service procedures and even if warranties are in place they are not impacted.”
Recently Kwik-Fit made a range of additional services available to both retail and fleet customers, services that – for the time being at least, round out the company’s fast-fit menu. “Last year Kwik-Fit Fleet completed its one-stop shop of motoring services with the roll-out of a new vehicle windscreen repair service,” says Wise. “The launch came on the back of adding air conditioning recharging, vehicle servicing and MoTs to our menu of services.”
With Kwik-Fit’s extended range of services now in place, the company intends to focus upon making itself more attractive to both retail and fleet customers. As Mike Wise says: “With regards to our 670-strong centre network and mobile fleet we will continue to roll-out our multi-million pound fast-fit centre modernisation and refurbishment programme and, earlier this year, we announced that we would add a further 30 units to our 200-strong mobile fleet in 2008 to cope with the boom in demand for tyre safety checks and mobile tyre repair and replacement.”
In closing, Mike Wise comments on what he believes sets Kwik-Fit apart from its customers. “Time is money,” he says. “Our seven-day-a-week opening and our ability to offer an MoT and service within typically 48 hours of booking rather than the 14 days of most franchised dealers makes our expansion into all SMR sectors very attractive…Additionally, it should be remembered that the whole ethos of fast-fit is a drive-in service, something which, in today’s 24/7 world, is significantly more customer-friendly than the rigid opening hours of franchised dealers.”
Bridgestone is to present its Total Fleet Tyre Management program at this year’s Commercial Vehicle Show, held at the NEC in April. And what’s more the company has built a brand “state-of-the-art stand” to highlight the fleet tyre management programme. Bridgestone will showcase its new generation truck tyre range, fleet services and focus on the support offered to fleets through their Total Fleet Tyre Management package. The stand will also exhibit a race winning F1 car and a MotoGP motorcycle.
Bolton-based haulage contractor Thomas Harwood & Son Ltd reports seeing an improvement in fuel economy after conducting its own in-house trial with Michelin’s low rolling resistance Energy tyres. The company claims that the savings they realised translate to cost savings of over £1,000 per vehicle per year.
The trial saw staff at Thomas Harwood carefully recording fuel data on a 44 tonne Volvo FH12 6×2 tractor unit over a period of more than two years – with the vehicle first fitted with Michelin ‘E’ segment regional tyres (XZE2+ / XDE2+), and then switched to operate on Michelin Energy tyres (XZA2 / XDA2+). The length of the trial ensured small inconsistencies were ironed out, with the non-Energy tyres returning an average of 8.68mpg, against 8.99mpg with the vehicle fitted with low rolling resistance tyres. This difference in fuel economy equates to a saving of 3.45 per cent – which in real terms is worth £1,025, based on an average annual fuel bill for a tractor unit of £30,000 a year.
Last July Tyres & Accessories attended the opening of the completely refurbished HiQ outlet in Nuthall road, Nottingham. The reason for our visit to the East Midlands, and what set this particular occasion apart from the numerous store openings that take place each year, is that the revamped Nottingham store was representative of things to come at HiQ. The Goodyear Dunlop group chain of retail fast fit outlets, as we reported in detail within our September 2007 article “What the HiQ “Revolution” Looks Like, was embarking of a programme of standardising its brand image and expanding its nationwide profile considerably. Six or seven months later, these plans are still in their early stages, but with some 30 outlets already refurbished, definite progress has taken place.
The number of HiQ outlets nationwide as of February 2008 stands at approximately 120. The three-year plan unveiled last year is to more than double this number by 2010. By the end of this year 30 more outlets are anticipated to join the HiQ family, seven in the first quarter; a positive start to the company’s growth plans – and the drive to attract new franchisees is really only beginning to get underway in earnest. As HiQ managing director Neil Burrows said at the time of the Nottingham outlet opening, more than 100 franchisees are anticipated to come on board over the course of three years. An initial geographical focus was the North West and the area ringed by the M25.
These new stores will follow the pattern set by the £600,000 Nottingham outlet refurbishment, says Neil Burrows. “The Nottingham centre is the first realisation of the new HiQ concept and it encapsulates everything we are aiming to do in the industry.” He adds that, while many outlets currently may not meet the high standards set by this particular premises, the company’s three-year plans will see all existing outlets redeveloped.
However for HiQ it is not simply a case of laying out the welcome mat then sitting back awaiting prospective franchisees to beat a path to its door. The company is proactively using a number of means to increase its profile – both with the motoring public but also, more specifically, with those within the industry that may not be aware of the franchising opportunities now becoming available. An important vehicle HiQ intends using to get its name out there in 2008 is the British Touring Car Championships. Goodyear Dunlop’s relationship with the series dates back a number of years and the Dunlop brand name held title sponsorship for the 2006 and 2007 seasons. During these years the benefits of the association with the BTCC were readily apparent, and the decision was taken to use the considerable exposure offered by the BTCC to Hi-Q’s advantage.
“We re-launched HiQ last summer with a rigorous plan through to 2010 to grow our network and to invest in brand awareness for HiQ,” comments Goodyear Dunlop corporate communications manager James Bailey. “We had already realised through our Dunlop sponsorship of the BTCC that this series provides fantastic exposure – it is the only championship outside of Formula One that is broadcast prime time on ITV.” Bailey adds that, as Dunlop retains its position as exclusive tyre supplier to the series, a switch to HiQ title sponsorship in actuality provides the best of both worlds – the simultaneous exposure of the company’s product and service brands. And as a means of getting the HiQ name out there, BTCC title sponsorship is hard to beat. The ITV coverage, says Bailey, attracts around two million viewers for each round – 20 million a season. Added to the 250,000 or so who attend the races, this is a sizable audience by any standard. The company’s brand exposure through the BTCC is, and will continue to be, supplemented by an increased level of advertising.
The main focus for HiQ in the next two to three years is, says Bailey, to continue the success achieved by the Nottingham store and the company’s first new look stores. “We have already noticed an increase in sales at outlets fitted out with the new HiQ brand identity,” he comments. And, as previously mentioned, plans are already firmly in place to ensure the number of stores conforming to the new HiQ look and feel continues to grow.
“Our second focus is to look at areas on the map where opportunities for franchising and extending our presence exist,” says the corporate communications manager, adding that the Norfolk region and the corridor between Manchester and Liverpool have been identified as key regions for growth. Hi-Q is actively seeking investment in these areas.
The company views Hi-Q’s fleet business as an existing area of strength, one that has greatly benefited from business brought in through the Goodyear Dunlop brand. During 2008 Hi-Q intends as a matter of priority to strengthen the retail side of operations and, through greater brand awareness, attract more retail customers. HiQ is aware that franchised dealers have raised their standards in recent times, and if they wish to remain a market leader HiQ needs to in turn raise its own standards even further. As James Bailey concludes: “Although market research shows a positive view of the Hi-Q brand, we believe that greater exposure through television advertising and motorsport, combined with an increasingly standardised brand image throughout the UK, will take public awareness of the Hi-Q brand to another level.”
Bridgestone first started working with Bulldog remoulds as its preferred retreading partner in the 1990’s Everything changed in April 2005 when Bridgestone bought the Bourne, Lincolnshire-based retreader, bringing with it plans to more than double the site’s previous annual output and radically overhaul the operation. Tyres & Accessories gained an exclusive insight into what has happened at Bulldog during a recent visit to Bridgestone UK’s newly updated retread production headquarters.
Last July Tyres & Accessories attended the opening of the completely refurbished HiQ outlet in Nuthall road, Nottingham. The reason for our visit to the East Midlands, and what set this particular occasion apart from the numerous store openings that take place each year, is that the revamped Nottingham store was representative of things to come at HiQ. The Goodyear Dunlop group chain of retail fast fit outlets, as we reported in detail within our September 2007 article “What the HiQ “Revolution” Looks Like, was embarking of a programme of standardising its brand image and expanding its nationwide profile considerably. Six or seven months later, these plans are still in their early stages, but with some 30 outlets already refurbished, definite progress has taken place.
Marangoni Tread North America (MTNA) reports that it experienced record sales in 2007 and anticipates continued incremental growth. The company adds that increasing its salesperson to dealer ratio is viewed as a priority, and thus MTNA has created an additional US sales region, to give the company a total of four; Northeast, Southeast, Central, West. A new region sales manager, Doug Edwardsen, will be responsible for the newly established Central region. Edwardsen, a former Bandag Executive, has worked within the tyre and retreading industry in the US and Canada for over 25 years and possesses, reports MTNA, extensive experience in the distribution and development of fleet and dealer sales.
When Tyres & Accessories recently attended Continental’s annual media briefing, we expected to hear details of the previous year’s market statistics and product trends. However T&A got more than we bargained for when Continental UK commercial tyre business director, Arthur Gregg, revealed that the company is relaunching its ContiNetwork commercial vehicle retail business in February and will spend the next few years completely refreshing its product line-up.
Full details will be published when the official relaunch takes place in February, but here is a rough outline: Continental are aiming to give their dealers a more equitable system, whereby each company will have increased freedom to choose how much fleet business they commit to. Executives recognise that large amounts of fleet business suits some dealers better than others. In addition, Continental will unveil a new “dealer charter” (not a contract), which aims to improve two-way communications. In a related move T&A learnt that a new fleet manager for the Northern region will join the company this month.
Kwik-Fit’s 2006 accounts show the company achieved turnover of £830.9 million (up 4.4 per cent) during its full year since being sold to PAI. EBITDA increased to £100 million in 2006, up 6.6 per cent year-on-year. In August 2005 CVC Capital Partners sold Kwik-Fit to PAI for around £800 million, despite reported bidding from a Bridgestone/Mitsubishi partnership.
According to reports, the group traded in line with expectations during the early part of 2007 with growth in sales boosted by new services like MOT testing in the UK and fleet business in continental Europe.
There are also said to be plans to open 50 new outlets across Europe. In addition, the company is expected to upgrade its estate in the UK, France and Holland with significant capital investment.
Vacu-Lug has appointed Dave Alsop as its new Fleet Sales Director. Alsop has spent the majority of his career in the truck industry including 10 years in the contracts division of Scania (GB) Ltd. He has also worked for the RAC and latterly at Euro Auctions UK Ltd where he was involved in the sales of truck, trailer and heavy earth moving equipment. “I am really looking forward to joining the team at Vacu-Lug and growing their extensive Fleet Business” he said “The wide range and type of fleets they manage gives us a great advantage in the market.”
For smaller companies involved in the tyre business it is sometimes equally important to stick to good old traditions as it is to find a way to develop the business creatively. A company that has obviously succeeded in both over the years is the retreader and tyre dealer “Reifen Wondraschek” from the Austrian city of Linz. While in the past the company was mainly known for its activities in the retreading business, today the company engages in an increasing range of new activities, such as exclusive distribution of the Cooper brand in Austria or – as of this year – the exclusive rights to market the Nexen brand in Austria. And just as Reifen Wondraschek is embarking on new businesses, old ones are being phased out. At the end of last year the company ceased producing retreaded tyres for passenger cars. This step was necessary, although painful at the same time as passenger car tyre retreading was once the core business of Reifen Wondraschek, which was founded in the 1930s as a vulcanising company.
For a company like Borrachas Vipal S/A the European market is becoming more and more interesting. On the domestic Brazilian market, a market with a size of about 8.5 million retreads per year (90 per cent pre-cured treads), Vipal is a clear market leader with a 45 per cent share, and the company is well established, with 25 successful years already under its belt. In Europe, on the other hand, Vipal started business with its newly found subsidiary only two years ago. However, according to international business director Maria Locatelli, this is one of Vipal’s major advantages, as the market thus offers the retreading and tyre repair material supplier an immense scope for developing its business. Based upon this conviction Vipal appears to be strongly self-confident. Nevertheless, there is no need to hurry, Mrs Locatelli asserts; it is better to approach the European market thoroughly rather than rapidly: “We must first understand the market,” says the director, summing up Vipal’s European strategy for the time being.
While news about the Bridgestone Bandag deal dominated the headlines in the closing months of 2006, these businesses were not the only new tyre manufacturers and retreaders to be engaged in business negotiations. In the UK, during the opening months of 2007, Pirelli and Britain’s largest retread manufacturers sealed a deal that will see the Italian company’s UK and Ireland Novateck retread production and distribution outsourced to Grantham-based Vacu-Lug. Novateck tyres had previously been produced at Pirelli’s retreading facility in Burton-on-Trent.
The deal came about following an internal strategy review at Pirelli. After analysing the effectiveness of its retread business, on 11 January, Pirelli Tyres Ltd announced that the company had come to the decision that Vacu-Lug would be the best retread production partner. However, the agreement is about much more than just retread production. According to managing director, Tim Hercock, Vacu-Lug will also take on distribution responsibilities. All the products will be made with Pirelli materials, processes and moulds to Pirelli standards, Hercock added.
The new tyre industry’s continued push into international and national fleet business and thus into the retreading business will very likely lead to an increased market polarisation between these companies and independent players participating in this market. The major material supplier, Gummiwerk Kraiburg Austria, has identified the prospects and risks attached to this development, according to Frank Gregory, new sales director within the company’s “Retreading materials” business unit. Talking to Tyres & Accessories, Mr Gregory announced an adjustment to Kraiburg Austria’s business model, but did not disclose specific details.
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