India
(Akron/Tire Review) Goodyear India Ltd. has nearly completed a major expansion at its passenger tyre plant in Aurangabad, India, boosting its annual capacity to 1.8 million tyres. Goodyear hopes the increase in radial production, due to start in June, will help it become one of India’s top selling tyre brands.
(India/Rubber Asia) At the end of what seems like an agonizingly endless wait, the gates of the Dunlop factory at Sahagunj, in the eastern State of Communist-ruled West Bengal, and the one at Ambattur near Chennai in the southern State of Tamil Nadu, are set to re-open in April, if nothing else intervenes in between, local media reports said.
“Maintenance work will start probably by early early-April at both the units,” an official spokesman for the Ruia group, which now controls Dunlop India Ltd. (DIL), has said.
CEAT Kelani Associated Holdings is to invest 300 million rupees (£1.67 million) into the radialisation of its Kelaniya, Sri Lanka plant Managing director Rohan Fernando explained that the new equipment would produce tyres for “light weight vehicles.” Local news sources have reported that the manufacturing upgrade will be funded by local banks.
January 2006 saw total tyre production in India rise 9 per cent to 5,623,048 tyres compared with January 2005. The figures calculated by the Indian Tyre Manufacturer’s association (ATMA) show that motorcycle tyre sales were up 15 per cent totalling 1,801,839 units. This particularly rapid growth is largely explained by the reclassification of moped tyres under the motorcycle heading, but also signifies production growth in the segment.
Passenger car tyre production increased to 1,230,869 units up 16 per cent from the same time last year. Truck and bus and light truck production increased to 946,730 (up 8 per cent) and 352,967 (up 14 per cent) respectively. Perhaps unsurprisingly in light of the current global shortage, OTR tyre production increased 37 per cent to 10,811 units in January.
Much has been written about the emerging Indian, Chinese and Russian markets, but what about South America? This continent is full of potential, something that is demonstrated by the fact that all the major players are there (Pirelli, Goodyear and Bridgestone/Firestone being particularly strong) and are already positioning themselves for the next market explosion. However for all its potential, the continent can also be described as tumultuous – at the end of November 2005, for example, Bridgestone/Firestone had to quell a violent dispute at a plant in Venezuela.
The International Rubber Study Group has announced that the Government of India will join the Group on 1 April 2006. India’s total rubber consumption has been increasing steadily since 1960 at a rate of 6.8 per cent/year to reach 968,000 tonnes in 2004. This makes India the fourth largest rubber consuming country, behind China, the USA and Japan.
Delphi Product & Service Solutions has established a joint venture with Roulunds Braking Systems SAS, a leading European supplier of OE and aftermarket automotive friction components. The new company, called Alliance Friction Technologies, has already developed a purpose-built manufacturing facility near New Delhi (India), dedicated to supplying Delphi with OE equivalent quality brake pads for sale throughout Europe and to other countries supplied by Delphi’s European operations.
Pirelli has come top in JD Power’s South African tyre satisfaction survey. But it wasn’t all good news for the tyre business. The research also found that many of the tyre brands fitted to new vehicles are below the industry average in terms of local customer satisfaction.
Pirelli retained the top spot for a second consecutive year with an overall CSI (Customer Satisfaction Index) score of 841 based on a 1000-point scale. Five index points separate Pirelli from second-place Michelin (836). Bridgestone (815) and Yokohama (798) also achieved above industry average scores. However, Firestone (769), Goodyear (780), Dunlop (781) and Continental (789) tyres were all ranked below the average of 790. The two lowest-ranked tyre brands were Korea’s Kumho (766) and Hankook (752). BFGoodrich, General, India, Kelly, Kleber, Toyo and Uniroyal were all included in the study, but not ranked due to insufficient sample size.
Not everything that’s bad for the OTR end consumer is automatically bad for the retreaders of these tyres, too. On the contrary, sometimes it could even help them increase their sales figures substantially. In earlier years tyres for earthmovers have literally been driven run-through. Today, consumers “somehow try to keep them rolling” for as long as possible admitting that they have paid good money for a good product. As a consequence, the Rösler group – market leader in Europe in this OTR niche – has been able to increase its annual number of retreads by about 30 per cent. On the one hand this growth has been induced by the general market expansion, on the other hand sales figures have been triggered by increasingly urgent demand on the part of the customers that were unable to get hold of any new OTR tyres whatsoever.
We hear so much about overcapacity in the tyre industry, with too many tyres chasing too few wheels, but this is not the case in all sectors and certainly not in the OTR/Earthmover tyre market, where words and phrases such as “crisis” and “global shortage” are freely bandied about.
Reports suggest that there is little prospect of improvement in the short to medium-term, with the entire global OTR tyre production for at least the next couple of years having already been sold. One prediction, from the UK’s OTR Tyres, forecasts that demand will exceed supply through to 2010.
The ContiTech Conveyor Belt Group, Northeim, is buying the conveyor belt operations of the Danish company Roulunds Tech A/S, Odense, subject to the approval of the antitrust authorities. In the special conveyor belt sector, Roulunds Tech A/S posted sales of approximately 10 million euros in 2005. The parties have agreed not to disclose the purchase price.
While India is home to one of the world’s fastest growing tyre markets, when it comes to exports the countries domestic manufacturers are wary of being caught out on quality control and having to face “extreme” insurance claims.
According to the Financial Express newspaper, India exports 20 per cent of its annual tyre production and some of the country’s largest producers are still struggling to ramp up exports for various reasons, including “liabilities arising of defective products” – Indian manufacturers simply cannot afford to be involved in a large scale product recall in either the European or US markets.
JK Industries is planning to de-merge its assets in order to better focus its tyre business. The company’s board has today approved the proposal of de-merger. According to the India’s Business Standard newspaper, the investments will be transferred to a new company at their respective book values. Ernst & Young and Amarchand Mangaldas and Suresh A Shroff & Co (AMSS) have been appointed as advisors and legal advisors, respectively, the company told the Bombay stock exchange. JK Tyres manufactures the JK and Vikran tyre and produces 7.2 million units each year.
Blackcircles.com has launched a new online fleet service. As manager of Black Circles Fleet, recent appointment, Paul Collins, will be responsible for ensuring “consistent delivery and on-going innovation.” At the same time the company launched an online auction site and continues with a long-term strategy aiming at European expansion. Managing director, Mike Welch, gave Tyres & Accessories details of this growing business’ ambitious but pragmatic plans.
According to the company, the new fleet service will be available to vehicle fleets of all sizes. Furthermore, blackcircles.com/fleet is said to significantly simplify the purchase process by providing access through a web-based system. Businesses will have their own private area containing all their vehicle details and will be able to make transactions using a unique PIN number.
Blackcircles expects its announcement to be warmly welcomed by fleet managers and boasts that it has “the largest network of fitting stations of any UK tyre retailer.” Mike Welch, managing director said: “We have taken all the knowledge gained from our retail business, including all the feedback we have received from customers, and invested this in our Fleet service.
“For too long managers have had to contend with complicated systems and a lack of control. We plan to change this with a system that is far easier to use but a lot more effective. Through our unique tyre procurement process and ground-breaking delivery mechanisms, Black Circles Fleet offers forward looking business flexibility, immediacy and savings to their fleet tyre needs.”
Mike added: “Whether it’s five or 5000 vehicles, one preferred supplier or a managed matrix of tyre outlets, Black Circles Fleet can be utilised as the primary resource for tyre supply or simply as a secure back up.”
One of the UK’s leading online tyre businesses, Blackcircles says managers and small business owners will now be able to have tyres sent anywhere in the UK in as little as two hours and will be able to access the lowest prices and over 30 tyre brands.
According to Mike Welch, Blackcircles already has 8000 fleet customers. That’s all very well, but some observers would argue that there is not much room for expansion in the fleet market. Welch’s response is that, in a similar way to how the company’s consumer business is run, Black Circles Fleet will focus on the needs of the niche it currently serves with a view to expanding from this point.
“We’re not eating anyone’s dinner and we are not looking to make no profit. The Kwik-Fits and the ATSs can keep their large fleets because they don’t make any money on them,” Welch explained.
‘We just want to sell more tyres’
In spite of his confident outlook, Mike Welch is pragmatic about Blackcircles’ progress so far and its plans for the future. In his words, the company got where it is today (a 5-year-old business that became profitable in 2005 and predicts sales of £15 million in 2006) by focusing on its core customers and not overestimating what can be done with the Internet.
“People always think I am trying to put them off when I say that, but I’m not,” said Welch, adding: “The Internet is another shop front for your retail business, not the answers to all you sales problems. Selling tyres is not a traditional online business and we are not a traditional dotcom company, we are more than that.”
“Trying to win and retain customers is our priority and price alone is simply not enough to do that. It’s about service, price and satisfaction. We all say that, but do we all deliver that ‘hand-on-heart?” he continued.
Instead Blackcircles aims to add value to “the whole Blackcircles.com experience” with the announcement that it has launched a number of additional services – the company’s online fleet service and auction site (see box) being examples.
Pricing is another critical part of the business. While the company’s structure and volume purchasing power help it to keep prices down, it is about more than the lowest possible price tag.
“Being able to get a handle on retail prices is a whole lot more important – the tyre industry is a funny industry, being one of the few that is happy to sell a product and not get anything for it. This confuses customers and trains them to expect the same or less next time,” Welch comments, suggesting that appreciating the importance of profitability is central.
But no matter how it is presented as a UK retail chain with international business, Blackcircles is growing from an online foundation and not the other way around. And in order to succeed in this respect there are a number of non-traditional advertising and marketing mediums that have to be mastered.
So how many visitors does the Blackcircles website attract? Welch didn’t want to see the figure published, but he did say that visitor numbers have grown exponentially – growing by 50 per cent per quarter since the beginning. Conversions, the rate at which visitors become customers is also on the up.
Online marketing is an area that Welch, by his own admission, really ought to know a bit about. “Its all about gaining the right balance between traditional and other mediums. PR is good but it doesn’t live forever.” Then there are the non standard mediums like search engine Google’s Adwords system. For Blackcircles.com “Adwords is just an expensive branding exercise.” Instead Welch says that it is all about understanding our current and future customers adding: “We are very good at that.”
The All Kerala Small Scale Tread Rubber Manufacturers Association has decided to increase the price of tread rubber by 8 rupees (10 pence) per kilogram, India’s Business Standard reported. The association general secretary, George Varghese, said the increases were necessary to counter high raw material costs and protect tread rubber producers’ livelihoods.
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