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Tyre Shortage Set to Continue

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.

17th February 2006/by Tyrepress Editors

ContiTech Buys Conveyor Belt Operation

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.

17th February 2006/by Tyrepress Editors

Indian Manufacturers Face Export Difficulties

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.

13th February 2006/by Tyrepress Editors

JK Industries to Separate Tyre Business

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.

9th February 2006/by Tyrepress Editors

Blackcircles.com Launches Online Fleet Service

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.”

9th February 2006/by Tyrepress Editors

Indian Tread Rubber Producers Raise Prices

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.

7th February 2006/by Tyrepress Editors

YHI Looks to Eastern Bloc and South Africa for Expansion

Automobile tyre-maker YHI International started its aggressive overseas expansion only in the 1990s and yet it already has presence in nearly every continent. Not content with its achievements, it is now focusing on faraway reaches like South Africa.

Up until the 80s, YHI could claim only Singapore and Malaysia as the markets for its tyre distribution business. But the company realised that it had to expand beyond these two markets for further growth. That’s why, in the early 1990s, YHI started to make inroads into China, Taiwan, Hong Kong and Australasia.

7th February 2006/by Tyrepress Editors

Apollo Acquires Dunlop International – Update

International News

Further details of Apollo Tyres’ acquisition of Dunlop International (also known as Dunlop South Africa) have emerged. Firstly Dunlop Nigeria (estimated turnover of $65 million, £40 million) is not included in the sale. Apollo representatives gave no reason for this. Furthermore, the Indian company confirmed it would keep the troubled Dunlop Zimbabwe business.

“Dunlop is the only tyre manufacturer in Zimbabwe and it is a profitable operation,” Apollo spokesperson Kankana Das told Tyres & Accessories. However in light of inflation rates as high as 800 per cent any profitability must be difficult to maintain. “Any operation can be profitable as long it is able to pass on price increases to cover the cost push. The Zimbabwe operations have been able to do this,” Das added.

7th February 2006/by Tyrepress Editors

Tyre Firms to Hike Prices Afresh

Indian tyre manufacturers are set to increase prices following further increase in rubber prices. The recent most recent hike is said to be 1.5-2 per cent, according to India’s Business Line newspaper.

Over the last 13 months, tyre prices have gone up by 15 per cent for the OE segment, and 7 to 8 per cent for the replacement market, which mostly comprises truck tyres.

6th February 2006/by Tyrepress Editors

TVS Tyres’ £7.7 million Expansion Plans

TVS Tyres is to invest 600 million rupees (£7.7 million) in expanding its domestic and export capacity. “Our new capacities will be ready by 31 March. We currently manufacture 7 lakh tyres a month; after the expansion, we will have capacities to manufacture 900,000 tyres per month,” S Balasubramanian, vice president, marketing, TVS Srichakra Ltd told India’s Economic Times.

6th February 2006/by Tyrepress Editors

Going, going, gone – Blackcircles launches Online Auction Site

Online tyre business, blackcircles.com, has launched a ‘virtual auction’ website. Designed as a way of bringing cut-price quality products to the masses, the company is aiming to use its reputable image to shine a light on the sometimes questionable world of Internet tyre auctioning. Whether or not the site is aiming to or, can realistically compete with, global giants like eBay is another question.

3rd February 2006/by Tyrepress Editors

Ruia Group Acquires Dunlop India and Falcon Tyres

The privately owned Ruia Group has bought Dunlop India Ltd, Falcon Tyres Ltd and India Tyres from the Dubai-based Jumbo Group for a reported 2 billion rupees (£25 million).

“An agreement has been reached between Pawan Kumar Ruia and the (Chhabria) Jumbo Group to hand over both Dunlop India and Falcon Tyres,” said H Sandu, a group spokesman, confirming the development took place at a meeting in Mumbai.

According to India’s United News Agency, Ruia said the figure required for revival of the company was around 1.5 billion rupees, although the National Productivity Council projected the package would be around 2.1 billion rupees. He said the liability of Dunlop stood at around 6 billion rupees and negotiations with the staff and the bank will begin shortly. The Sahagunj and Ambattur factories will be opened shortly and the redevelopment will reportedly take around two years.
After visiting the factory with his family members and a group of executives, Ruia told the Business Standard that the condition of the Sahagunj plant was much better than expected. “I think, we could start production soon at the plant,” he said. However, Ruia qualified his optimism by saying he wanted to restart production in phases.

Most of the production lines, which include rubber pipe and hose production equipment, are reportedly “old”, but the factory also “has a modern conveyor belt line,” the Business Standard reported. At the last count, the Sahagunj unit had 2,700 employees. Production at the Ambattur factory is expected to restart in six months time.
Apart from the Ruias, Metro Tyres, MRF, Hero Honda, the Caparo Group of Lord Swraj Paul and the Sarda Group were all also in the in the running to purchase the assets.

Dunlop says it aims to become a leader in the tyre industry, even if it means getting into alliances with global tyre giants keen on India, said Pawan Ruia at the first media meeting after taking over Dunlop. According to the Business Standard, the Sumitomo name was mentioned as one such company.

3rd February 2006/by Tyrepress Editors

CITExpo Can Celebrate Successful Breakthrough

When the China International Tire Expo (CITExpo) opened its gates for the second time in 2004, it was already considered to be the potential Chinese tyre show of the future. It appears these estimations were well founded now that the third show in December has reached a size, which makes it the biggest show of its kind in East and South-East Asia. CITExpo even had to move into a different venue in order to accommodate its 150 exhibitors. Overall more than 5,800 visitors have registered with the organisers; two thirds came from abroad and the growing number of foreign exhibitors emphasises the increasingly open Chinese tyre market.

To the organisers of the China International Tire Expo the positive developments of the show have been much more than just good luck. “Most industry experts know our exhibition by now,” says Wilko Fong. The managing director of Reliable International Exhibition Services Co., Ltd., the organising company from Beijing, firmly believes that many of the current exhibitors have already taken part in earlier shows as visitors in order to find out how the land lies. Only now this wait-and-see-approach has actually paid off for the Shanghai CITExpo, with the latest event taking place in the Everbright Convention & Exhibition Center in downtown Shanghai.

31st January 2006/by Tyrepress Editors

Apollo Tyres Buys Dunlop International

Apollo Tyres Ltd is to buy Dunlop Tyres International (Pty) Ltd (Dunlop South Africa) for US$62 million. The all-cash deal will see Apollo take on 100 per cent equity for 2.9 billion rupees (£37.3 million). The transaction is subject to regulatory approvals in both countries, including that of the South African Competition Commission, and a number of conditions. The Durban, South Africa-headquartered company also owns subsidiaries in Zimbabwe and the United Kingdom. The news follows speculation that Apollo Tyres was interested in purchasing Dunlop Zimbabwe.

30th January 2006/by Tyrepress Editors

The Widest Possible Niche

The history of Balkrishna Tyres, a company that is probably better known by its initials – BKT, began with its incorporation in 1988. The production of off-highway tyres followed in 1995. Since its foundation BKT has made its mark in the niche segments and offers tyres for agricultural, construction, industrial and earthmover applications. Now, with £39 million (Euro 56 million) being invested, the cumulative production capacity at all three of BKT’s plants is set to almost double, from 60,000 to 100,000 tons per annum. Part of this investment will go towards the introduction of a radial earthmover tyre range later this year.

30th January 2006/by Tyrepress Editors