Hwa Fong plans listing on Thai Stock Exchange
Hwa Fong Rubber manufacturer and distributor of Duro and Dunlop tyres, will list on the Stock Exchange of Thailand on Dec 15.
Hwa Fong Rubber manufacturer and distributor of Duro and Dunlop tyres, will list on the Stock Exchange of Thailand on Dec 15.
September new car registrations for Western Europe rose by 4.4 per cent over last year across the main five markets (France, Germany, Italy, Spain and the UK), which was better than many industry analysts had forecast. Over the 15 EU members, figures were broadly similar (+4.5 per cent). In unit terms, registrations totalled 1,363,206 units.
STS Stapletons Tyres and Exhausts has joined Fit4Fleet, giving the company access to a national account facility. This is a boost to Fit4Fleet and perhaps gives an insight into the relationship between AA Tyrefit and Stapletons, founders of Tyreserve, which later became AA Tyrefit.The move puts Stapletons back in the running in terms of serving the fleet customers and also serves to boost Fit4Fleet, bringing their membership to 850 operational centres and some 350 mobiles.Fit4Fleet’s Dominic Bateson told T&A, “We are delighted to have Stapletons on board. The company has excellent coverage backed by excellent brand availability through its wholesale operation. Stapleton’s is also very experienced in fleet work and understands the demanding nature of the clients and has suitably strong operational controls. These are characteristics that are very important when dealing with the fleet customers.”This move is explained by strategic developments at AA Tyrefit, formerly the Stapletons’ originated Tyreserve.Says David Goodyear of AA Tyrefit, “The traditional fast-fit centre is a thing of the past and tyre networks that maintain them simply do not have the right structure to survive in the future. We aim to offer the flexibility, pricing and service that the tyre customer rightly expects.”Goodyear cites research by AA Tyrefit that suggests just four per cent of customers using a mobile service would return to a fast fit outlet.”The service advantage is so strong,” argues Goodyear, “that the biggest hurdle we face is the fact that people expect there to be a premium for mobile fitting. There isn’t. Our mobile fitting is free.”Such is the confidence in building the mobile service that AA Tyrefit has eschewed the independent networks completely. David Goodyear explains, “We can provide the entire service capacity we need from within our mobile resources. The need for the independent network has passed, although we are still maintaining relationships with those outlets that offer mobile tyre fitting to provide back-up to our own units.”In further moves to hit its target of becoming the largest tyre distributor in the UK by 2007 (David Goodyear, T&A April 2003 p 37) the company has further developed its mobile fleet, which has now reached a total of 70 mobiles with a further 200 to be commissioned by the year-end, rising to 500 units by 2005.
Analysing some of the marketing opportunities open to the retreading industry and how it might approach a common strategy. In doing so, the retreading sector, will initially have to face the fact that as an industry it has never been in a position where it has had to design a classical marketing plan before.Retreads traditionally were taken for granted as the budget option for the tyre industry. All tyre shops stocked passenger retreads and these were automatically sold to budget oriented customers. Budget new tyres did not form a viable competition to retreads at the bottom end of the market because retreads still enjoyed a significant price advantage and many budget tyres were of poor quality. To secure a sale all retreaders needed to do was to assure good prices, good product quality and good service to the retailer. Nowadays, it is clear that these attributes alone are no longer adequate.In the truck tyre market the situation is somewhat different. Retreads have long been part of the life cycle of the tyre. The market has always been considered healthy and so the question as to whether the industry’s marketing strategy was being efficient in reaching its message to as much of the potential market as it should was seldom raised. However, with pricing issues now becoming more relevant, the issue of the optimisation of the market is becoming more critical.The impact of the downturn in car tyre retreading has been particularly severe in the UK where sales by UK retreaders fell from 4.4 million units in 1995 to around a million today, with a number of high profile retreaders being forced into receivership. This situation was exacerbated by the strength of Sterling resulting in the almost overnight disappearance of vital export markets.It has to be recognised that passenger retreads are now niche products. There is still a place for passenger retreads in Europe but, unless the generic marketing of passenger retreads is improved, the fear must be that the market will follow a similar path to the United States, where it has now almost completely disappeared.To counter this, a sample marketing plan has been drawn up, the key elements of which are as follows:A scientific research programme to ascertain the performance qualities of retreads, using the results as part of a PR campaign.Direct lobbying of government departments and public bodies with a view to highlighting the environmental message that the retreading industry wishes to portray. At government level, the aim would be to persuade individual departments to accept retreading as the best practical environmental option and to include retreads in their purchasing policy.The incorporation of tyre dealer seminars and training days. This proposal generated some considerable thought as it was felt that there was not much point wasting money trying to change the views of tyre dealers and fitters whose minds were already set on opposing the sale of retreads. Instead, the idea would be to use funds to help in the training and support of dealers who had proved themselves to be positive towards retreads.Allied to this is the decision to create a “Green Tyre Dealer Scheme” backed up with the production of a retread buyers guide. This would allow the retreading business to channel sales through dealers who support the retreading industry, thereby reducing switch selling. A promotionally effective presence at exhibitions. This would include car and truck shows as well as events frequented by the environmental lobby.A comprehensive PR campaign is proposed, aimed at the tyre trade press, environmental magazines, motoring magazines, the national and regional press and other consumer interest groups such as women’s magazines. In addition, the incorporation of a press monitoring service to measure the success of the campaign. It has also been planned to introduce a response service to react to bad press in the same way as TRIB does.For the truck and bus market an informative newsletter is suggested dealing with tyre related issues in general but, allowing plenty of scope for promoting the argument in favour of retreads. This activity is based upon the knowledge that the regular truck press is editorially light on tyre related issues and indeed rarely covers anything concerning retreads.Other activities include the design of a campaign website, the increased use of environmental newsgroups on the internet to promote retreads, the production of brochures and presentation materials for use by fleet engineers, the police, schools and tyre dealers and the production of promotional merchandising items such as cab stickers, tacho holders, mugs etc.Finally, a comprehensive but highly targeted advertising campaign focused on environmentally friendly consumers. Part of this strategy would be the promotion of the “Green Tyre Dealer Scheme” mentioned earlier.These are the main elements of a package which could make a considerable contribution towards improving sales of retreaded tyres.
Michelin’s first quarter sales fell 4.9 per cent year on year to 3.655 billion Euros. This was due to a strong negative effect (-10 per cent) due to the weakness of currencies in North and South America versus the Euro. Sales volumes rose, but income fell in passenger car/light truck (-4.9 per cent), heavy truck (-0.9 per cent) and other segments (-5.4 per cent). Despite these figures and a predicted decline in markets, financial analysts regard Michelin as well positioned to make progress, although lower profits for 2003 are forecast.
Michelin recently held an analyst conference to discuss its commercial vehicle tyre performance and strategy. This sector is worth 3.9 billion Euro a year in sales to Michelin, with an operating margin of almost 9 per cent, despite the dramatic downturn in the US and European markets. Looking ahead, the company’s strategy lies in the provision of total tyre management and problem solutions for fleets, with Michelin often taking over a customer’s total tyre requirements, from new tyres to scrap disposal. Typically, Michelin tyres command a price premium (of up to 20 per cent in Europe) over competitors’ tyres and the company intends to maintain this pricing level. Despite the higher prices, Michelin has an estimated OE market share of 70 per cent, and a replacement market share of over 30 per cent, and the company is aiming to improve on these figures. There has been a boost in the first four months of this year, with raw material prices lower than expected and sales volumes of tyres greater than anticipated.
Michelin Group income increased by 4.1 per cent to 3.8 billion Euro, ahead of analysts’ estimates. This was assisted by volume, pricing and currency in Michelin’s favour. Sales for 2002 have started on a positive note with volumes up on the same quarter in 2001. However, the key brands have fallen and the truck tyre market is dropping faster than expected. Price increases have so far held and Michelin believe they are on target for a 6.7-7.4 per cent margin in 2002, but this is dependent upon the price increases holding. The sales mix in the North American market is said to be precarious and under attack from the growth of private brands in the USA, and flag brands are still suffering as a result of the Firestone recall.
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.”
Eight Goodyear factories have earned the DaimlerChrysler Gold Award, given in recognition of outstanding service. Seven of the plants are in North America and one is in Europe, at Philippsburg, in Germany. Goodyear was rated as “excellent” in the areas of quality, delivery, competitive pricing and technology and “acceptable” in customer support.
Press reports say that financial investors in Stomil Olsztyn, the Polish tyre maker, are threatening to take Michelin to court over alleged abuse of the rights of minority shareholders. There is a shareholders meeting, at which the disaffected investors are set to demand the appointment of an independent auditor to look into the financial links between Stomil and Michelin. Failing this, legal action will be taken, says the investors group.
Avon Rubber, British supplier of components for the automotive industry and not to be mixed up with the tyre manufacturer Avon, has released a profit warning. Due to pricing pressure and the strong British Pound the company will probably not achieve the profits expected. Experts think that Avon Rubber is too small for a global market, while the company itself recently blamed falling car production in the UK for the drop in annual profits.
The large manufacturers of car wheels, especially those cast of aluminium, are growing ever larger. Business is booming worldwide, but the financial results of most manufacturers in this field of activity are well below those achieved in other industries. Wheel manufacturers, on the one hand, suffer from the low ratings stock exchanges accord to car manufacturers and their suppliers, and on the other, because their products are regarded as “low tech”. But all the time big changes are taking place in the world of wheels – in the form of new technologies and an optimisation of existing products. New wheel technologies, however, are not the only decisive factor, another considerable influence is the car manufacturers’ aggressive pricing, well beyond what many a supplier can bear. Some wheel manufacturers focus their activities on the original equipment market in the belief that it will allow them to operate more cost-effectively. Others like to commit themselves to the refit markets because they think they can thus keep their ears closer to the market and be well-placed to offer car manufacturers superior development capability. Which way is the right one, or whether both can succeed – that is something we shall only know in a few years’ time. Of course the starting position is different from wheel manufacturer to wheel manufacturer and from car producer to car producer. In the comprehensive report in this and the following (April) issues we shall outline the trends in detail.
NEUE REIFENZEITUNG, having focused in its wheel industry report on original equipment and vehicle manufacturers in its March issue, will in April concentrate on the pricing of wheels (manufacturer to customer), on technical features, the takeover merry-go-round and on the replacement market. It came as no surprise that motor manufacturers were not too keen on our trade magazine investigating the pricing procedure – which only serves to make this exercise that much more interesting. We are still a very long way away from completing the consolidation of the industry, as can be gathered from the takeover rumours that spring up afresh every week and from the commitment of large market players to use their strong growth potential. As our last issue went to press, we reported the sale of the Norwegian manufacturer Fundo, for instance. Who will be next? In the April issue we also take a closer look at some companies operating in the replacement market, which have influenced the most important European market, i.e. Germany, in 1999, e.g. Alcar, Artec/RH Alurad, Brock/Rad Center Derkum and many others.
A Deutsche Bank analyst raised the Goodyear rating to “buy” because he believed in a turnaround story. Some analysts agreed, others saw Goodyear shares still only as “neutral”. But now it is different. Based on the latest statements from Goodyear, there are massive doubts regarding volumes and whether the pricing trend will be favourable. Analysts now believe that the situation will not improve before next year and that Goodyear shares will remain low.
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