News articles on the tyre retail business
Nokian Tyres has released its 1Q figures, which show a 17.8 per cent increase in sales over 1Q 03, from 95.7 million Euros to 112.7 million Euros. Group operating profit was up to 10.7 million Euros (3.2 million). Profit before taxes was 9.6 million Euros (1.6 million) and net profit totalled 6.5 million Euros (0.7 million). Sales of passenger car, heavy tyres and retreading materials rose, but bicycle tyre sales fell.
Cooper Tire & Rubber’s strategic realignment has resulted in two Vice Presidential sales and marketing appointments. Carl A. Casalbore has been made Vice President, Marketing and Retail Sales for the North American Tire Division. He joined Cooper in 1999 as a director of sales, after 20 years’ service with a competitor and his most recent post was that of VP, retail sales and high performance tyre development. The second appointment is that of Phillip D. Caris, as Vice President Sales & Marketing for the North American Tire Division. His 21-year Cooper career includes several sales and marketing roles, latterly as VP, marketing. Both appointments are effective from 1st May.
Danish wholesaler, NDI is proving popular in Germany having opened its second retail outlet in five months. Founded by Benny Kristensen, the company now has stores in Dortmund and on the outskirts of Hamburg. Managing Director, Michael Andre claims the company´s success will be based on meeting NDI´s next day delivery service. The Danish firm has also enlisted the services of Hamburg-based off-road expert, Viggo Meyer-Bernitt, as the firm continues to develop its share of the off-road tyre market.
Goodyear Dunlop Tires Europe has strengthened its position in Scandinavia with an agreement to buy the outstanding shares of one of Sweden’s major retail tyre groups, Däckia. The company expects to complete the purchase of the chain by the end of June. Goodyear Dunlop currently owns 50 per cent of the shares with the remaining being primarily owned by Procuritas (26%) and Däckia management (24%). Financial terms of the deal were not disclosed. Däckia has more than 60 company owned stores, as well as 31 contract partners in cities throughout Sweden, with annual sales revenue of approximately $65 million. Däckia is widely regarded as one of the most successful tyre retailers in the Nordic Region.
The development of a free trade area by the EAC and the introduction of zero-rate tax on tractor tyres could eat into Firestone East Africa’s local market share according to local commentators. Further, a decision by the company to develop an equity retail chain is being met with resistance by the tyre trade. It is claimed that outgoing managing director Hiroshi Yamazaki had already expressed concerns that the new tariff decision by the government would severely affect the firm’s tractor tyre product line, which employs about 150 people. Sources said unless the firm improves its level of efficiency, monthly production capacities of 900 for tractor tyres and 2,500 for truck and bus tyres would fall. Even in Africa the market for light trucks and passenger vehicles has been facing heavy pricing pressures as a result of both the flooding of the local market by cheap imports and counterfeits.
Cooper Tire & Rubber Company plans to launch AVON Tyres USA, a new collection of performance passenger, light truck, sport truck and motorsport tyres. Completely new to the U.S. and Canadian markets, the AVON Tyres USA line is the first ever to have been designed and engineered from consumer feedback data. All data was collected and analyzed by The Tire Rack, the country’s largest independent tyre tester, through its web site, www.tirerack.com.
According to the Shanghai Daily, Michelin will continue to expand its Chinese venture by investing several hundred millions of US dollars in automobile tyre production plants. Expansion efforts are expected to continue for five years, at which annual production capacity will top several million units of tires, said Eric Jugier, chairman of Michelin (China) Investment Co Ltd. In 2001, Michelin established a joint venture with Shanghai Tire & Rubber with an investment of 200 million US dollars in exchange for a 70 per cent stake. Michelin also plans to add up to 200 retail shops in China this year. Jugier said he expected Michelin’s business to grow much faster than that of the industry as a whole. The Chinese tyre sector is expected to grow by about 30 per cent annually for the next five years. In 2003 there was a 36.7 per cent increase in vehicle manufacture and China is expected to produce 125 million tyres in 2004, one-third of which will be exported.
Wal-Mart has announced that its top 100 suppliers must comply with a requirement to Radio Frequency Identification each case and pallet delivered to its stores by 2005. 25 other suppliers including Goodyear have volunteered to join the project. RFID chips give each tagged item a computer readable signal that identifies it precisely. It is a process that has been in use in the defence sector to identify friendly aircraft since the 1940’s. As the only tyre company actively participating in a large retail- customer-driven RFID program, Goodyear is leading the way to overcome the challenges involved in using this technology with consumer tires. Attaching the tag to the tyre is a complex task and their method of transportation and storage raise other problems which Goodyear will need to address. In the interest of consumer privacy, all radio frequency tags applied to tyres by Goodyear will be designed to be disabled at the point of sale.
Black Circles is using the Internet as a tool to market tyres in what is a unique route to market. Black Circles is a rapidly growing Internet and mail order tyre operation that carries very little stock and has no in-house retail outlets or warehouses to speak of. It takes on the cost to sell tyres and pays its fitter partners in advance. It offers everyone a better deal from the client buying the tyre, to the retailer getting paid in advance and taking a greater margin. Even the UK tyre wholesalers and manufacturers win for Black Circles has a policy of supporting local suppliers who can offer them repeated standards of high service.
Whilst most tyre purchases remain distress purchases, Black Circles recognise that there is a growing sector of the market where planned replacement of tyres is the norm. Where performance is the key requirement, and we all know that means sales of UHP and higher margin tyres.
Which is where we come to Michael Welch’s Black Circles – the Internet tyre supplier. In actual fact it isn’t quite correct to call Black Circles an Internet Tyre supplier, for the business is as likely to be carried out on the telephone as it is over the Internet. Perhaps a better description would be a remote tyre supply service. People call or use the Internet to request information, obtain a quote, and book a fitting for their tyres.
Now, this is where things start to get interesting. A number of players in the tyre market hold the traditional view that if you don’t buy your tyre from them, they either don’t fit it, or they charge you a premium for fitting the tyre. Which is in some respects short sighted.
Let’s look at this from a consumer’s point of view. He has decided to buy a pair of, or a set of tyres. He has chosen the brand, the size, the pattern and agreed a price. He knows that wherever he goes to collect his tyres they will be what he wants. He books a fitting time and in due course arrives at the appointed time, whereupon the dealer mounts and balances his tyres and sends him merrily on his way. Exeunt one very happy customer.
At this stage in the process the retailer is also a very happy customer because he has gained from the business without having to worry about ordering, about the customer not paying or not arriving, and what is more, he was paid for the job before the client brought his car in.
Let’s look at that from a traditional point of view. The customer wants a set of tyres for a BMW M5 – he has to call in, find out that the retailer doesn’t hold stock of the two sizes required, he has to have them ordered, perhaps pay a deposit, and then return when the tyres are in stock – perhaps the next day. Not an ideal scenario for the client.
TBC Corporation, one of the USA’s leading marketers of automotive replacement tyres, has reported record sales and earnings for the fourth quarter and year ended December 31, 2003.
The new Chairman of the NTDA Tyre Wholealers’ Group, Peter Gaster took to the floor at the NTDA TWG luncheon to offer one or two points for the trade to consider. Gaster opened by highlighting the fact that whilst he was looking at things from a wholesale point of view, it was worth remembering that many at the event had a foot in both retail and wholesale camps.
He outlined the importance of the role of the wholesaler, comparing the ability of the multi-brand wholesaler to that of the tyre manufacturer and how the result was benefiting the tyre trade as a whole. “The true wholesaler performs a vital and necessary function in the UK distribution market in providing a variety of products and deliveries to all retail sectors in the industry and it is here that the wholesaler performs the most vital function which is service. We are all aware of the cost of distribution and I’ve always felt that manufacturers have at the best misunderstood and at the worst miscalculated the cost of distribution and the reality of the logistics and practicality of delivering one tyre to one customer on a daily basis.
To Continental, National Tyres and Autocare and Viking International and associated trimmings were a collective albatross around the neck of the UK division. After years of loss-making Conti made the decision to cut its losses.
The company and its assets were bought from Continental for a figure that, depending upon how the numbers are crunched, is either 15 million, or 24 million pounds. Some would say that was a lot of money for a business on its last legs. The long and the short of it was though that National came into the ownership of the Axle Group, a parent company formed during the management buy out of National, where most of the management team had built careers out of the fast fit trade – almost all having been employed on the shop floor at retail level at some point in their career. Alan Revie had been manager at Smiley’s Langside outlet and had taken on John Caldwell as a fitter – now Revie heads the Axle Group and Cauldwell heads the wholesale operation. The people at the helm of National were thoroughbred fast fit experts who knew the business inside out.
The fiscal arrangements of the business have been, by now, well documented but the purchase price of the business was met largely through the revaluation and sale of properties no longer required by the Axle Group. The outcome is that the Group has no debts and is currently in a very strong position, and Alan Revie makes a point in talking to T&A of emphasising that fact.
In the USA, the TBC Corporation has issued a bullish financial outlook for 2004, boosted by the contribution of 225 National Tire & Battery retail stores, acquired last month from Sears, Roebuck & Co. TBC expects earnings of around $1.80 to $1.90 per share; a 25 per cent increase over last year’s figure. NTB’s contribution will be around 15 cents per share. Net sales are forecast to be in the region of $1.7 to $1.8 billion. TBC has plans to add 20 company-operated tyre retailers and 25 franchised Big O stores next year, giving the company a total of 1,215 retail locations.
It has been an eventful – some might say traumatic – year or two for the Goodyear Corporation as it struggled to integrate Dunlop within its organisation across Europe and the USA. One of the countries that has seen a great deal of change is the UK, where a number of different methods of restructuring have been tried, with varying levels of success. Recent changes affected the management at the highest level – Goodyear and Dunlop had their own MD’s, reporting to Marco Molinari, who was in overall control. When Molinari left the company, it was decided to change the management structure and responsibilities. Out went the two separate MD posts and a General Manager was brought in.
That person was Andreas Niegsch, a 39-year-old German who only joined Dunlop in 1998. One year on, the structure is in place and beginning to produce results and Andreas Niegsch found the time to give his first press interview, with T&A. Where Andreas Niegsch’s position differs from that of his predecessors is that he is responsible purely for the sales organisation at Goodyear Dunlop and the UK factories report to Goodyear Dunlop Europe. By not being responsible for manufacturing, Andreas Niegsch is free to concentrate on sales and in getting closer to the market and the customer.
The new structure has separate sales divisions for consumer, commercial, farm, earthmover, motorcycle and motorsports tyres and these are supported by functions such as HR, logistics and finance. Retail is treated as a separate profit centre and a new marketing department has been created to support all the product groups. Given enough time, things will turn around, said Andreas Niegsch, as the company has the funds and has bought itself the time to implement the necessary changes. However, whatever else changes, he believes that Goodyear Dunlop still has those two priceless assets; two brands that are worth their weight in gold.
TBC Corporation, one of the USA’s largest marketers of automotive replacement tyres, has announced that it has completed its acquisition of National Tire & Battery from Sears, Roebuck and Co.
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