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Tyre Wars: An overview of the wholesale tyre conflict

The tyre trade has been buying and selling tyres for over 100 years. One might have imagined that it would have settled on a profitable, manageable and structured method of distributing car tyres from manufacturer or importer to retailer by now. However, it hasn’t and one suspects it never will.

Way back in the mists of time life was simpler. The tyre manufacturers supplied their tyres to the vehicle manufacturers and tyres were supplied at the local garages. The number of brands available was limited and people tended to buy what they wanted at the garage displaying their brand’s logo.

In the 1960’s tyre manufacturers would have supply arrangements with local dealers who would agree to take their brand of tyres and then redistribute to local tyre fitters, all at fixed retail prices of course. Then the manufacturers decided that they could deliver, and they cut out the local dealer, they set up their own logistics operations and offered to deliver tyres to anyone who would buy them. The result was chaos.

In the meantime, the network of local tyre wholesalers in the UK was developing. The manufacturers realised that they could not survive delivering just their own brands so they delved into the market with their own tyre wholesale operations.

At the same time there had been the development of a number of regional tyre wholesalers. Of which Stapleton’s had become a national player.The co-operation of strong regional wholesalers across the UK culminated in the establishment of Group Tyre.

Whilst Stapleton’s and Group Tyre dug in for a long war a third player entered the fray. Hampshire-based Micheldever, the sleeping giant, decided to make some moves to expand out of its Southern base. It first bought Southam Tyres, then opened a warehouse at Chepstow, and now Halifax with rumours of interests in the North East being rife. Battle was joined.

To listen to the larger operators it would be fair to presume that no independent had any involvement in the fleet market or the franchised dealer sector. However the independent trader is well aware of the situation and whilst some may be content to work on ever diminishing markets, others may be taking another view of the situation.

17th November 2003/by Tyrepress Editors

Tom Dattilo: “The customer is king”

US tyre maker Cooper is a phenomenon. During the last ten years it achieved the – relatively speaking – best profits with an operating profit of clearly more than ten percent. But today this is different. The difficult American market, as well as higher raw material prices, have had an effect on Cooper’s operating profit too. But, during this year, and in particular during the recent months, Cooper has made good progress. Cooper is rather successful in the retail business because the company is only engaged in the replacement market and does not have its own sales chain. Talking to TYRES & ACCESSORIES at the SEMA show in Las Vegas, Cooper’s chairman Tom Dattilo explains the key to success: “We treat our clients well, the customer is king and we deliver the best products with a consistent product and brand strategy.” Dattilo confirms again that Cooper will sell up to 4.5 or 5 million tyres extra during next year. While competitors like Goodyear and Continental close plants in the US or reduce their production capacities, Cooper only has one problem: where can we produce the additional quantity of tyres?

12th November 2003/by Tyrepress Editors

Michelin 3Q results; numbers rise, revenue falls

Michelin’s third quarter results show that turnover was down 1.7 per cent on 3Q 2002 to 3.8 billion Euro, but volumes were up slightly for both OE and replacement markets. Speaking of prospects for the year as a whole, Michelin expects to achieve an operating margin slightly below the 7.8 per cent of last year. Raw material costs have risen by 300 million Euro this year and second half figures will be affected by the consolidation of the loss-making Viborg retail chain and a PSA wheel recall.

23rd October 2003/by Tyrepress Editors

Goodyear President, Consumer Tires

Goodyear has appointed Lawrence D. Mason (43) to the newly-created post of President, Consumer Tires for North America. He will be responsible for sales to dealers, distributors, mass retailers, company-owned outlets and OE vehicle manufacturers. Mason joins Goodyear from Huhtamaki – Americas, where he was president of North American Foodservice and Retail Consumer Products. Before that, he spent 19 years with Proctor & Gamble in a variety of sales and brand management posts.

9th October 2003/by Tyrepress Editors

Tyrespot bucks the trend with retreads

We hear a lot today about the demise of the retread industry, especially the car tyre sector, and a lot of tyre dealers have stopped stocking retreads, preferring instead to carry cheap new tyres.

Against this background, it is refreshing to learn of an independent tyre dealer who is not only still stocking retreads, but actively selling them. The company in question is Durham-based retailer and wholesaler Tyrespot, which stocks tyres from nearby manufacturer C-Tyres, and Managing Director John Shaw says that he has seen retread sales rise over the last two years and he expects to increase sales by a further ten per cent this year.

He explains: “We have never changed our policy towards retreads. Our experience has shown that if we stock them, we will sell them. This year we expect to sell more than 20,000 retreaded tyres through our retail and wholesale business, proving that it has been well worthwhile sticking with the product.”

John Shaw points out that much of Tyrespot’s growth has been achieved in market niches, emphasising the opportunities open to dealers willing to target and work at these markets. He says: “Although sales of 80 series retreads have stagnated, we have seen substantial growth in sales of retreads for 4×4 vehicles as well as increased demand for 65, 55 and 50 series tyres. It is clear that there is a large potential market for the sale of retreaded tyres to younger drivers who want to make sure that they are legal and who see the economic benefits offered by retreads. In addition, we are looking closely at the opportunities presented by retreads within the winter tyre market. As a result, we are well on the way to a record year of retread sales.”

9th October 2003/by Tyrepress Editors

California passes tyre efficiency law

In California, car tyres fitted as OE have to conform to federal fuel economy standards. However, the state argues that this should also apply to replacement tyres and has passed a law requiring the California Energy Commission (CEC) to develop efficiency standards, measured by rolling resistance. These standards will be in place by July 2007 and take effect a year later. Individual tyres will not have to be labelled, but retail stores will have to display efficiency lists.

7th October 2003/by Tyrepress Editors

Brian Smith talks about Continental

Some 18 months after Continental divested itself of NTA Retail, NTA Commercial and Viking International, T&A approached Brian Smith to find out how Continental Tyre Group was managing in its current format. After all, the complete closure/sale of a manufacturer’s equity is not an every day occurrence and must have had negative effects on Continental’s business in the UK.

Brian Smith knew that the performance of Continental Tyre Group without its UK retail and wholesale operations was going to be at the heart of the matter and he went straight to the point. “Continental Tyre group has shown its ability to handle change both quickly and professionally. One of our great strengths is the ability to make decisions, act on them and adhere to them even though they may be difficult courses of action to follow. We can spot opportunities and act quickly to take advantage of them. That is one of the core policies at Continental, to take opportunities and to handle changes when things don’t work out as planned.

“There is a table in reception that carries the Continental Mission Statement: “To establish Continental Tyre Group as the most professional supplier of quality tyres and customer services, respected for consistent, stable, business relationships. To be known for understanding the customers’ needs and for being responsive in meeting them.” That is a benchmark for the standards we apply at Continental Tyre Group and we need to ask ourselves, are we really like that?

“If we are to achieve that mission it is the customer services element which is particularly important. Then we need to consider how we think internally and what our aims are within Continental Tyre Group. It is in many ways more important therefore to differentiate ourselves from our competitors by the way we handle our customers to develop consistent business relationships.”

11th August 2003/by Tyrepress Editors

Kwik-Fit regroups

Back in May 1996, Kwik-Fit was on the acquisition trail, buying a number of independent chains.The then Chairman, and yet to be knighted, Tom Farmer, said that the group was aiming to build up a second retail chain, made up of regional companies with a strong local presence. They would retain their original identities and, in some cases, compete with local Kwik-Fit centres. Although there was no national identity, the second chain did have a name – Tyre Plus.Now, almost exactly seven years later, the situation is very different, as Kwik-Fit has announced that Tyre Plus is to be integrated into the group’s core operation, with all the fast fit business coming under a single management structure.Kwik-Fit, under its new owners CVC Capital, has been undergoing an extensive review of all aspects of its operations and the decision to integrate Tyre Plus is the latest result of this process. So what will it mean? Firstly, the Tyre Plus head office in Motherwell will be closed, as will other support offices around the country. The Tyre Plus chain consists of 256 centres and the initiative will see the closure of less profitable centres and those that compete with Kwik-Fit centres. In all, 140 Tyre Plus centres will be closed, with the remainder being re-badged as Kwik-Fit centres.What will happen to the employees in the centres that are to close? Kwik-Fit says that “the majority of staff affected will have their employment transferred to Kwik-Fit” and that the company is working closely with the T&GW trade union to ensure that staff are aware of their position and the proposals on offer. Redundancies will be kept to a minimum and Kwik-Fit will make a further announcement after having consulted with the T&GWU.When the dust has settled, the number of fast-fit centres being managed within Kwik-Fit GB will total over 700 and it is an indication of how the trade – and Kwik-Fit’s aspirations under the new management – have changed as, before the company was sold to Ford, its stated aim was to be operating from 2,000 service points by the year 2005.

8th July 2003/by Tyrepress Editors

Christian Salvesen Wins Michelin Distribution Contract

Darfeuille, the French industrial division of logistics specialist Christian Salvesen, has won a multi-Euro contract to distribute tyres from Michelin’s St-Priest site near Lyon, destined for retail outlets and distributors in the Rhone-Alpes and Central region of France. Darfeuille has been operating Michelin’s Salon de Provence site since the beginning of 1998 and the company’s experience and performance was instrumental in the award of the new contract.

20th June 2003/by Tyrepress Editors

Stapleton’s joins Fit4Fleet

STS Stapleton’s Tyres and Exhausts has joined Fit4Fleet giving the company access to a national account facility. Alan Denton, STS’ retail manager is pleased that the company has become a member of Fit4Fleet. “The partnership is quite natural as our philosophy to customer service mirrored their own.” Said Mr. Denton.

13th June 2003/by Tyrepress Editors

Survey shows popularity of mobile fitting

AA Tyre Fit carried out a survey of 50 randomly chosen drivers who had used the company’s mobile tyre fitting service within the previous 60 days. 21 of the respondents were fleet customers, the remainder retail.86 per cent said they would use mobile fitting in preference to visiting a fast-fit centre, while four per cent preferred the latter. The reasons given for preferring mobile fitting were “more convenient” and “it allows me to make more efficient use of my time”. Location of mobile fitting was split almost equally between home, office and roadside.The findings came as no surprise to AA Tyre Fit General Manager David Goodyear, who said: “Customers have a perception of fast-fit centres as dirty and unpleasant places where they can spend an hour or more hanging around while their new tyres, which are nearly always a distress purchase, are fitted.

11th June 2003/by Tyrepress Editors

First Stop BDM

Neil Cleaver has been appointed First Stop Business Development Manager, covering the Midlands. He was formerly a retail account manager for the Royal Mail Group and has extensive experience in marketing, which he intends to put to good use by helping First Stop dealers set up local marketing and promotional campaigns.

11th April 2003/by Tyrepress Editors

Bandag Sells More TDS Locations

Bandag Incorporated has stated that its wholly-owned subsidiary, Tire Distribution Systems, Inc. plans to sell 19 stores and nine retread plants to a current independent Bandag franchised dealer and a previous independent Bandag franchised dealer. TDS previously sold nine of its Tennessee commercial and retail outlets in 2003.The shift of TDS locations into the hands of independent Bandag dealers began last year with the sale of several commercial and retail locations in Alabama, Georgia and Tennessee. One of the two transactions involves the proposed sale of seven stores and three retread plants in the state of Louisiana and seven stores and three retread plants in the state of Mississippi to Southern Tire Mart. The second deal sees five stores and three retread plants located in the state of Arkansas going to Trans American Holdings LLC, headquartered in Fort Smith, Arkansas.

21st March 2003/by Tyrepress Editors

The Car Fleet Tyre Market; T&A talks to the people who really understand the business

The car fleet tyre market has seen some changes recently. The forerunner of fleet tyre management was, we believe, FTM, first established in 1991. Cutting to the chase, two years ago as part of the Montinex Group, FTM almost went to the wall when Montinex collapsed. Its management included Kevin Parker, who was snapped up by National Fleet, then in the hands of Continental, and Dominic Bateson who in quick time arrived at the helm of General Motor’s backed Fit4Fleet. At the same time Kwik-Fit had been acquired by Ford and there was a drive to expand Kwik-Fit’s coverage of the fleet market. Sir Tom Farmer bought FTM from the receiver and brought in Mike Wise to operate FTM to cater for the independent sector alongside Kwik-Fit Fleet. This was an arrangement which despite Mike Wise’s team’s success in delivering the contracts, remained uneasy as many independents questioned FTM’s autonomy from Kwik-Fit. Some simply had a dislike, or fear, of the Kwik-Fit ogre. Now that FTM has gone and Kwik-Fit Fleet has turned its back on the independents the sector is in a state of flux. This, in depth feature airs the views of the top players in this important and growing sector.The two equity players, ATS and Hi-Q have leading positions in the sector though both freely admit to chasing Kwik-Fit. Central’s role is somewhat less, and anyway is masked in the figures of one of the larger fleet tyre management operation’s figures. ATS Euromaster is in the invidious position of having lost two of its top management, both appointed from outside the tyre trade to bring in fresh approaches. The past year has seen ATS putting a great deal of effort into the retail outlets, perhaps at the expense of the car fleet sector. “The coming year”, says Ian Thomas, strategic development and interim sales director, “will see a redirection of emphasis and a development of the fleet sector alongside the ongoing retail developments.”ATS Euromaster, which we will refer to from here as ATS, has been in the fleet sector for a long time, however it’s interests have historically been largely in the truck and agricultural sectors rather than the car and van fleets. In the truck fleet market ATS lays claim to 35 per cent of the tyre replacement market and 85 per cent of the truck breakdown market in the UK. The inroads into the car sector, though significant, are far less and Ian Thomas admits that in car fleet terms ATS is trailing market leader Kwik-Fit, though he stresses that the company’s second place in the sector is a long way ahead of the third largest player. Ian didn’t say which was the third largest player but at present we might estimate that the honour falls to either National Fleet or Hi-Q, though if AA Tyre Fit is as successful as Centrica hope that position may change within the year.Paul Harrell, retail director responsible for Hi-Q advises T&A that the Goodyear Dunlop equity has been under review and through 2003 will be taking on a new stronger Hi-Q branding, with a reorganisation which truly strengthens Hi-Q, putting them in leading positions in some sectors of the UK market.Mike Wise who proved himself as a contract winner at FTM has been retained as the sales director for Kwik-Fit Fleet. In a frank discussion with T&A Mike was quite open about his thoughts on the market … “Honestly, I don’t think there is a future for the independent tyre retailer in the fleet tyre market … Kwik-Fit wins on every count … there will always be some work for them [the independents], but in the long term I question their viability against the strengths of Kwik-Fit.”To find out how the competition responded to Mike’s outspoken views read the most in depth discussion on the fleet tyre sector ever written …

14th March 2003/by Tyrepress Editors

AA Tyre Fit Is New Name For Tyreserve

UK fleet tyre management company Tyreserve has changed its name to AA Tyre Fit. The change, effective from February 24, reflects the purchase of Tyreserve by the AA in June 2002. The company’s general manager, David Goodyear, said the change would bring the business – and its network of 3,221 independent fast-fit centres and franchise dealers – all the benefits of belonging to the most trusted brand in motoring services. AA Tyre Fit has also appointed Continental as an approved tyre supplier. The German tyre manufacturer joins Cooper-Avon as the only two suppliers whose products are offered to the company’s fleet and retail customers.

26th February 2003/by Tyrepress Editors