News from the tyre wholesale sector
Peter Gaster confronted the issue of tyre ageing head-on in what is likely to be his last NTDA dinner as association chairman. The headline news is that, following negotiations between NTDA director Richard Edy and the RAC Foundation, the respected motoring organisation has pledged its full support for to an industry-wide tyre age check campaign.
For NE Wholesale, the ability to provide three times daily deliver to customers has become a firm emphasis. To achieve this level of service, the company has built up a fleet of more than 120 vans that operate out of five distribution points, infrastructure that despite the cost of developing, has, comments NE Wholesale, been worth the expense and effort. The company has seen a growing number of customers making the switch to NE Wholesale after seeing the benefits offered by the wholesaler’s ‘Rapid Response’ one-hour service, currently enjoyed by around 65 per cent of NE Wholesale’s customers.
“This is a just-in-time service offer that works on the principal of delivering the tyres within one hour of them being ordered,” comments Ben Darcy, NE Wholesale sales & marketing director. “Our delivery service works hand in hand with our high performance tyre stock. Customers cannot afford to have large amounts of expensive premium brand product on the shelf gathering dust, and they don’t need to when they can receive the tyres within an hour of ordering.
Micheldever Tyre Services has announced the appointment of Jason Burgess as its new Kumho Brand Manager. Micheldever holds the distinction of being the largest Kumho distributor in Europe, and UK sales of the brand are rapidly growing – indeed, Micheldever reports that Kumho has become an important component of the company’s continued growth, growth that saw 2007 tyre sales reach six million units.
“We are delighted to have recruited someone of Jason’s quality and experience”, said Alan Baldwin, Micheldever wholesale director. “We have enjoyed massive success with the Kumho brand, and to find such an outstanding brand manager as Jason will be a significant benefit to MTS and the Ecsta Performance Centres network.”
De Klok Banden BV, one of the largest tyre wholesale businesses in Holland, will be exhibiting its range of exclusive brands on its show stand in Essen (Hall 3:330). In addition to dealing with all the well-known names, De Klok operates as something of an exclusive brand specialist, distributing: Accelera, GT Radial, Nankang and Nokian tyres. According to the company special attention will be paid to the promotion of the Delfin private brand to show visitors.
Intyre is a tyre wholesale company that specialises in the export of used tyres. Situated in the centre of Belgium, near the well-known export and shipping centre of Antwerp, the company mainly deals with used car and truck tyres. Unlike other casing and used tyre companies, Intyre does not collect tyres from fitting stations and other dealers, but only buys tyres that can be ‘reused.’ “In this way we try to avoid stocking scrap tyres. We usually inspect the tyres at the supplier’s place and bring them to one of our warehouses where they are sorted by quality and size,” the company told T&A. Intyre has a 4600m² warehouse and a yard of about 8000m². “We usually distinguish two qualities for two different markets. Firstly there are the high-quality used tyres which are sold mainly in Europe. Our second outlet is the African and South American market, which mainly imports the cheaper second hand tyres,” company representatives concluded.
The Tires & Rubber show was unmistakably a genuine tyre trade show, despite its appearance as an event mainly attracting machinery and raw material suppliers. Among the 197 exhibitors at the show, which took place in Moscow from March 4-7, 2008, were only a handful of tyre manufacturers – but plenty of resellers, importers and wholesalers. And most of these companies are only interested in the distribution of tyre brands produced outside of Russia, i.e. in China, Korea or Europe.
Together with Russian importers such as Petromaster (Hankook, Sumo Firenza), Avantek (Alliance), Satim (Mitas) or Yarshintorg (Sumitomo), TransGaz Komplektatciya presented itself to visitors of the Moscow Tires & Rubber show and featured the “Primewell” brand. This brand is produced by Giti Tire in China and TransGaz is initially importing only truck tyres from this range. Later, however, Giti’s new importer in Russia will also import and distribute Primewell and Runway passenger car tyres. Runway is yet another brand from the GT group (Giti Tire from China and Gajah Tunggal from Indonesia). To what extent, if at all, TransGaz will play a major role with regards to importing the group’s core “GT Radial” tyre brand has yet to be decided, says Richard Lyons, sales director with Giti Tire Europe and thus responsible for the Russian tyre market, in an interview with Tyres & Accessories.
Tire Group International (TGI) has bought US-based Brazil and the Caribbean tyre export specialist, Serit Tire Wholesale (STW). According to an official statement announcing the acquisition, TGI purchased all STW’s assets for an undisclosed sum.
“This acquisition gives TGI an instant presence in Brazil, which is a market we have been absent for the last nine years. We are also retaining the services of STW’s president Ernie Rodriguez. Rodriguez will be responsible for the continuing development of this market, as well as developing other key markets we have targeted. Rodriguez has over 15 years experience in International Tire Sales and his expertise will be another asset TGI can count on,” said Tony Gonzalez, Tire Group International’s Chief Executive Officer. Gonzalez also stated that TGI will continue to be aggressive in its growth strategy and will look for other acquisition opportunities that make business sense and fit into TGI’s growth plans.
Stapleton’s Tyre Services has extended its contract with resource recovery company Sapphire and tyre collection and recycling firm Saltire, by two years. The deal will enable Sapphire to continue a regular supply of tyre chips and whole tyres to cement companies across the UK to use as fuel – including its joint owner Lafarge Cement.
Scrap tyres have been providing a sustainable fuel alternative for the cement industry for well over a decade, providing an environmentally-beneficial outlet for the 40 million tyres removed from UK vehicles every year.
Sapphire has operated a recovery service for Stapleton’s via Midland’s-based Saltire Recovery Limited for the past year – the two-year contract extension is testament to the excellent service offered by the Saltire-Sapphire partnership. Peter Allen, Commercial Director of Stapleton’s, commented:
With seemingly everyone increasing the attention they pay to green issues; and following the introduction of ‘green taxes’ like the London CO2 congestion charge, what does the future hold for the 4×4 tyre market?
In years gone by when 4x4s were practical vehicles, rather than milk-run-machines for city dwellers, a London-only surcharge on such cars wouldn’t have made much different. Now however, according the Society of Motor Manufacturers and Traders (SMMT), families who use larger cars in the capital could face bills of up to £6,000 a year. From 27 October, cars that emit more than 225 g/km CO2 will pay £25 to enter the central London charging zone. The scheme has been billed as a gas-guzzler tax, but in-effect it will have a disproportionate effect on SUV and 4×4 drivers.
The question is, is this kind of anti-4×4 legislation likely to affect 4×4 tyre sales now or in the future? Looking at the most recently published SMMT data there is no evidence to suggest that a dramatic 4×4 sales slow-down is on the horizon. The last SMMT UK vehicle parc census, which took place in 2006 found that over 3.32 million 4×4, Utility and Light Commercial Vehicles (LCV) below 3.5 tonnes are on UK roads. Likewise 4×4/SUV registrations have continued to grow – over 175,000 were registered in 2006 (up 7.5%), their fastest rate in over a decade. Interestingly more than a fifth of newly registered 4x4s were Land Rovers, meaning these fitments are likely to remain dominant in replacement tyre sales for some time.
During the same period the total 4×4 replacement tyre market continued its trend of rapid development. Alan Baldwin, wholesale director at leading 4×4 tyre specialist Southam Tyres (a division of Micheldever Tyre Services) estimates that the UK 4×4 tyre replacement market totalled 2.2 million units in 2007. Last year’s official ERMC data put the 2006 figure at 1.5 million, so even when grey, parallel and non-EU imports are added into equation the 4×4 replacement still appears to have grown by as much as 20 per cent year-on-year in 2007.
One explanation for this; and probably the most exciting news for tyre retailers is the reduction in the mileage capabilities of OE tyres. According to Alan Baldwin, high kerb weights, increased engine power and torque, excellent suspension systems with minimal body roll all mean much higher tread wear rates. “If you go back a few years for example to 235/70R16 Michelin and Goodyear OE tyres fitted on Land Rover Discovery, anything between 40 and 70 thousand miles was possible on a set. The new and stunningly successful Audi Q7 can do its boots in under 10,000, and even the less powerful, often more sedately driven Volvo XC90 rarely sees more than 20,000, often only 12,000.” Baldwin explained.
Commenting on recent market trends, he continued: “I still believe that there is good growth in all of the on-road 4×4 vehicle sectors, and CUV is very exciting, but so is the luxury sector. Facelift BMW X5 sales are very strong, the new Audi Q7…Range Rover sport is a massive success, with its 20-inch OE tyres often getting a hard life.”
What the arrival of the CUV may mean for the 4×4 tyre market
However, looking back to new vehicle figures, one of the clearest trends for the future is that the fastest growing sector is the so-called Crossover Utility Vehicle (CUV) segment. CUV sales are reportedly growing faster than any other market section at the moment. The traditional 4×4 vehicle, which tends not to be widely accepted by society, has according to Renault, come of age. Launching the new Renault Koleos crossover vehicle – which the company admits draws heavily on influences gained from its partnership with Nissan – the French car manufacturer explained that 4×4 technology’s “coming of age” is what has led to CUVs gaining ground in recent years.
The presence of SUV-type vehicles can be observed in all segments, in the same way that MPVs spread to other categories in the late 1990s. Indeed, the whole concept of market segmentation is more blurred than ever. In the eyes of a consumer what exactly differs between a car and a CUV; or an SUV and a 4×4?
Today SUVs account for five per cent of the total worldwide market compared with less than one per cent 15 years ago. The SUV/compact crossover market is constantly expanding in the top five European countries and strong growth in the past five years has seen total sales more than double from 222,500 to 522,000 vehicles. This trend can be observed across Europe: in a total market of approximately 15 million vehicles, the SUV/compact crossover category accounts for almost five per cent, with more than 700,000 vehicles of this type sold in 2007. The sector is extremely competitive, too, with 25 models available.
Renault also explained the company’s perspective on the kind of customers that are buying CUVs, an interesting insight for anyone wanting to sell replacement tyres to the same drivers down the line. According to the French carmaker, European SUV/CUV customers essentially come from the C and D segments. The majority of them already own a vehicle of this type (25%), while 22 per cent come from the D segment and 13 per cent from the C segment. Former MPV owners account for eight per cent of SUV/CUV buyers.
Looking forward
While the North American vehicle market clearly has many differences to the Europe market, the fact that the US is home to leading manufacturers such as Ford and GM means what happens in the US market invariably has some influence over what comes to Europe. With this in mind it is interesting to note the findings of a recent PriceWaterhouseCoopers (PWC) analysis. Writing on 14 February 2008, PWC US automotive analysts Michael Mckenzie predicted that assembly of full-size pickups and SUVs in North America would fall 14 and 13 per cent respectively. In fact with car assembly predicted to fall 3 per cent year-on-year in the first half of 2008, the only segment in which assembly rates are expected to increase is the CUV sector (up 7%).
Mckenzie also produced a fascinating graph that plotted US fuel prices against pick-up sales between January 2007 and January 2008. He found that the there was a very clear correlation between increased petrol costs and a marked slowing of pick-up sales. Basically whenever fuel costs went up pick-up sales went down. Exchange pick-ups, which have relatively low sales levels in Europe, for the 225 g/km+ category of vehicle mentioned at the start of this article and it seems logical to predict a similar trend on this side of the Atlantic. Add in the fact that fuel costs roughly 50 per cent more in the UK than it does stateside and this seems all the more likely. Nevertheless market insiders told T&A that sales of pickups like the Nissan Navarra and Mitsubishi L200 both remain “very strong” despite some degradation in the tax benefits they previously offered to drivers registering them as commercial vehicles. Either way, keeping an eye on the OE fitments of the latest CUVs would seem to be very prudent.
Roughly a year ago Southam/Micheldever wholesale director, Alan Baldwin, told Tyres & Accessories that he expected General Tire’s 4×4 range to increase its UK market share by about 10 per cent. A year later, T&A asked if the company’s bold targets had been realised?
In answering that question with a resounding yes, Alan Baldwin explained that his calculations make Southam/Micheldever the largest seller of 4×4 tyres in the UK: “[Southam/Micheldever] had another phenomenal year in 2007…General 4×4 2007 sales grew by 15 per cent over 2006, and [the company] continues to produce the innovative tyre sizes that the very specialized UK market requires…More and more 4×4 tyre specialists and retailers stocking and selling the ever expanding General line up.”
Tire Group International (TGI) has just opened a new office in Qingdao, China. Heading it will be Jing Dong Ling, formerly a quality and mixing engineer with Yellow Sea Tire. Mr. Ling brings over 10 years of experience and knowledge from the quality control side of the tyre building process and will be overseeing all of TGI’s private label production coming out of China (Cosmo, Luna and Industar).
“We are now building three private labels in China. The addition of Mr. Ling will ensure that TGI’s quality standards are being met and that our supply chain is being supervised directly at the source,” said Tony Gonzalez, Tire Group International Chief Executive Officer. “We expect this move will help us better serve our distributors throughout the world with more consistent quality.”
Bridgestone first started working with Bulldog remoulds as its preferred retreading partner in the 1990’s Everything changed in April 2005 when Bridgestone bought the Bourne, Lincolnshire-based retreader, bringing with it plans to more than double the site’s previous annual output and radically overhaul the operation. Tyres & Accessories gained an exclusive insight into what has happened at Bulldog during a recent visit to Bridgestone UK’s newly updated retread production headquarters.
Lassa Tyres has appointed Vicki Tillson as its new UK Sales Manager. Based from her home in South Yorkshire, Vicki will cover the entire Lassa UK distributor network. One of the key objectives for Vicki and Lassa in 2008 will be to assess the current UK distributor channel and to ensure the most appropriate partners are appointed to represent the Lassa brand. Tillson previously worked with well-known wholesaler operations Stapleton’s and Micheldever.
Martin West, Lassa International Director of Marketing and Business Development, commented – “We are delighted to welcome Vicki to the team. She is well regarded within the tyre industry and we look forward to her leading the development of the Lassa brand within the UK distributor and wholesale market.”
In the US, Car Boutique inc. has relaunched its website. The relaunch brings vast improvements in both navigation and product offering, making it easier for performance car enthusiasts to find the right wheel and tyre package for their vehicle. Car Boutique has enjoyed 25 years in business under the same family ownership in South Florida serving both retail and wholesale customers across the US.
Car Boutique is a top-level distributor of many nationally recognized brands such as Axis, Cor, Drag, Dub, Enkei, Foose, Forgeline, Giovanna, HRE, KMC, Maya MHT, R1 Racing, Sevas, Tork, Volk and Vossen and many others. According to the company, Car Boutique carries all popular brands of tyres with different performance and pricing options including Falken, Nexen, Nitto, Pirelli and Toyo. The wheel and tire sections are updated weekly to ensure that we offer our customers the latest styles and best fitments for their vehicle.
Chris Anthony
Editor, Tyrepress.com/Tyres & Accessories
Tyre Industry Publications, Federation House, Station Road, Stoke-on-Trent, ST4 2SA, United Kingdom
+44 (0)1782 969860
The content herein is expressly intended for the person(s) addressed, and for business purposes. Any other communication is the sole opinion of the author and not necessarily the views of Tyre Industry Publications Ltd.
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