In a recent op-ed Harjeev Kandhari, CEO of tyre company Zenises, reflected on possible changes in the way tyres are sold in the future. Kandhari’s first point is that the quality gap between brands that are long-established in the market (the so-called ‘legacy’ brands) and more recent introductions, such as Zenises’ own Z-Tyre, is shrinking fast. There has traditionally been a large difference in price between legacy and the newer tyres, but Kandhari believes that the small differences in performance and technology mean that this gap is no longer appropriate.
He also maintains that the newer brands offer better margins to dealers and so the legacy brands will have to find different ways to do business if they are to compete successfully.
In truck tyres, the move is away from product only to the provision of services, which fleets would otherwise have to outsource for themselves – ppk contracts and in-the-field checks and maintenance are designed to maximise tyre life and tie in the customer.
For car tyres, things are different, although even here, there are changes afoot. In Germany, for example, Zenises, in conjunction with its partner Alzura, offers a Z Tyre Flat Rate program. Customers pay Eur 4.99 a month and for this they receive brand new tyres and a replacement if the tyre is punctured. Kandhari believes his is the only company to offer this type of service.
Is it the way ahead? Possibly, but it will take time to become widely accepted. In the meantime, Kandhari suggests that the legacy manufacturers will change their strategies. Firstly, he expects them to sideline importers by getting control of wholesalers and the retail distribution system and he cites the recent acquisitions of Bandvulc and BlackCircles in the UK, Allopneus and Speedy in France and Meyer Lissendorf, Ihle and others in Germany as evidence that this is happening.
With tyre dealers often getting a better margin from the newer brands, it is logical that these are the brands they recommend. The legacy brands’ long-term approach is to change the way that consumers choose a tyre, and their preferred option is online and via social media. Games, competitions, surveys and portals to inform customers of tyre benefits all help build a relationship with the buyer and the provision of a ‘Buy Now’ button, together with the facility of mobile fitment at your home and work, means that a tyre can be sourced, bought and fitted without ever having to go near a dealer.
Harjeev Kandhari’s response to this is that the newer brands will have to improve the service that they offer and his view is that, as the battleground moves more towards social media and the Internet, the legacy brands will have a fight on their hands.