Almost 10 years on from the trauma of the global ‘credit crunch’ and we’re still not entirely free of the economic aftershock. The resulting times of austerity have made for tough competition for every pound in the motorist’s pocket – and the forecasts suggest even more tough times ahead. In a trade as utterly international as the tyre industry the outcome of the 23 June referendum on the EU was always going to have profound effects – and the marginal victory for the Brexit side predictably has caused dramatic weakening of the pound against both the Euro and the dollar.
This has already generated rapid increases in overall inflation (up 1.6 per cent and 1.8 per cent in December and January respectively) and it remains to be seen what effect the actual triggering of Article 50 has on the pound at the end of March, let alone the UK’s projected departure some two years or more away. According to the Bank of England’s latest inflation report (2nd February 2017) higher import prices are likely to have their greatest effect on CPI inflation in around a year’s time pushing inflation above the bank of England’s target of 2 per cent.
The industry is also facing another wave of price rises – in this case caused by global increases in raw material (natural and synthetic rubber) prices. In response, most of the household name tyre brands have already announced price rises and the effects are already being felt.
“So, of course as new stock comes on-stream there’s little question that retailers – and by extension their customers – will be hit by the increase,” explained Stapleton’s Wholesale Director Nigel O’Hara. “And in the high-value SUV/4×4 tyre sector the pain may well be felt most keenly. It’s not all bad news, though, because I think Stapleton’s can help our retailers turn this new challenge into a sales opportunity.”
Clearly even the bargaining power of a wholesaler of Stapleton’s size can’t mitigate the effects of global raw materials price hikes – but they can arm retailers with the competitive tools they need to attract and retain the custom of newly price-sensitive motorists.
“Of course we always carry a comprehensive stock of SUV/4×4 tyres from all the household name brands, such as Bridgestone, Continental, Dunlop, Goodyear, Hankook, Michelin and Pirelli,” Nigel continued. “But these imminent price rises mean our retailers can’t rely on premium tyre offerings alone. And this is where SUV/4×4 products from our exclusive brands can make a difference.”
Not that Stapleton’s stable of brands such as Nexen, Maxxis, Matador and Riken is immune from the vagaries of the raw materials:
“These carefully selected brands are already very familiar to our customers – with many of them registered as key dealers in the programmes associated with each brand. And since each comes with an impressive pedigree of its own, they’ll be “no-brainers” for customers hoping to alleviate the effects of tyre inflation at both ends of the scale”.
O’Hara concluded: “At the end of the day, price rises or no price rises, it’s all about helping our retailers offer their own customers broader choice: choice across all price points that really gives them the edge in competing for SUV and 4×4 drivers custom. Our retailers can propose our exclusive brands’ offerings to their customers with total confidence in the knowledge they offer uncompromised quality, durability and performance at extremely competitive prices – even in the light of current market developments”.