Deldo: New Products, New Markets
This year’s Reifen show coincides with 35 years in the business for one of Europe’s leading wholesalers. Located in the vicinity of Europe’s second largest port, Antwerp based company Deldo has much to celebrate as its reaches this milestone. From a four person operation in 1973 Deldo has mushroomed into an outfit that sold 6.5 million tyres last year and experienced an annual turnover of 270 million euros. And all signs indicate this upward trend is set to continue. When Tyres & Accessories visited Deldo in Belgium before the Reifen show, company marketing manager Rutger Veerman expressed confidence in the company’s plans for 2008 and beyond.
A strong current focus for Deldo at present is its private labels. Mr. Veerman reports the company sold 2.5 million Minerva, Fortuna, Sunny and Wanli brand tyres alone in 2007, and preparations are underway for additions to the respective ranges in strategic areas. “Fortuna is really moving as a brand,” comments Veerman. “We will introduce a winter range for next season.” Thirty winter sizes are planned to accompany the high performance range that is currently available in more than 20 sizes between 15 and 18-inches. The focus for Fortuna has been upon passenger car fitments, however light truck tyres are also on their way.
Across the board, the products that continue to sell well for Deldo are those from the 4×4 and UHP segments. “There is a rising demand for UHP,” says the marketing manager. “We are playing a big role in the area of high performance tyres. SUV tyres are also a growth segment for our business.” But these top selling dimensions are not enough on their own to meet the needs of tyre retailers. What sets Deldo aside from many other tyre suppliers, Veerman explains, is the size of range the Belgian company can offer. “Take Wanli, for example. We started as exclusive European supplier in 2002 and since then the size range has grown significantly. There is a new brand from China appearing every week, but most only produce 18 sizes and focus upon UHP – Chinese manufacturers tend to think the European replacement market is between 30 and 40 per cent UHP and thus tend to focus upon this sort of tyre in 17-inch sizes and up. In reality the demand is approximately 5 per cent. The Chinese manufacturers see huge profits in larger sizes, but we tell them that smaller sizes are also needed in a range to sell to European dealers. They need a complete programme.” To illustrate the point, Veerman points to two particular tyre sizes sold by Deldo – the 275/40R20, fitted to 4×4 vehicles such as the Porsche Cayenne and Volkswagen Touareg, and the 155/70R13, a size popular in Southern Europe. As the marketing manager says, there is a huge contrast in size between the two, but both products are necessary.
The UK is the largest market Deldo has for its budget range, with this type of tyre accounting for over 50 per cent of sales. Wanli is the most popular brand Deldo sells here, and approximately 30 to 35 per cent of the company’s total Wanli business goes to the UK. Rutger Veerman points out that, in addition to the comprehensive Wanli size range, Deldo can provide its UK customers advantages rarely found elsewhere. “We see a lot of people in the UK confronted by direct offers from Chinese trading houses for whole container shipments direct to the UK. The price seems okay but customers must pay directly and up front, then they must wait three to four months, and what they send you is always a surprise!” At Deldo, he adds, a customer can ask for as little as three or four tyres and receive them within a week. “Many people are coming back and are prepared to pay a little more for service and flexibility.”
The numerous new tyre brands springing up in China and making their way into international markets has led to a degree of suspicion regarding the quality of Chinese manufactured products, sometimes for good reason. It is important, however, not to tar everything from China with the same brush, and Mr. Veerman points out that ensuring the quality of its Chinese made brands is an important issue. Using the example of Wanli, he comments: “Their new factory in Guangzhou is equipped with machinery produced by VMI in Holland, and the facility is very modern. We see that much money and energy is invested into research and development, and several ISO certifications have resulted from this. All products are e-marked, and perhaps most importantly, we co-operate with TÜV for independent testing, and TÜV co-operates with the research and development department.
“We are playing the role of a coach,” Veerman adds. “We know the market and what Europeans need.” With guidance from Deldo providing valuable direction in terms of what sizes and patterns should be produced, the factory has seen many improvements. “We are investing a lot of money into this, and it is really making a difference.”
Regular deliveries through Deldo’s own transport company, Tyretrans, ensure that tyres arrive at the customer quickly. In the Benelux countries Deldo is able to offer a 24 hour service, and the UK, France, Germany, Italy and some other European countries are serviced by several weekly deliveries. “Having our own fleet (currently 50 trucks and 80 trailers) means a lot of freedom and flexibility,” comments Veerman. “As we also purchase some tyres within Europe we have the flexibility to deliver tyres to a particular location and also purchase some. The ability to load and unload with our own fleet makes our operations more cost efficient, including a service aspect.” And speaking of deliveries, the Deldo marketing manager adds that a growing trend is towards Just in Time and express deliveries, a service currently popular in Germany and several other European destinations. Small orders – two, four, six pieces and more – can be shipped across Europe within 24 or 48 hours.
With orders coming in from multiple European countries it is necessary to have a sales team that reflects the markets served. According to Rutger Veerman, the sales team currently includes representatives from approximately 12 nationalities, ensuring that customers can always talk business in their own language. This is a necessary point if the company intends to enter new markets, he adds. “We now have some people from Poland, Hungary and Russia on our team, we are acquiring the tools to enter these markets in a decent way.” Deldo has been active in these three countries for about several years now, and as an added incentive is offering customers there an “all-in package” that includes handling all logistics if requested.
All in all, the Deldo marketing manager expresses that definite growth potential exists for the company in Eastern Europe. “There are lots of opportunities there. Confidence in Chinese brands is also growing; the perception of ‘made in China’ has traditionally been lower there but it is growing. Eastern Europe is definitely a focus market, where we want to grow in the next three to five years.”
Deldo’s presence at the Reifen 2008 show will include a new 140 square metre stand, where clients and prospective clients can view the latest products and price offers whilst enjoying a glass of fine Belgian beer and national delicacies. The Deldo stand will be located in Hall 2, stand 404.