Exclusive Brands Account for 11% UK Car Tyre Market
For the purposes of this research GfK analysed retail sales of new tyres by dividing the market into three distinct channels; national multiples (retailers with over 100 branches), regional multiples (10-99 branches) and independents (1-9 branches). Data from thousands of depots has been collected and analysed continually since the retail panel-based project began at the end of last year. This really helps assess the private brand market because it surveys what was actually rung through the till. The results make for some very interesting reading:
Of the 28.4 million car, 4×4 and light commercial vehicle tyres sold last year GfK calculates that approximately 10.6 per cent of the car tyre segment; 15.1 per cent of the light truck and 0.1 per cent of 4×4 sales were exclusive brands. In real terms this means 2.62 million exclusive passenger car tyres were sold last year – more perhaps than most people would have estimated. At the other end of the scale it is surprising to note that this particular route to market doesn’t focus on 4×4 owners (only 1420 exclusive tyres were sold in this segment). Perhaps the strategy is to sell premium brand tyres to these customers, acknowledging the role of some wholesalers in offering the economical alternative in the form of their “own brands.” 343,000 exclusive brand light truck tyres were sold last year. As good as this data According to GfK, the UK new tyre replacement market (for car, 4×4 and light commercial vehicles – sell out) totalled 28.4 million units in 2007.
The most comprehensive ETRMA data Tyres & Accessories has seen to date puts the total UK sell-in passenger car tyre market at around 16 million units in 2007, down from 16.6 million the year before. There is obviously some major disparity here. And based on the Europool numbers, how can so many trade tyre units be sold? The fact that ETRMA data only counts tyres made by manufacturers producing in Europe and excludes grey/parallel imports means pinning down a figure for how much of the market is occupied by private brands is somewhat tricky. Whether they are produced in the wider European region or imported from further afield, this calculation effectively obscures any details of sales of private brand tyres. The new numbers basically highlight a part of the market that isn’t counted in the other report. But what about the traditional definition of private brands – brands that are produced by a manufacturer following a contract with a wholesaler who owns the moulds themselves.
As a result, evidence from one European wholesaler shows that this can mean certain private brands end up holding total market shares of around 1 per cent due to significant six digit unit sales figures. The data also shows that large numbers of consumers in the light truck tyre segment have opted for private brand products, could this be a trend that continues as the small and medium sized businesses that commonly run light trucks feel the pinch from increased fuel prices and turn away from premium brands? Private branding is one the areas of the tyre business where the reciprocal (some would say love/hate) relationship between new tyre manufacturers and wholesalers is most important. The recent explosion of production capacity in emerging markets – especially China – has only served to increase the influence available to those with the right contacts and infrastructure (see elsewhere in this month’s Private Branding feature for more on this). For those wholesalers and marketers partnering with premium tyre manufacturers, this means the chance to have your own brand produced in the same factory as market leading products, at considerably lower prices. For those with the savvy to find quality Far Eastern production partners, this means securing production capacity in exchange for incredibly competitive prices. In either case, the promise of guaranteeing sales of large quantities of the manufacturer’s production buys a price differential that can make consumer sales very attractive to tyre retail customers.