In From the Cold: Former Michelin Nordic MD Returns to UK
When Malcolm Scovell was appointed commercial director at Michelin Tyre Plc earlier this year, his appointment marked a significant change in the company’s management as it followed the almost simultaneous appointment of Bill Schafer as commercial director of Michelin’s UK truck and bus operations in July. Now Scovell’s predecessor (Hervé de Froment) has transferred to take on a new role with Michelin in sunny Spain, Scovell – himself the former managing director of Michelin Nordic – has taken the opportunity to move to warmer (if not drier) climes. In his first full interview since taking over at Campbell Road, Tyres & Accessories asked what he brings to the role and what the market can expect in the next 12 months.
According to Malcolm Scovell, premium brands have managed to maintain their overall market share despite the pressures of the down market. However, it is clear that some have faired better than others. As far as Michelin is concerned this year is said to have been pleasingly stable: “We are confident we have been able to maintain our position…[But] if we hadn’t have taken such a broad approach to the market – fleets, distribution, OE etc – we could have lost ground.”
When asked how the increasing replacement and OE strength of Korean tyre markers and increased sales of Korean cars may affect Michelin’s business, he answered simply: “Michelin have a large percentage of OE on the Kia C’eed.”
Michelin maintains market share in 2009
With the UK passenger car market down between 5 and 8 per cent in terms of volume and exchange rates playing havoc with lots of companies calculations, pricing has become a key issue this year. Scovell, however, is resolute about the value associated with Michelin: “We are determined to stick to our core values. We may have been forced into making some short term decisions this year, but we have generally maintained our European pricing strategy. Not all of our competitors were able to do the same.”
From his point of view, the market is currently “bumping along the bottom,” meaning it is just a question of time before things pick up again. And while there has been a noticeable, but difficult to quantify, trend towards cheaper unit priced tyres, Scovell is clear in his opinion that this is short-term thinking: “One thing facing the business is the decline in the value of the market…long term thinking secures business [pricing] in three years time, not just tiding things over for the present. You can express your concerns, but what people do in response is up to them.”
Addressing the economy as a whole, Scovell commented on the fact that politicians have been predicting green shoots for months “we haven’t seen any harvest yet.” The point is that due to the ongoing economic difficulties, making the right choices in relationship to forecasting is as important as ever. “Ask for too little and you are in trouble, ask for too much and you are lumped with more stock than you can sell and have to face the problems that come with a stilted cash flow,” he commented, adding that dealers have “every right to demand more from manufacturers” in this respect. “Dealers that have the resources and/or access to the right IT systems to help with this will be the winners.”
While Scovell describes his latest promotion as “a natural progression,” his return to Stoke-on-Trent also brings him full-circle, in a manner of speaking. His 34-year long career with Michelin began after qualifying as an electrical engineer. The next posting was applying these skills in the Michelin factories in Stoke-on-Trent and Dundee for the best part of a decade. What followed was a “technical phase,” which saw Scovell take on engineer consultancy work overseeing the delivery of tyre/wheel packages to customers including Lotus, Volvo in partnership with TWR and Rolls Royce. After this he moved on to running Michelin’s UK motorsport division – including rally, touring car, superbike and GT racing involvement; followed by 3 – 4 years leading Michelin UK retail sales force; before most recently spending seven years running Michelin’s Nordic operation (first as sales manager, then as managing director).
Despite having only been in the UK a few months this time round, this is not the first time Tyres & Accessories has crossed paths with Michelin Plc’s new commercial sales director. Our first meeting was actually, by sheer fluke, in Rome during a retail conference with a group of Scandinavian tyre dealers. There in his capacity as MD of Michelin Nordic, Scovell shared some of the unique features of Scandinavian tyre markets – high premium brand market share, quality conscious consumers and strong winter market. With this in mind, at least two of those three key features make Scovell’s promotion into an increasingly mid to budget market appear to be a timely decision. “Nordic markets are value rather than price driven,” Scovell surmised, explaining that make up of the two markets are radically different.
In 2004 the UK passenger car tyre market was seen as a 40 per cent premium, 20 per cent mid-range and 40 per cent budget market. Since then it has evolved into a roughly evenly split tyre parc. With each segment now occupying roughly a third of the market, depending on exactly how you classify the Korean brands, there is a clear contrast between the UK and Nordic experience (which is 50 per cent premium, and 25 per cent mid-range and budget respectively). However, despite many market observers reporting that premium brands have lost out to mid-range and budget tyre sales in the recession, Scovell see things slightly differently: “There has been definite growth in the budget market…In terms of price I would expect to see shrinkage in the mid-range sector.” Nevertheless the Nordic breakdown is no-doubt a model that Michelin would like to see replicated in the UK.