Micheldever Continues Growth Despite Turbulent Market
Leading tyre wholesale operation Micheldever Tyres Services reports that it has increased unit sales despite the difficulties of selling in a market beset with recessionary pressures. This year the company expects sales of 6 million tyres – equivalent to just under 20 per cent of the total UK market – with an annual turnover of over £300 million. Not bad for a company that was bought from its founder Tony Todd in a reported £85 million deal just four years ago. When Tyres & Accessories spoke to wholesale director Alan Baldwin he revealed that these unit sales are set to include 1.2 million Kumho tyres. So does this figure reflect a market move to the mid-range as other sources suggest?
This year tyre demand appears to have been somewhat erratic. According to Baldwin, few predicted how strong demand would be in the first four months of the year, but this recovery was also beset with the two-fold supply pressures of a recovering OE demand diverting manufacturers’ outputs and increased production of winter tyres in one of the coldest seasons for decades.
With vehicle production having crashed during 2009, tyremakers understandably reduced production levels to cut costs and to avoid flooding the market with unwanted tyres. The problem is that vehicle demand increased faster than most predicted due to purchase incentives such as the various scrappage schemes operated around Europe and this in turn meant a larger proportion of tyremakers’ output was sent to car factories. Add in the fact that the manufacturers had to produce large numbers of winter tyres to replace depleted stocks across and deal with the strong demand that a cold winter brought and suddenly, though retail demand was good, it was reportedly hard to source some premium brands.
Alan Baldwin also reports that currency rates, raw material price hikes and increased shipping costs meant that during this period the price gap between the budget and mid-range narrowed. The combination of less attractively priced budget tyres and premium tyre availability issues is said to have pushed consumers towards the mid-range at a rate of knots, something that is supported by data elsewhere in this issue. But that is not to say that Micheldever are averse to selling premium tyres.
“The worst thing you can do is sell a tyre without explaining it product benefits,” says Baldwin using the case of 4×4 mud tyre to illustrate his point: “I wouldn’t want to be doing 70 mph on the motorway in a Land Rover Discovery capable of much faster than that with tyres designed for off-road use.” His point is that without the right tread pattern and siping these tyres are not as good as all-terrain or road-orientated tyres at stopping at speed on tarmac, however much they cost. To a much lesser extent the same principle is true with the plethora of passenger car tyres available to the market. Different products have different performance emphases and – as a rule – low priced products don’t beat the most expensive tyres that have had the benefit of the largest investment in research and development. He argues that it is a question of selling the benefits of each product rather than its price.
Wholesaler upgrades truck fleet
Back in June Micheldever ordered several truck and trailer combinations in order to enhance its distribution offer. The largest part of the investment saw the company purchase 15 fuel-efficient Mercedes-Benz tractor units. All 4×2 Axor 1840 models with high-roofed sleeper cabs, they are reportedly the first trucks to wear the new ‘big M’ livery of Micheldever Tyre Services (MTS).
The Axors were supplied by south coast dealer Pentagon Commercials and are based at MTS’s depot in Kettering, Northamptonshire, which is operated by Wincanton. They represent extensions to the fleet of fast-growing MTS, which has also bought 25 new Montracon trailers.
Group fleet manager Malcolm Turnbull explained: “In the past we’ve sub-contracted out our entire trunking operation to Wincanton. A change in strategy means that we’re now purchasing our equipment because we believe this will be more cost-effective, as well as presenting us with the opportunity to utilise the vehicle liveries to promote our business. However, we continue to rely on our partners at Wincanton to operate the vehicles on our behalf.”
MTS runs a fleet of around 300 commercial vehicles across its various operations. Most are Sprinter vans although the line-up also includes rigid trucks of various sizes, as well as tractor units. Speaking in a statement released at the time Micheldever CEO Paul Fox commented: “As a former director of Mercedes-Benz I was well aware of their quality and standards. That is why I was happy when the proposal to purchase Mercedes-Benz units was brought forward, and why I was confident to sign off this next major stage of Micheldever’s growth and development.”
The purchase of new trucks followed significant investment in new trailers. Having already taken delivery of 16 new trailers this year – 15 sliding bogie skelletals and one box van – trailer supplier Montracon reported in June that Micheldever Tyre Services ordered a further 25 more stepframe curtainsiders. Prior to last year the firm only bought used trailers. According to Montracon, that policy changed a year ago and now the company uses a mix of replacements and additions. The curtainsiders are progressively going to work distributing tyres to the firm’s 12 wholesale warehouses and 49 Protyre retail sites across the UK.
The skelletals reportedly handle the collection of imported tyres from the docks to the company’s Direct Import Distribution Centre in Kettering (where the new trucks will be based) and their main distribution hubs at Halifax and Winchester. The news comes just over a year after acquired its first new trailers in April 2009.