Sir Tom Farmer has launched is Tyres and Wheels Autocare operation and it offers the trade a new opportunity.
“The plan is,” explained Sir Tom, “that we will help people realise their ambition to develop their own businesses. We understand that there are people out there in the automotive sector who want to go out on their own, but who don’t have access to the funding. They may be excellent salesmen, mechanics, tyre technicians, but be lacking in administration skills. We can help the people with the right attitude to achieve their ambition.
“We will put up, for the right people, 100,000 poundsw to finance the co-owned business. They will have to put in between 25,000 pounds to 45,000 pounds of their own money to become a Farmer Autocare co-owner. They will have to locate the premises and we will take care of fitting out the business, developing the branding and carrying out all the administration work for the business. That leaves the co-owner free to operate the business.
“If the project requires the purchase of premises, then we will buy the premises and lease them back to the co-owners.
“Many small businesses fall down because the owner is too involved in one area or another of the business. If they devote their time to the customers and the physical side of the business they end up working till all hours doing paperwork. That isn’t good business practice. On the other hand, if they do the paperwork well they often don’t have the time to devote to their customers. Few people have the ability to run every element of their business nowadays. We can take the administration load away from them and allow them to do what they are good at, dealing with the running of the business and the customers. That’s not to say that we expect our co-owners to be out there fitting tyres, but they will have the time to manage their business, to look after the suppliers and the staff. If they don’t get the people and the suppliers right then they won’t get the customers.
“This is an opportunity for the more mature person with the energy and the enthusiasm, who wants control and who wants to work to live rather than live to work.”
The Maxxis brand was rated fifth in the Taiwan Top 10 Global Brands awards, from an initial 1,000 candidates. To make the top 10, at least 20 per cent of revenues under the name must have come from overseas and the top ten positions are decided by “brand value”, which is determined by the drawing power of the brand, calculated in accordance with criteria stipulated by New York-based branding agency Interbrand. Of the top 10 Taiwanese brands, seven were from IT companies.
While not one of the world’s giant tyre manufacturers, Kumho is in the top ten and the company realised some time ago that it needed to concentrate on its overseas activities if it were to grow, but this is easier said than done. There is no doubt that established brands have a terrific advantage – everybody knows their name and they have decades of history behind them. Of course, this has not been achieved overnight and is the result of many years of effort and considerable financial outlay and it is a daunting task for a comparative newcomer into a market to try to get its name known, especially when the target is a considerably shorter time frame than decades.
So the question is how to boost awareness in a number of diverse markets across the globe in a manner which makes economic sense? Different countries have differing cultures and tyre requirements, but Kumho realised that a common factor – and one popular in most countries – was that of motorsports. Thus it was that, in the 1990s, Kumho began to develop its involvement in international motorsports, in a strategy that was to become central to the worldwide marketing of the Kumho brand.
This strategy is by no means unique – after all, the Yokohama brand established a reputation for high performance in the UK after cars shod with its tyres won four consecutive British Touring Car championships from 1990 to 1993. However, the biggest pitfall in such a strategy is that, if you are going to go down the motorsports route, then you have to be sure that you are going to be good at it and you need implicit faith in the product. You also need to divert considerable resources towards R&D and to provide the technical back-up that so many motorsports events require nowadays – the tyre manufacturer has to do so much more than merely provide tyres.
This, then, was the route that Kumho decided to pursue and the quality of the racing product has been proved in competition over the years. Perhaps the highest-profile recognition came when Kumho ECSTA S700 tyres were adopted as the control tyre for the Formula 3 Euroseries, which is a series of 10 races, taking place in five different countries (Germany, France, Italy, Austria and The Netherlands).
Further recognition came in 2002, when Kumho signed a five year contract as the official tyre supplier to the Marlboro Masters of Formula 3, which brings together the best drivers from various European national championships. Last year Kumho was the control tyre for the first time and the lap record at Zandvoort in The Netherlands was broken – a dream start for the Korean company.
This year’s Marlboro Masters was contested by 49 drivers from 20 countries and for some of them (notably those from the British and Italian championships, which use another make of tyre) this was their first experience of racing on Kumho tyres. The race took place on a blisteringly-hot day at the Zandvoort track, attended by 55,000 spectators. Kumho branding was much in evidence and, indeed, the company has a very close association with the venue, having adopted a corner at the circuit in order to capitalise on the estimated TV audience of up to 800 million for last year’s event.
Continental and Indian company Metro Tyres are to manufacture motorcycle and scooter tyres under the joint brand name Continental-Metro for the Indian market. Initially, Metro will produce 100,000 tyres and tubes a month for 100cc and 110cc motorcycles, with tyres for 150cc and 180cc bikes coming on stream later. Half of the production offtake will be marketed in Europe and North America – these tyres will carry the Continental name only. Production is set to begin in May and the initial investment is 30 crore Rupees, or around US$ 6.3 million. The arrangement between the com panies will be purely a technology deal for the first three years, after which the companies may explore a possible equity partnership.
The car fleet tyre market has seen some changes recently. The forerunner of fleet tyre management was, we believe, FTM, first established in 1991. Cutting to the chase, two years ago as part of the Montinex Group, FTM almost went to the wall when Montinex collapsed. Its management included Kevin Parker, who was snapped up by National Fleet, then in the hands of Continental, and Dominic Bateson who in quick time arrived at the helm of General Motor’s backed Fit4Fleet. At the same time Kwik-Fit had been acquired by Ford and there was a drive to expand Kwik-Fit’s coverage of the fleet market. Sir Tom Farmer bought FTM from the receiver and brought in Mike Wise to operate FTM to cater for the independent sector alongside Kwik-Fit Fleet. This was an arrangement which despite Mike Wise’s team’s success in delivering the contracts, remained uneasy as many independents questioned FTM’s autonomy from Kwik-Fit. Some simply had a dislike, or fear, of the Kwik-Fit ogre. Now that FTM has gone and Kwik-Fit Fleet has turned its back on the independents the sector is in a state of flux. This, in depth feature airs the views of the top players in this important and growing sector.The two equity players, ATS and Hi-Q have leading positions in the sector though both freely admit to chasing Kwik-Fit. Central’s role is somewhat less, and anyway is masked in the figures of one of the larger fleet tyre management operation’s figures. ATS Euromaster is in the invidious position of having lost two of its top management, both appointed from outside the tyre trade to bring in fresh approaches. The past year has seen ATS putting a great deal of effort into the retail outlets, perhaps at the expense of the car fleet sector. “The coming year”, says Ian Thomas, strategic development and interim sales director, “will see a redirection of emphasis and a development of the fleet sector alongside the ongoing retail developments.”ATS Euromaster, which we will refer to from here as ATS, has been in the fleet sector for a long time, however it’s interests have historically been largely in the truck and agricultural sectors rather than the car and van fleets. In the truck fleet market ATS lays claim to 35 per cent of the tyre replacement market and 85 per cent of the truck breakdown market in the UK. The inroads into the car sector, though significant, are far less and Ian Thomas admits that in car fleet terms ATS is trailing market leader Kwik-Fit, though he stresses that the company’s second place in the sector is a long way ahead of the third largest player. Ian didn’t say which was the third largest player but at present we might estimate that the honour falls to either National Fleet or Hi-Q, though if AA Tyre Fit is as successful as Centrica hope that position may change within the year.Paul Harrell, retail director responsible for Hi-Q advises T&A that the Goodyear Dunlop equity has been under review and through 2003 will be taking on a new stronger Hi-Q branding, with a reorganisation which truly strengthens Hi-Q, putting them in leading positions in some sectors of the UK market.Mike Wise who proved himself as a contract winner at FTM has been retained as the sales director for Kwik-Fit Fleet. In a frank discussion with T&A Mike was quite open about his thoughts on the market … “Honestly, I don’t think there is a future for the independent tyre retailer in the fleet tyre market … Kwik-Fit wins on every count … there will always be some work for them [the independents], but in the long term I question their viability against the strengths of Kwik-Fit.”To find out how the competition responded to Mike’s outspoken views read the most in depth discussion on the fleet tyre sector ever written …
Anyone in the tyre business who has spent holiday time in the South of Spain will probably have noticed the branding of Confort Auto – the red, yellow and black logo emblazoned across the frontage of the white and black tyre depots along with the eagle logo and the Grupo Soledad inscription. They may not have realised that, with 57 workshops, Confort Auto is the largest independent fast fit operator in Spain. They may not have made the connection with the retread industry either, for the parent company of the Confort Auto brand is Grupo Soledad, which is also the owner and manufacturer of the Insa Turbo retread brand of truck and car tyres. Given the poor reputation of retread tyres in the UK market it may be difficult for some to reconcile a retread operation with the modern and professional approach of Confort Auto. However, the history of the company runs deeper still.The retreading division is based at Aspe outside Alicante, and the operation has grown on this site gradually expanding to take in more and more of the available space here. There is a great deal of development in the area and further expansion is planned in the near future, with a new warehouse at an industrial site a few kilometres away. This will create space at the Aspe plant for further developments.
TRW’s steering and suspension components currently marketed under licence by Federal Mogul, are to be sold under the TRW brand. Martin Hendricks, director and general manager for TRW Automotive Aftermarket Europe said, “We have a clear branding strategy – Lucas for braking and TRW for steering and suspension. Our OE position and the reputation for excellence for Lucas braking and TRW steering and suspension makes this an obvious direction for us.”
The Heafner Tire Group is changing its name to American Tire Distributors as from the 4th July 2002. The new name reflects the national nature of the business and focuses on the distribution element of the company. The name change is part of a national branding operation to standardise the company image and operation throughout the USA.
Nokian Tyres is preparing to launch RoadSnoop, its first generation tyre pressure and temperature monitor. The sensor is battery powered and is mounted in the tyre at tyre changing and operates instantaneously upon turning the key in the ignition. It sends signals to a dashboard mounted monitor. Deliveries are expected at the beginning of March 2002.
The French tyre trading network Arc-en-Ciel claims to be the largest European chain of independent tyre dealers. In 1986, there were only twelve members, but this has grown to a network of 850 outlets in Europe, 386 of which are in France. Every year, 20 new members join the group, it is claimed. In France alone, Arc-en-Ciel distributed around 2.9 million tyres in 1999, with the group holding 11% of the car/van tyre market, 9% of HGV and 18% of the agricultural tyre market. The Arc-en-Ciel branding is memorable – the name means rainbow in French – and this is carried over to a range of own brand products, which, of course, includes tyres that go under the name Eurotyre. As Arc-en-Ciel spreads across Europe, its strength increases. In addition to the French network, the group has a presence in six European countries, including 71 depots in the Benelux and 168 in Spain. Further expansion is envisioned in Portugal and in eastern Europe. Besides its fast-fit operation, Arc-en-Ciel has introduced a 24-hour replacement tyre service for hauliers in 14 European states.
According to research from Deloitte & Touche, businesses are not making the best use of Internet trading facilities. Most, they say, concentrate only on the supply chain element of their e-trading. According to the Deloitte & Touche report a full integration of the demand chain and supply chain, from basic supplier to consumer, offers greater shareholder value, increasing profitability by up to 70 percent.