Bridgestone Profit to Rise
Bridgestone Corporation is set to make a nine per cent gain in net profit to $891.6 million (£490.3 million) by the end of this fiscal year, according to a Japanese newspaper report.
News from the tyre wholesale sector
Bridgestone Corporation is set to make a nine per cent gain in net profit to $891.6 million (£490.3 million) by the end of this fiscal year, according to a Japanese newspaper report.
The National Tyre Distributors Association (NTDA) has confirmed its support of the 2005 Aftermarket show.
Director Richard Edy commented: “We are constantly searching for high profile opportunities to meet with members, as well as those businesses and organisations that play a major part in our industry. Our first experience of the Aftermarket Show proved it was an event that was capable of meeting our needs. With the show planning an even greater focus on the issues and opportunities that matter to the tyre industry, we’ll return next January confident of building on that success.”
Next year’s show will concentrate on core business issues, such as mobile fitting and service, tyres and the environment, developments in tyre technology and the delivery stream of wholesale supply to the UK market.
The Aftermarket show will be held at the NEC from 13-16 January, 2005, and will once again be staged alongside the Autosport International show.
Danish wholesaler, NDI is proving popular in Germany having opened its second retail outlet in five months. Founded by Benny Kristensen, the company now has stores in Dortmund and on the outskirts of Hamburg. Managing Director, Michael Andre claims the company´s success will be based on meeting NDI´s next day delivery service. The Danish firm has also enlisted the services of Hamburg-based off-road expert, Viggo Meyer-Bernitt, as the firm continues to develop its share of the off-road tyre market.
Cooper Tire & Rubber Company plans to launch AVON Tyres USA, a new collection of performance passenger, light truck, sport truck and motorsport tyres. Completely new to the U.S. and Canadian markets, the AVON Tyres USA line is the first ever to have been designed and engineered from consumer feedback data. All data was collected and analyzed by The Tire Rack, the country’s largest independent tyre tester, through its web site, www.tirerack.com.
The Indian Government is to permit Michelin to import bus and truck radial tyres for wholesale trading on cash and carry basis until its joint venture with Apollo Tyres becomes operational. Michelin Apollo, 51 per cent owned by the French firm and 49 per cent by Apollo Tyres, will take about 20 months to begin production.
The new Chairman of the NTDA Tyre Wholealers’ Group, Peter Gaster took to the floor at the NTDA TWG luncheon to offer one or two points for the trade to consider. Gaster opened by highlighting the fact that whilst he was looking at things from a wholesale point of view, it was worth remembering that many at the event had a foot in both retail and wholesale camps.
He outlined the importance of the role of the wholesaler, comparing the ability of the multi-brand wholesaler to that of the tyre manufacturer and how the result was benefiting the tyre trade as a whole. “The true wholesaler performs a vital and necessary function in the UK distribution market in providing a variety of products and deliveries to all retail sectors in the industry and it is here that the wholesaler performs the most vital function which is service. We are all aware of the cost of distribution and I’ve always felt that manufacturers have at the best misunderstood and at the worst miscalculated the cost of distribution and the reality of the logistics and practicality of delivering one tyre to one customer on a daily basis.
To Continental, National Tyres and Autocare and Viking International and associated trimmings were a collective albatross around the neck of the UK division. After years of loss-making Conti made the decision to cut its losses.
The company and its assets were bought from Continental for a figure that, depending upon how the numbers are crunched, is either 15 million, or 24 million pounds. Some would say that was a lot of money for a business on its last legs. The long and the short of it was though that National came into the ownership of the Axle Group, a parent company formed during the management buy out of National, where most of the management team had built careers out of the fast fit trade – almost all having been employed on the shop floor at retail level at some point in their career. Alan Revie had been manager at Smiley’s Langside outlet and had taken on John Caldwell as a fitter – now Revie heads the Axle Group and Cauldwell heads the wholesale operation. The people at the helm of National were thoroughbred fast fit experts who knew the business inside out.
The fiscal arrangements of the business have been, by now, well documented but the purchase price of the business was met largely through the revaluation and sale of properties no longer required by the Axle Group. The outcome is that the Group has no debts and is currently in a very strong position, and Alan Revie makes a point in talking to T&A of emphasising that fact.
Mark Emkes says his top priority as the new chief executive of Bridgestone Americas Holding Inc. is to make the division he headed the past year turn a profit. As the Nashville-based business continues its turnaround from a devastating tyre recall in 2000, three units are making money. Not Bridgestone/Firestone North American Tire, which includes tyre manufacturing and sales of wholesale and original equipment. “We’ve made nice progress over the last 12 months, but the goal for 2004-2005 is to make that business profitable,” said Emkes, who will continue heading that division even as he takes over the entire company after John Lampe retires on March 31st.
The tyre trade has been buying and selling tyres for over 100 years. One might have imagined that it would have settled on a profitable, manageable and structured method of distributing car tyres from manufacturer or importer to retailer by now. However, it hasn’t and one suspects it never will.
Way back in the mists of time life was simpler. The tyre manufacturers supplied their tyres to the vehicle manufacturers and tyres were supplied at the local garages. The number of brands available was limited and people tended to buy what they wanted at the garage displaying their brand’s logo.
In the 1960’s tyre manufacturers would have supply arrangements with local dealers who would agree to take their brand of tyres and then redistribute to local tyre fitters, all at fixed retail prices of course. Then the manufacturers decided that they could deliver, and they cut out the local dealer, they set up their own logistics operations and offered to deliver tyres to anyone who would buy them. The result was chaos.
In the meantime, the network of local tyre wholesalers in the UK was developing. The manufacturers realised that they could not survive delivering just their own brands so they delved into the market with their own tyre wholesale operations.
At the same time there had been the development of a number of regional tyre wholesalers. Of which Stapleton’s had become a national player.The co-operation of strong regional wholesalers across the UK culminated in the establishment of Group Tyre.
Whilst Stapleton’s and Group Tyre dug in for a long war a third player entered the fray. Hampshire-based Micheldever, the sleeping giant, decided to make some moves to expand out of its Southern base. It first bought Southam Tyres, then opened a warehouse at Chepstow, and now Halifax with rumours of interests in the North East being rife. Battle was joined.
To listen to the larger operators it would be fair to presume that no independent had any involvement in the fleet market or the franchised dealer sector. However the independent trader is well aware of the situation and whilst some may be content to work on ever diminishing markets, others may be taking another view of the situation.
The Micheldever wholesale operation has been rapidly growing but until 2001 had been concentrated in the South. However, the desire to replicate the wholesale success achieved in the South had led Tony to search for strategically placed wholesale premises initially in the Midlands and North of England, and when Southam Tyres came on the market in October 2001, Tony beat off competition from UK, European and Far Eastern wholesalers to acquire the Southam business. This immediately provided Micheldever with the UK’s most successful 4×4 tyre distributor and its specialist sales team, plus exclusive distribution rights to BFGoodrich 4×4, General Tire and Roadhog. However, due to virtually zero investment from its previous owners, the Southam warehouse was poorly equipped, lacking adequate storage systems and having an ageing fleet of vehicles.
The Micheldever investment came swiftly, with a new fleet, tyreracking systems and a vastly increased range of stock. The benefits of having the most comprehensive range of car and 4X4 tyres available in the Midlands quickly led to excellent sales results for the previously product starved Southam sales teams.
However, the move that really sent the message out that Micheldever had intentions to become a national player was the announcement of the new Halifax depot. A purpose built warehouse on four floors it will have a capacity for 600,000 tyres. By mid 2003 work was progressing well at Halifax, and finally in Sept 2003 the UK’s largest tyre warehouse commenced deliveries on a phased schedule.
Obviously for Micheldever the main thrust of the business at present is the development of the wholesale division and taking the offer to the trade across the UK. One of the much-vaunted drivers for offering national coverage is the potential to be developed in the franchised dealer network. The opportunity to supply tyres as first fit on fleet cars through the franchised dealers is reportedly enormous.
Tony Todd is adamant that there are two factors to being successful. The first is that you can’t sell it if you haven’t got it; the second is that you can’t do the job unless you have got the right tools and the right people in place.
With tyre retailers trying to minimise their stock holdings, the pressure is on the wholesaler as never before to have the right tyres in stock and to deliver them when required. Some wholesalers supply on a weekly basis, others will deliver three or more times a day if required. Is the retailer prepared to pay for this convenience and, if not, can the wholesalers continue to offer what is virtually a just-in-time service when their costs continue to rise? We talk to the major players in this demanding sector.
T&A talks to Martin Sutherland, general manager at Toyo in the UK, for an update on the company development.
Toyo is perhaps one of the most recognised mid-market brands in the UK. A series of targeted media campaigns both above and below the line have gone a long way to establishing the brand as the performance tyre of choice for many driving enthusiasts. In spite of the success of the UK operation it remains answerable to Toyo Reifen in Germany, so there is no UK managing director, the head of the chain of command in the UK is Martin Sutherland. Martin Sutherland has been with Toyo in the UK for the past 21 years, joining the company from Pirelli; so he knows a thing or two about the market in the UK.
Toyo has recently moved premises at Rushden. The re-location was only about 100 yards up the road, but the new premises have doubled the available storage space allowing Toyo to improve its stock capacity and as consequentially improve its service to its customers. Martin Sutherland says, “We have virtually doubled our stock capacity by moving to this unit. It offers us 70,000 square feet, which is twice the area of the old unit. However, we have managed to relocate without too great a disruption to our service or distribution. In fact, in the past we used to hold stock at the dockside and at one point had as many as 70 containers sitting in storage. All that stock is now held here, and we still have room to expand.
“One of the limitations we had on developing the business was the warehouse capacity and our restriction on turning stock around. That is no longer an issue and that allows us to offer a full width of patterns and sizes in all ranges. That gives us the potential to further build the business and we have the capacity here to grow considerably in all areas.”
The wholesale and distribution side of the tyre trade is going through a period of expansion and we could point to a number of companies investing considerable sums in new premises and expanding coverage. Toyo, though, is probably one of the few manufacturers talking so positively of expansion. What makes Toyo such a strong developer at this stage?
“There are probably a number of contributory factors,” says Martin Sutherland, “In the last fiscal year to 2003 we had our best ever results in terms of income and in terms of unit sales. In a market said to have declined by 2 per cent we saw an across the board increase of 12 per cent. That includes passenger car, 4×4, light truck and truck tyres. In high performance car tyres we saw a 37 per cent increase in sales.”
Winning volume and value in today’s tyre market is an uphill struggle, competing against established brands and in some sectors having to fend off price-led competition from the far east means that a 12 per cent increase is no mean feat. What do you attribute the success to?
“Without doubt,” says Martin Sutherland, “Much of our success is due to the quality of the marketing campaigns we have established over the years. Mike Rignall came to Toyo with the remit to redevelop our marketing and to increase brand awareness and he has done an excellent job in raising our profile in the trade and with the consumer. The way we have marketed the brand is now paying dividends for us. We established a policy of exclusivity for dealers and we have stuck to that policy and we have ensured that our availability is good.”
We hear a lot today about the demise of the retread industry, especially the car tyre sector, and a lot of tyre dealers have stopped stocking retreads, preferring instead to carry cheap new tyres.
Against this background, it is refreshing to learn of an independent tyre dealer who is not only still stocking retreads, but actively selling them. The company in question is Durham-based retailer and wholesaler Tyrespot, which stocks tyres from nearby manufacturer C-Tyres, and Managing Director John Shaw says that he has seen retread sales rise over the last two years and he expects to increase sales by a further ten per cent this year.
He explains: “We have never changed our policy towards retreads. Our experience has shown that if we stock them, we will sell them. This year we expect to sell more than 20,000 retreaded tyres through our retail and wholesale business, proving that it has been well worthwhile sticking with the product.”
John Shaw points out that much of Tyrespot’s growth has been achieved in market niches, emphasising the opportunities open to dealers willing to target and work at these markets. He says: “Although sales of 80 series retreads have stagnated, we have seen substantial growth in sales of retreads for 4×4 vehicles as well as increased demand for 65, 55 and 50 series tyres. It is clear that there is a large potential market for the sale of retreaded tyres to younger drivers who want to make sure that they are legal and who see the economic benefits offered by retreads. In addition, we are looking closely at the opportunities presented by retreads within the winter tyre market. As a result, we are well on the way to a record year of retread sales.”
Northern Ireland’s Magowan Tyres has joined Group Tyre. This development gives Group Tyre coverage in Northern Ireland and coincides with Magowan’s move from general bulk wholesaling to a more structured and targeted regional wholesaler of quality branded tyres. Daryll Magowan jnr. Says, “This is a new challenge for the business and we see the future as being more structured and more sophisticated. We will be developing the quality of our portfolio and offering a much improved quality of service to our wholesale customers.”
Magowan reported that the company was building an all-new warehouse with 30,000 sq ft of floor space with four tiers of storage giving an equivalent 130-140,000 sq ft of storage space. The new facility , which should be operational within seven months will also house a 22 bay fast fit operation that will se the company move into a wider area of fast fit service.
Some 18 months after Continental divested itself of NTA Retail, NTA Commercial and Viking International, T&A approached Brian Smith to find out how Continental Tyre Group was managing in its current format. After all, the complete closure/sale of a manufacturer’s equity is not an every day occurrence and must have had negative effects on Continental’s business in the UK.
Brian Smith knew that the performance of Continental Tyre Group without its UK retail and wholesale operations was going to be at the heart of the matter and he went straight to the point. “Continental Tyre group has shown its ability to handle change both quickly and professionally. One of our great strengths is the ability to make decisions, act on them and adhere to them even though they may be difficult courses of action to follow. We can spot opportunities and act quickly to take advantage of them. That is one of the core policies at Continental, to take opportunities and to handle changes when things don’t work out as planned.
“There is a table in reception that carries the Continental Mission Statement: “To establish Continental Tyre Group as the most professional supplier of quality tyres and customer services, respected for consistent, stable, business relationships. To be known for understanding the customers’ needs and for being responsive in meeting them.” That is a benchmark for the standards we apply at Continental Tyre Group and we need to ask ourselves, are we really like that?
“If we are to achieve that mission it is the customer services element which is particularly important. Then we need to consider how we think internally and what our aims are within Continental Tyre Group. It is in many ways more important therefore to differentiate ourselves from our competitors by the way we handle our customers to develop consistent business relationships.”
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