Earlier today I had a visit from Mathew, our Value Tyres sales representative making one of his regular calls to Megatyre. Sure this will excite some tyre industry people as usual, but that is their problem.
As always on these visits, we reviewed Megatyre’s sales and he updated me on Value’s new products and the tyre market in general. There was no need to discuss stock availability as everything was in stock! We ended up having a long discussion about the Hankook brand in New Zealand.
I asked if there was any prospect of Value Tyres distributing one of the old high priced prestige European tyre brands; the answer was illuminating. Matt explained that Hankook was now the number two or three largest selling tyre brand in New Zealand with Hankook’s market share continuing to expand; such expansion being fueled by widespread acceptance of Korean product quality, motorsport success and Hankook’s aggressive original equipment (OE) new Vehicle program.
Matt reminded me that Hankook is a huge selling, super high quality, brilliantly marketed, innovative and technically excellent product with quick and reliable lines of supply. Value Tyres contention is that with Hankook, they already have a leading Prestige tyre brand, albeit one with mass market pricing and huge sales. Matt said there would be nothing to be gained from picking up one of the over priced old European Prestige tyre brands which are small sellers, have problematic lines of supply and overseas principals who do not understand our market. All of this is evidenced by the churn of old prestige tyre agencies from one tyre wholesaler to another as suppliers dissatisfied with poor sales try to find a company that can sell more tyres or as local wholesalers dump them.
New Zealand’s tyre market is just fundamentally different to that of Europe, Britain or even South Africa and the USA; the famous old prestige tyre brands still have a big presence in those markets whereas that has never really been the case here. These brands have always been highly priced in New Zealand and then there is the geographical imperative, we look to Asia for our tyres and it is Asia that supplies tyres priced the way Kiwi consumers want them. Crucially, Hankook have made the effort to understand our market and its requirements. And what is the point of consumers paying top dollar for tyres that are only marginally better performing, if at all, than Hankook tyres? Some of these old brands have a marvellous history, but it’s not worth paying money for.
Look, I am not saying these famous old brands are not top quality, because they are. Significantly they are still fitted as Original Equipment on some vehicles but it must be remembered that vehicle manufacturers pay very low special prices; retail prices that Kiwi consumers have to pay bear no resemblance. And it should be remembered that many vehicle manufacturers are fitting Hankook tyres to their vehicles; For example, BMW now fit Hankook tyres to 5 of their models including the BMW 5-Series. These old prestige tyre brands are now made in low-cost countries like Thailand, China, Brazil, Indonesia etc and surely benefit from such low production costs just like the lower priced tyres made there. So the owners of these old brands rely on their brand reputations to exact a price premium; there is nothing wrong with that but why would Kiwi consumers want to pay that premium when they can buy equal quality Hankook tyres at much lower prices?
Matt’s dead right, why would we compromise our huge selling, brilliantly priced prestige Hankook tyre story by picking up one of the old European brands for no benefit? It would not make sense…..