Tyrepac 1st Carpark Tyre Sales @ Turf City

Tyrepac’s inaugural 1st Carpark Tyre Sale event was held at Turf City over past weekend (22nd-24th May 09) and proved to be a roaring success. It was the first-ever tyre sale event held at an open-air carpark with over 15 brand of tyres for consumers to choose from. The event attracted over a thousand car owners, with over 700 tyres and rims sold. Car accessories, wipers, car care products were also sold at the event.

This was the first time car owners had the option of choosing their tyres from such a wide spread of brands, and getting them changed right on the spot. The event was organized with Tyrepac’s key objectives in mind, of providing our customers with transparent pricing, comprehensive range of tyres to choose from, convenience, and most importantly, making the right and informed choice with our advice and tyre education.

We are confident that all our customers who bought from us will be satisfied with the tyres they have chosen.



MyCarForum

The event also saw over 70 car owners from Singapore’s number one automotive community forum, Mycarforum.com attending. Twenty lucky members from MFC had the opportunity to attend a private ‘Tyres 101’ lesson from Mr Adrian Thio, General Manager of Tyrepac, who covered topics from the different types of tyres to the importance of tyre rotation. Five lucky participants also walked away with various gifts sponsored by Tyrepac.



We will like to thank everyone who attended and helped to make this event a success. We hope to see everyone back for the next “Carpark Tyre Sale”. More details will be provided in due time. Looking forward to seeing you at the next tyre sale!

1st Car Park Tyre Sale

Tyrepac is hosting a "you-can't-miss-it" carpark tyre sale May 22nd to 24th 2009 at Turf City.

This first of its kind car park sale will offer a great selection of tyres from numerous brands including Goodyear, Yokohama, Dunlop, Firestone, Kumho and more. Rims and other various automotive accessories will also be available at fantastic discounts.

Event Details
Date : 22 May 09 (Friday) to 24 May 09 (Sunday)
Time : 10:00am – 5:00pm
Location : Turf City car park (near Giant supermarket). 200 Turf Club Road. Singapore 287994

Amber Road

The Land Transport Authority (LTA) has fixed the divider at the common accident area along Amber Road, as you can see in the photos below.

Temporary cones placed to alert motorists.




New sign alerting motorists of the divider.

Tyrepac Malaysia Soft Launch

Tyrepac Malaysia have soft launched, check out the website and provide us with your views & comments!

http://www.tyrepac.com.my

Key issues to address in the near future

Unfortunately, as much as the title suggest. I will not be able to say what these issues are exactly and what should and can be done to ensure an enterprise continue to prosper over this difficult period and what can be done to capitalize on the better times. We know for sure the present global economic situations will definitely be reshaping the tyre industry. The general questions we could be asking ourselves are perhaps;

1. Excesses from China
How will the excesses in China, way beyond local demand, affect the global supply and pricing situations? This question can be further digested, and an analysis of individual product category is required. But I think this is my crystal ball guess;

· The number of manufacturers will diminish particularly the ones who have poor cash flow
· We may even see some of the big ones go under for mismanagement and over expansion- a result of bad cash flow management.
· The ones who will prosper will probably be restricting themselves in size and cutting back on unnecessary expansion. The better ones will concentrate on product specialization be it in TBR, PCR, LTR, or even OTR.

2. The American Market
How will US tyre market, dominating practically a quarter of global tyre demand evolve? Will SUVs and light truck demand really start to diminish, and if so, how will this mutation pen out? Will this mean better and further penetration of Asian car make in US, and if so, what are the new preferred car models since it affects tyre size mix?

· The American market will always dominate, and I doubt the few remaining manufacturers will disappear. Some tie up will bound to happen and the consolidation will result in cost cutting and perhaps produce a leaner and better organization
· I do not think the US market, particularly the LT and SUV demand will diminish. It may be scaled back in demand over this period, but I am sure when better times are here, the demand will resurface.
· Asian makers will penetrate US this period with economical car makes and may swing part of the SUV and LT demand into saloon cars. The size mix may change slightly but should not be too drastic.
· In this sense, I think Asian auto makers may be in for a smoother transition over this tough period compared to American manufacturers. When I say this, I am also making reference to the tyre manufacturers and the situation that may unfold for them.
· Tyre manufacturers will naturally push out fewer patterns and have cross functional patterns that perhaps cater both to the demand of an average car owner as well as the owner who needs his bigger car size replacement.

3. American tyre manufacturers
What will become of American tyre plants which have skewed production to SUVs and light truck? What is the cost of transforming existing plant structures from producing SUVs and light truck to producing more passenger or even commercial tyres?

· The cost structure of the US based manufacturers, and the fact that Asian makers will be making bigger inroad into the US markets will simply mean the US makers will be forced to scale down in terms of size and further concentrate on a specific SUV/ LT tyres.

4. Automobile demand
How will the definite drop in global new automobile demand over the next few years affect tyres required for OEM? Will the excess created by this drop in OEM tyre demand further place more excesses into the replacement tyre market?

· Excesses will force closure and stoppages and makers are expected to shoulder the burden of overheads. In the case of prolonged stoppages, closure may be inevitable. The combination of stoppages and closures, a measure of last resort, will hopefully balance out reduced demand.
· The replacement market will be there, but competition (until the reduction of supply balances reduced demand this period), prices will be driven down and we should witness downward pressure on all raw material.
· What will happen to consumer demand over the next two to three years, when economic situations are expected to be at its worst? What will happen to retailers and distributors, particularly the large ones, who have geared themselves to the good times two to three years back?
· Distributors, or at least those that I know, particularly the larger ones are in dire situation of having to cut cost, lower overheads, stock cautiously, and prepare for a period of reduced demand.
· Consumers will be cautious and demand for higher end products will slacken.

5. The 3 big markets
The global demand for tyres can generally be classified into 3 big markets- US, EU, and Asia. Together they each take up an approximated a third of market demand.

The automotive markets are in disarray, and practically all automotive makers are either stopping or cutting production. This sudden reduction in OE will shaft supply into the aftermarket we have not witness before.

We also have to understand that this phenomenon of a global crack is never before witnessed, and the historical growth in demand has driven an excessive expansion of production capacity.

Parting words
· Further integrations of major players- acquisitions and mergers will happen over next 2/3 years
· Chinese manufacturers will go through a period of “big acquiring small” either voluntarily or involuntarily
· Chinese will dominate TBR with lower end and in the near future mid range products, major players will dominate higher tier product category. While mid tier will predominantly be the realm of Taiwanese, Korean makers.
· A few Chinese manufacturers will appear as a player in the budget UHP market.

This is the final post by Ler as he discusses the trends of the tyre industry. Ler Hwee Tiong is Managing Director at Tyrepac Pte Ltd .

The Trends

In my recent conversation with Itochu, Continental, Pirelli, Goodyear, and some of the biggest stockiest in the region- some trends are pretty obvious.
1. Manufacturers are beginning to realign product lines
2. Stockists are contending with tighter credit and practice caution in purchase
3. Smaller retailers or retail chain remains relatively stable as of now, but big retailing players are feeling the heat from hot properties secured, and high lease properties.

You would have noticed that I relate all incidences to the impact created to the manufacturers. Unfortunately, manufacturers end gets the repercussions of market upheavals.
1. Tyre manufacturers go through particular hardship during economic down trends. This fact is very closely linked to the fact that automobiles are luxury items for many countries. And during down trends, the car is a luxury we can do without. In countries which cannot do without a car, the US for example, people switch their buying habits or delay buying urges. We have already witness how this impact is so eminent and already auto makers are reacting by either shutting production plants, or realigning production. We may have to examine the role of automakers a little more to understand how this impact will turn out.

2. Tyre manufacturers are also hit hard because they are raw material reliant, capital and labor intensive.
a. When the times are good, raw and related material rises with the good times. Manufacturers rarely can capitalize much on the up swings since majority of price adjustments cater to rises in raw material.
b. When the down swings come, manufacturers are handicapped by intensive capital invested and poor efficiencies due to capacity cut backs.

3. When the economy weakens, the entire sales channels stop stocking beyond required and consumers become rational in purchases. The artificially inflated demand disappears, and manufacturers are left wondering what happened. We are already witnessing this phenomenon in progress. From past trends, prices will start to collapse and moving further south when raw material prices come down. The market demand at the retailing end is there, but the trading channel and distribution channel stops or slow down purchase. By chewing further, we know;
a. OE demand drops drastically creating excesses into the replacement market
b. Weakening of domestic markets further create excesses
c. Export/ trading activities minimized as traders become cautious- whatever price level.

4. Extreme up and down trends, are however also opportunities. The Asia financial crisis in 1997, saw various countries with currencies in a state of imbalance vie-a-vie other currencies. Indonesia had its Rupiah value halved practically overnight to a low of about Rupiah 12,000 per American dollar. Opportunists and we did see many, descended into Indonesia and practically clean out all tyres from Indonesia- selling them into countries with stronger currencies.

5. Those who do not align well with the conditions of this down trend may be in for some serious awakening. Realign products, product lines, product categories. Already as we speak, tyre manufacturers of Chinese and Korean origin are reacting with aggressive price reductions. SRI in the mid 90s launched the LeMans range of product, which transcended the budget and tuning range, and the launch coincided with the bad times. Consumers took to it immediately and this product in my memory, sold extraordinarily- not because it was a great product, but because it was a product which came in when times were bad, and was a product consumers feel was fairly priced.

6. Be ready to capitalize when the good times are here again, and if past trends serve us right, could be in three to five years time. We witness how Goodyear has done exceptionally well in this aspect based on the patterns launched during the “good times”. From a product planning stand point- I think Goodyear has done exceptionally well.

Ler will discuss key issues to address in the near future in his final segment on Trends of the tyre industry. Ler Hwee Tiong is Managing Director at Tyrepac Pte Ltd .

Update on Amber Road accident area

The Land Transport Authority (LTA) has responded with regards to our highlighting of a common accident area along Amber Road.

“We wish to share with you the current traffic scheme at Amber Road is not yet completed.

“Our contractor has taken care to alert motorists of the presence of these new dividers by placing those orange traffic cones at the end of the dividers.

“Apparently, the cones must have been removed which caused the dividers to become a hazard. We have since informed our contractor to replace the cones.”