Car press

May / June 2006
TYRES - DISTRIBUTORS AND MANUFACTURERS AROUND THE TABLE

Rechange Automobile: According to our study of the 19 main car tyre distributors, the service centres (Norauto et Feu Vert) are neck and neck with the Tyre specialists.

Alexis Nerguisian: We use the Internet as a distribution model enabling us to sell tyres cheaper than they do through traditional retailing means. Pneus-Online has now been around for five years. But that's not to say that its purpose is to destroy the market. It's true that price is the sales argument we use today, but we absolutely rely on our partners to fit the tyres. I am therefore very sensitive to the results of your survey which gave good marks to the majority of the companies for technical advice. (...)

R.A.: Here are the results of a comparative study between the price of tyres sold via the Internet and the same items sold through retail channels. Surprisingly, although the three leading websites do sell cheaper tyres, their partner fitting centres actually charge more for fitting and balancing, and make an additional charge for recycling the old tyres. All of which ultimately reduces any savings to the customer on the tyres to zero. The conclusion is that the Internet traders by no means have it all their own way. Alexis Nerguisian, don't these figures put the lie to your economic model?
Alexis Nerguisian: No they don't. But it is true that there is a lot of fairly groundless confusion about Internet sales. I am the first to admit it. One of our main concerns is finding partner fitters. I am surprised you found an average cost of 22 ¤ per tyre for fitting. Of our 800 partners, no more than 100 charge those sorts of prices. Everyday, we cherry-pick the best fitters so that we can provide attractive fitting costs of at most 16 ¤ inclusive of tax and recycling charges. One thing's for certain, at 22 ¤, we would not automatically be the best choice for the consumer. (...)

R.A.: Isn't it due to the price information provided by the Internet which gives more negotiating power to the consumer compared with the physical distribution channels?

Alexis Nerguisian: : It is certainly true that it is very easy for the big names because they already have retail sites. But I genuinely do wish everybody luck because the inevitable problem of distribution does need managing. How can you sell tyres to a customer for less money without eating into a network's margins? (...)

R.A.: Looking to the future...
Alexis Nerguisian: As far as I'm concerned, the Internet channel and the physical distribution channel will come together in the next few years. I believe the tyre market will consolidate and we will see a certain number of sales outlets closing their doors. The same will happen to the Internet sites. (...)

Extract: Rechange Automobile, pages 33 to 46 - May / June 2006