Galgo - Racing Ahead

One of the busier retreading stands at Essen this year was that of Galgo Pre-Q. Joe Krimpenfort and his sales team were truly occupied with enquiries throughout the show, from start to finish. Not something that every exhibitor could claim.

There has to be a reason for this draw to the Galgo stand and it wasn't just the snacks and refreshments on offer that made the difference. Galgo is not a newcomer to rubber production, for over 55 years Galgo has been a strong market player in North - Central and South America and is still making its mark in Europe, but it does so with products tried and tested in the Americas by a reputable manufacturer with its own highly skilled research and development department. Whilst rolling resistance is one of the current buzz words in the tyre sector, it is nothing new to Galgo, as right from the outset of trading in Europe all of Galgo's long distance application treads have been compounded with low rolling resistance materials. Regular end users of Galgo precure treads have recognised the superior mileage and economy that Galgo products offer, according to Joe Krimpenfort.

The reality is that the established European market players continue to lose share to new players and the established producers will always complain about low priced competition from outside Europe Galgo's results in Europe within five years certainly suggest that the product is in the right quality range. With an increasing market share Galgo has put itself in a strong position to grow further, aiming at a 15% share by 2012.

On entering the market in 2003/4 Galgo targeted Germany as the market with the greatest potential in Europe, it accounts for some 20% of the European market for retread materials. This year though has seen the German truck tyre market dive by 25%. However, despite this reduction in market size Galgo has been increasing its sales in Germany, pointing to an ongoing increase in market share.

This prediction of 15% market share is based on careful market analysis and the presumption that there will be no "new" incomers to the European market. The Belgian -based distribution operation for Galgo has also spread its team across Europe and is experiencing sales increases in Scandinavia, the Baltics, Central Europe, the Balkans, Turkey, Southern Europe and of course the UK. Joe Krimpenfort also advises that there are the beginnings of sales in that much coveted market of Russia where plants with considerable capacity are being developed in anticipation of the growth of the domestic market for retreads. The Russian demand comes from end user experience using imported Galgo-equipped retreads from the Czech Republic and Germany. This has created a pull for the Galgo product in Russia as the local producers begin to develop their own retreading operations.

On the general market conditions Joe Krimpenfort sees the firm's 7% share as a good start to creating a key role in the market for the brand. The market is changing, according to Krimpenfort, there is, he says, a clear trio of top players in the sector, Marangoni, Kraiburg and Bandag. However their combined market share is likely to fall below 50% by 2010 as other suppliers increase their market share. Galgo is in a very strong position with product quality, distribution and technical back up to increase its share of the European market. It doesn't take a rocket scientist to see that if Galgo makes its 15% target by 2012 that the brand will then either have matched or have superseded one or more of the established European producers.

In general retreading is buoyant and the percentage of retreaded tyres in use may even be growing. However the shortage of casings remains an issue which is again, an indicator that the market for retreads is still growing. Needless to say this demand for casings is pushing prices up, and in many cases all available casings are being retreaded in their own local markets or exported for retreading elsewhere, particularly in the fast expanding Russian market where there is a shortage of casings due to the quality of the domestic new tyre product (though this is improving) and the state of the countries road infrastructure.

Raw materials prices do have an impact upon the market, but since they affect everybody equally the real issue is perhaps less of a barrier than some might argue. In retreading terms the ability to provide the end user with more economical to operate retreads adds a selling point that few can afford to ignore. Better quality retreads with a lower rolling resistance become more advantageous when fuel prices rise. Galgo's Tongeren distribution centre operates from a 2,000sq.m warehouse at the headquarters of its European logistics supplier, ensuring no more than three days from order to delivery throughout Europe.

When Retreading Business last visited Tongeren, Doug Howell had just taken on the UK and Ireland distribution of Galgo Pre-Q through Tyres Supplies International. Doug is delighted with the response the market is giving Galgo and reports that the UK market is responding positively to the product.

Issue 2008/4