Page 37 - RB-74-15-3

HUNGARY
The production line is to Michelin specifications and faces an annual audit for quality and performance
the sales. It is about whole life costs. The Chinese tyres may be cheaper to buy, but they have a short life, so their cost per kilometre is higher. We can show customers that by using premium brands their long term costs are lower.
“Michelin tend to lease tyres to the bigger fleets. So they sell on the estimated cost per kilometre, and the fleets pay per km, rather than buying the tyre. Of course we cannot do that, but we can use the same principle of cost per kilometre to prove the benefits of what we produce.
“If our customers are satisfied, then we too are satisfied. We have long term aims for the company, and we want to sell to the same customers over and over again. In the Hungarian market Recamic retreads are the most expensive but the quality is the best and that is what will keep us successful.” When Retreading Business put the Chinese tyre question to Béres he was quick to respond. “We simply don’t sell Chinese tyres, not even the better quality ones such as Giti. We certainly don’t retread them. We experienced the Chinese tyres when they came into the market in 2008, and we saw our customers buying them, but mostly they have returned to the quality tyre sector.
“There is a market for the Chinese tyres in the On/Off road sector, and remember Hungary has a lot of unpaved roads, this is a sector where we struggle to sell premium tyres, especially if the roadways are abrasive. Here the operators see tyres as disposables, and they buy cheap and often. So, where there is no performance required, Chinese tyres can have a market. However, as long as we can sell in the performance market on whole life costs, cheap Chinese tyres are not an issue.”
As for customers: Who is buying these premium tyres in an economic downturn? “The answer to that is the fleet operators who understand the benefits of quality,” said Béres. “We focus on the small
to medium fleets, and we have three or four wholesale partners, plus we have an additional four outlets where we can sell our tyres. “In Hungary there are some small retread companies that try to compete on costs with the Chinese tyres, but it is very difficult, and they are dealing with customers
who are looking only at the low cost to purchase. With the Michelin contract that we have, we need to sell 2,500 Remix, and 5,000 Recamic/ New Life tyres. “Michelin deal with the bigger fleets with maybe 3,000 trailers, and they opt for Remix direct from Michelin. Selling Recamic is totally our business, there is very little assistance in sales from Michelin, but all the technical support we could ever need, when we need it. To sell the Recamic is a challenge, but we look for fleet solutions, and there we can sell both the new tyre and the retread.
“Our challenge for the future is to maintain the quality and to sell the best quality tyres that we can. We do have to sell into the budget market and we have negotiated with Michelin on this. They have
agreed to an arrangement where we can use Marangoni products to offer a middle market offer that lets us sell at lower prices where needed, but there is a percentage restriction on that business, and if, when we are audited, we have focused too much on Marangoni, we will lose our Recamic contract. However, we always want to offer quality because we believe that is the way to survive and grow.”
As an indicator of the contradictions in the Hungarian market where cheap Chinese tyres have had such an impact, Béres explained that they used to sell 9,000 Kormoran tyres four years ago, and 2,000 Michelin. Today, they sell 5,000 Michelin and 5,000 Kormoran, there has been a key change in the market towards the premium brand.