The head of massive Middle East tire distributor Al Dobowi Group is virtually unknown on these shores. But the chairman, Surender Singh Kandhari, may understand the tire business far better than many of his American counterparts.
Kandhari apparently stunned more than a few people with his recent assertion that, in his view, there is no such thing as a bad tire anymore. Speaking on the emergence of budget tires at the recent Automechanika Middle East, the chairman said that the combination of “ambitious manufacturers” and increasingly tough legislation has created an opportunity for “budget brands” to rapidly increase sales volumes and their own quality standards.
As a result, he said, “There are no bad tires; only good ones and better ones.”
When asked by Tyres & Accessories magazine how his viewpoint washed with Michelin’s opinion that forthcoming European tire labeling laws will lead to a roughly 30% reduction in the number of Chinese firms able to export to Europe, Kandhari said that such low-end tiremakers won’t be able to survive as exporters and won’t be present in markets that regulate tire performance expectations – such as rolling resistance, treadwear and traction.
Japan already has such testing and labeling regs. Europe’s are slated to take effect in 2012, and the U.S. at some unknown point in the future. Brazil and Middle Eastern nations will follow suit.
Once in place and fully functioning, these regulations will serve as proof that “bad tires don’t exist.”
Extending that argument, Kandhari also noted that international tire markets become increasingly polarized, with tires being classified as either “budget” or “premium,” according to T&A’s report, and there is no longer any middle ground. But those qualifications have been largely made based on product price, not product performance.
Those assertions are often evident in North America, where unions, legislators, car companies and even other tiremakers want consumers to believe that less expensive tires are automatically bad tires (and bad for American workers so we need a dysfunctional tariff).
But market expectations pushed tire performance faster than price. If you want to compete in the Americas, for example, at minimum you need to produce and deliver tires that provide the level of performance expected by the market. In the past, if you did that and offered a low price, your tires still got classified as “budget.” Ask any dealer today and they will tell you the same thing: Yesterday’s so-called “budget” brands are actually products that are quite proficient.
As Kandhari stated: “No one spends $200 million on building a factory to make bad products.”
“While some might see the 2012 labeling laws as being the best way of separating the wheat from the chaff, Kandhari was optimistic about the performance of lower-cost products: ‘When economy tires achieve a B or C rating, they are as good as a premium,’” T&A wrote.
The point is that some “budget” brands will reach higher performance levels, which will put even more pressure on the “legacy” brands. Consider, too, that Kandhari’s firm handles European, Middle Eastern and African distribution of tires from Linglong, Hangzhou Zhongce and others, as well as Bandag, General, Goodyear, Hankook, Ceat, Pirelli, Trelleborg and others.
When you frame that around our current run on price increases, Kandhari’s remarks could also be seen as a warning to the majors.
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We do like our oddball stories. Especially when there is a loose connection to our business.
Perhaps you have read about the Edmonton man who saved his Canadian Tire cash for 15 long years – to buy a riding lawn mower.
Now 29 years old, Brian McPherson started his quest when, as a 14-year-old he received his first 10 cents of Canadian Tire money after buying a hockey stick. He thought it would be a good idea to save up is Canadian Tire money and buy the most expensive thing in the store, which at that time was a riding mower.
Like many kids, he made a promise to do something. Unlike most kids, he followed through. Every penny of Canadian Tire cash went into the fund, change from this purchase, change from that. He bought whatever he could from his local Canadian Tire store. When he had spare pocket change, that got converted into the chain’s iconic spending money.
After 15 years, McPherson has $1,053 in Canadian Tire bucks, just enough for his dream mower.
Even though he already has a working push mower, "This is one of those things that you set the goal when you were a kid and told your friends and family about what you were saving this ridiculous amount of Canadian Tire money for," he told the local paper.
Good for you! Now get out there and cut the grass!
