Johannesburg - The retail tyre sector is set for a major shake-up, with new vehicle dealership groups to offer motorists new tyre sales and fitment services through their service departments.
Jebb McIntosh, the chief executive of listed vehicle retailer Combined Motor Holdings (CMH), said on Friday it had introduced tyre retailing into “a fair percentage but not all” of its 52 dealerships over the past three months. He said CMH would not be unique in retailing tyres and that there would be an effort by dealers and dealer groups to try to get some of the tyre business volumes back.
Philip Michaux, the chief executive of the Automotive Retail and Car Rental divisions at Imperial Holdings, confirmed it had looked at a few options in regard to tyre retailing in the group’s dealerships.
But he said from an Imperial automotive perspective it was not something it would look to get into because the volume and spread of tyres they would have to buy would not be more competitive than existing tyre retail outlets.
He said he could not speak on behalf of Associated Motor Holdings (AMH), a separate business within Imperial Holdings. Attempts to obtain comment on Friday from AMH and other major vehicle retail groups were unsuccessful.
McIntosh said the rationale for moving into tyre retailing was in line with the group’s strategy of adding value for customers in its service departments. He said tyres were a huge opportunity but it had been difficult to get into because tyre manufacturers had such large volume discounts for the various tyre retailers, making it difficult for vehicle dealerships to be competitive in this market.
He said previously tyre manufacturers were prepared to supply dealerships with tyres but were insistent that the dealership had to sell about 1 billion tyres a year and dealerships were unable to get sufficient critical mass to achieve this target.
McIntosh believes there had been a rethink by tyre manufacturers, adding that CMH had tied up a few brands for its initiative and was hopeful the group could make some inroads into this market.
He admitted CMH would have to change the habits of motorists for its tyre retailing initiative to be successful.
“The various tyre dealers and fitment centre groups have a well-established niche in the market. But at least we can be competitive now whereas before we could not reach the threshold of being competitive,” he said.
Jakkie Olivier, the chief executive of the Retail Motor Industry Organisation (RMI), said this initiative would make the tyre market more competitive. However, business casualties were possible because of the increased and tougher competition if they were unable to get a return on their investment in expensive technology and equipment.
But he said the RMI had not received feedback from dealers and fitment centres or the National Automobile Dealers Association about this issue.
Olivier said technological advancements had resulted in the auto market moving towards specialisation and away from one-stop shops but businesses were diversifying again to support profitability and survival. He said this was also happening among tyre retailers and fitment centres, where some businesses had diversified into other areas, such as brake and clutch repairs and even minor vehicle servicing.