News, Opinions and Discussion
Digital technology has revolutionised almost every aspect of modern life, and the world of the motor business is no exception. The internet has led to the rise of an online ‘sharing economy’ that allows people to rent and share physical and intellectual resources. This cataclysmic change in consumer buying habits has implications for us all, but the effect is particularly significant for the automobile industry.
Some industry experts and social commentators argue that the biggest threat currently facing the European motor industry is a phenomenon known as ‘peak car’, which suggests that the number of cars (and tyres) in circulation will hardly rise any further. There is now a tendency among the younger generations to focus on gadgets and technology rather than being seduced by their first car as a teenager. And as the sharing culture of Airbnb and Uber lead inextricably towards carpooling and ‘on demand’ driving, what does this mean for the future of tyre companies? One thing is for certain – it’s no longer going to be ‘business as usual’. In fact, according to Automotive News, in June 2016 the growth of European car sales had slowed to just 6.5 percent.
The Practicalities of Car Ownership
One of the main issues appears to be that a significant number of Millennials, particularly graduates, currently live in urban areas so car ownership isn’t a priority for many, and for a great many more, owning a car simply isn’t financially viable. Like owning your own home, for the younger generation, car ownership seems very much out of reach. It’s clear therefore, that the auto-industry needs to adapt. But what changes need to be made, and how exactly are brands to appeal to a generation whose interest in car ownership is seemingly at an all-time low?
What we need to remember is that although Millennials aren’t necessarily investing in cars now, they will in the future as their lifestyles inevitably change. When they have swapped urban life for the suburbs and have children that need to be driven to and from school, sports practice and music lessons etc., renting/sharing a car will no longer be practical. Having a family means that your priorities change – this is no less true for Millennials than it was for previous generations. The struggle of trying to balance family life with work and other commitments is a difficult enough task in itself, but as Millennials are now starting to realise, it’s even more difficult when you don’t own your own car.
It is then perhaps of little surprise that recent statistics suggest that Millennial demand for cars is actually rising much faster than anyone anticipated. According to global market researchers, J.D. Power, Generation Y are in fact, buying more cars than the previous generation, with sales rocketing to 27 percent in 2014, from 18 percent in 2010. While it’s worth noting that Millennials do significantly outnumber Generation X by 15 to 20 million people, these statistics demonstrate that the need and desire for car ownership still very much exists, and that it’s a consumer-market that’s just waiting to be tapped into.
Further proof of this is the fact that the growth of car sales isn’t just rising in the European market, growth has also risen exponentially in China and shows no sign of slowing anytime soon. In fact, the growth of car sales in China is still growing so considerably that in Beijing it is difficult to get new number plates allocated to you, even for those who can afford to buy a car. In Qingdao, which is a second tier city in China, they are now considering implementing the odd/even number plate system, which prohibits motorists from using specific thoroughfares on certain days of the week, due to there being such a large number of cars on the roads. So there can be little doubt that car ownership is still clearly growing and forecast to continue doing so – and statistically speaking it’s the Millennial generation who are driving this growth.
Adapting to Meet Changing Consumer Needs
Therefore, it’s more imperative than ever that automobile and tyre businesses focus on building a strong consumer-brand relationship with Millennials to establish themselves as Generation Y’s brand of choice, so that when they are ready to buy, they’ve already decided exactly which brand they’re going to buy from. Generation Y won’t make any purchase unless they can see an immediate and tangible benefit – and more importantly than that, they want to invest in a company with whom they can create a purposeful connection. Therefore, brands need to show that they share the same social concerns as Millennials by focusing on purpose as well as profit, to ensure that they appeal to a generation whose purchase power is still yet to reach its peak.
Indeed, The Deloitte Millennial Survey 2016 found that “Most young professionals choose organizations that share their personal values”. Therefore, brands need to be aspirational by ensuring that their products are at the forefront of technological innovation, but they also need to show that their working practices are economically and environmentally sustainable. They need to show that cars are as necessary, desirable and more importantly, as attainable for Millennials as they were for the generations that preceded them.
Forward-thinking companies such as Zenises in partnership with Alzura have already responded to this change in consumer needs by introducing the Flat Rate Tyre Subscription via the internet. Both innovative and unique to the industry, from just 2.99 euros a month, it is designed to cover all new tyre-related costs, and allows the customer to fit or upgrade tyres without having to worry about expensive on-the-spot payments. It is in essence offering a style of contract that has been popularised by companies such as ‘Netflix’. This concept is of huge appeal to the younger generations because it provides a short-term, cost-based solution to the issues that new motorists encounter, such as the high cost of making initial distress purchases.
Another fast-emerging trend that we are seeing within the auto-industry is that an increasing number of companies are now focusing on developing more environmentally friendly or ‘green’ tyres. Of course, this trend can largely be attributed to brands trying to appeal to the socially conscious value system of Generation Y. However, the introduction of EU labelling legislation in 2012 has also meant that tyre brands have had to focus on developing better quality tyres in a more efficient way, hence the rise of industry 4.0 tyre manufacturing factories. Otherwise known as ‘smart factories’, they are designed to utilise cyber-physical systems and technologies to make the manufacturing process more efficient and environmentally sustainable.
This ‘green’ trend can only be a good thing for the industry and consumers alike, as it means that brands are now creating tyres that have higher fuel efficiency and lower rolling resistance grades than ever before. This not only helps to reduce fuel consumption and CO2 emissions, but also helps to improve the motorist’s entire driving experience due to increased energy performance, which is exactly what Millennials are looking for from the brands that they buy from.
Generation Y will arguably be the most influential consumers in the market. In building this connection with Generation Y through changing business models and appealing to Generation Y values, a company can maximise its chances of longevity and give themselves a huge advantage in an increasingly competitive market.
In a recent interview with Larry King, world-renowned theoretical physicist Stephen Hawking, argued that the biggest threat to humanity isn’t nuclear war or the rise of artificial intelligence, it’s human greed and stupidity:
“Humanity needs to collaborate and change our assumptions of wealth and possessions if it is to tackle challenges like climate change, disease, food production and overpopulation.”
These words are disconcerting to say the least and serve as a rather shocking and worrying indictment of the direction in which humanity may be currently headed. However, thankfully there is one generation who appear to not only share his concerns, but are actively trying to find a solution to a problem that, if ignored, could have catastrophic implications for us all.
Millennials & The Culture of Sharing
Success used to be defined by the house that you lived in, the car that you had on your driveway and the money that you had in your pocket. However, Millennials, having seen the financial achievements of the Baby Boomer generation, have realised that monetary success alone isn’t the answer. As this quote from Forbes demonstrates, “Money is important and they [Millennials] do enjoy making it, however, they long to be part of something bigger than themselves”, Generation Y recognise that there must be a more meaningful and purposeful motivator for success than wealth and possessions alone.
Indeed, the concept of ownership has changed dramatically over the last decade, with an increasing number of young people now choosing to take advantage of the internet’s ‘sharing economy’. This digital economy allows them to rent or borrow physical resources such as cars, electrical appliances and/or recreational goods, and frees them from the ‘burdens’ of ownership. Daniel Arthurson, founder and CEO of Xercion observes that, “Gone are the days of self-serving ownership — community sharing and mass enjoyment are the “now” trends.”
It is perhaps unsurprising then that Hawking, one of the world’s leading thinkers, should also choose to comment on people’s changing attitudes towards ownership in his recent interview:
“People are starting to question the value of pure wealth … is knowledge or experience more important than money? Can possessions stand in the way of fulfilment? Can we truly own anything, or are we just transient custodians?”
In longing to be part of something bigger than themselves, Generation Y are daring to ask the same questions – if money and possessions aren’t the key to happiness and fulfilment then what exactly is? It appears that by being more socially conscious and responsible than any generation that has gone before, Millennials may be one step closer to finding an answer to this question. They understand that if they wish to be the instigators of positive change, then this can only be achieved by holding themselves and others accountable. Ghandi once said that we ‘should be the change that we wish to see in the world’ – Generation Y are embracing this philosophy, and they are inspiring the innovators, leading thinkers and entrepreneurs of our time, as well as the next generation, to do the same.
Focusing on People as well as Profit
Perhaps it could be attributed to the wisdom of youth, but Millennials recognise that money is and can be used as a powerful force for good, and that it can be utilised to create real positive change in society. However, when businesses work with the singular objective of maximising their profit margins and fail to consider their social impact, the pursuit of money becomes blind and the highest of ideals can all-too-quickly descend into greed and avarice.
As the gap between rich and poor only seems to grow wider, the need to find an ‘antidote’ to the insidious nature of greed has never been greater. Generation Y understand that we must start taking a top-down approach to business, in order to create a world where the monetary success of a company will no longer be of benefit to the few rather than the many. Of course those at the top should be able to enjoy the fruits of their hard work and effort, but so too should the employees working within the company, the community in which it was founded and society as a whole.
In other words, big business should be expected to reinvest in the social infrastructure of the communities that made them, and to set up charitable initiatives that benefit the most vulnerable and disadvantaged in our societies. Over time, this will create a ‘drip-down’ or ‘domino’ effect that will ultimately enable individuals and communities to thrive. Millennials don’t only expect, but they demand that this Utopian vision, which many dismiss as being the folly of youth and naivety, become a tangible reality.
Because while those belonging to the older generation may have little belief that our society can ever change, Generation Y refuse to compromise their ideals. They know that if we change our attitudes towards wealth, hold each other accountable and resolve to conduct business in an ethical and socially responsible way, then we can, and more importantly must, create a better and fairer world for everyone.
I’ve been thinking about how the world of tyres might change in the coming ten years or so. That’s not to think about which brands or sizes might be doing better or worse than they are today – except that Zenises and our Z-Tyre will of course be in the ascendant.
It’s more about changes in the way we do business. Tyres made in China are getting better. Today there is still a large gap in price but a much smaller gap in technology performance compared with ‘legacy’ brands (those tyre brands which first established themselves in the Western tyre markets decades ago). That big price gap is no longer justified by the small differences in technology. And the technology gap is shrinking fast. Even today many of our tyre brands can compete on equal performance terms with legacy brands. In a year or two, I expect the difference between ours and legacy brands to be indistinguishable.
On pure performance abilities, we should be charging the same price. The market is probably not ready for that yet, but we can bring that day closer by helping people understand what they could be paying for when they buy a legacy tyre. Just the name – nothing more.
It’s not just happening in car tyres. It is the same story around the world in truck tyres and also in the tyres used on bikes, agricultural vehicles; mining trucks and every other type of vehicle.
Where does that leave the legacy brands?
We’ll be offering great tyres that are largely indistinguishable from legacy brands, except for the name on the side of the tyre. Our prices will be better and our dealer margins will be better. So legacy brands are going to have to find a different way to do business if they want to compete with us.
New business models
There are some recent innovations. In the commercial tyre sector we have seen the move to price per kilometre (ppk) contracts where the fleet manager pays a fixed monthly fee depending on the type of vehicles, distances travelled and so on. Already tyre makers are talking to the suppliers of the telematics boxes. Those are the instruments that measure speed, location distance and can help a fleet manager to minimise costs while maximising up-time for the trucks and drivers. Michelin recently purchased the biggest such company in Brazil.
Here there’s a strategy emerging: Michelin has the Michelin Solutions business; Goodyear has the FleetOnlineSolutions. Bridgestone has its Total Tyre Care programme. Each of these is designed to meet the need for fleets to outsource various services.
In business, we focus more and more on the customer and try to out-source the tasks where we cannot add value through our customer-facing activities.
These fleet management solutions aim to meet that need by providing services to the fleets. Truck tyres are only a small part of the total service package.
If the low-cost, high-performance tyres coming out of China are eroding the legacy brands’ margins, then those legacy brands have to find a way to extract more money from their customers. In the business-to-business world, that means selling more services to help make the customer’s business more efficient.
New strategies in car tyres
In the car tyre business, it’s a bit different. In Germany, in conjunction with our partner Alzura, we have already announced our Z Tyre Flat Rate program whereby customers can pay EUR4.99 per month and we’ll provide them with brand new tyres as a service and even replace them if the tyre gets a puncture. It’s a great service and meets a need and we’re currently the only tyre company in the world to offer a flat rate for tyres.
It might take a while to convert the whole market to this model, but it’s a start. In car tyres, however, I see the legacy tyre makers adopting two key defensive strategies. The first is freezing out the importers by gaining control of the wholesale and distribution and retail system. They originally tried to disrupt new quality brands from China by lobbying for new regulations such as tyre labelling but this backfired. So now they’re now trying to block market access to new entrants by using their considerable financial muscle to buy the market away. The second is controlling the marketing message and using new technology to by-pass the distributors and eventually the retailers that aren’t part of their platform.
The legacy tyre makers know that dealers in many cases receive more profit by selling one of our tyres. They know that most people who walk into a tyre store will buy the tyre recommended by the dealer. They know that long term, this is bad for their business.
Their short- to mid-term strategy is to buy up the distribution and retail companies: Bandvulc and BlackCircles have already been swallowed in the UK; Allopneus in France; Ihle, Meyer- Lissendorf and others in Germany. Following Bridgestone’s acquisition of Speedy there is barely a single independent retail chain left in France. It’s not just Europe – we saw Bridgestone bidding hard to win the Pep Boys chain in the US.
Longer-term, they want to try to change the basis of the consumer’s purchasing decision. Today the purchasing decision is often based on a combination of dealer recommendation; magazine test results as well as availability and the overall price-performance package. That works in favour of a competitive multi-brand environment and against a legacy brand monopoly.
Exploiting social media
A mid- to long-term response is an increasing online participation with social media, webstores, competitions, games, surveys and other infotainment designed to trigger mass sharing and forwarding. Legacy brands are setting up portals to inform consumers about tyres; about what to look for; magazine test results; their ‘green’ credentials and the rest. They are using games and Tweets and infotainment to build a relationship with the customer. They are watching which parts of the site are visited most and which pages contribute to the buying decision.
And then they place a big, bright ‘BUY NOW’ button that encourages the customer to hand over credit card details with no need to visit a dealer.
They believe this approach will make it more difficult for consumers to learn about the alternatives to their brands.
They want to gain control of the communication channels and the message and then to understand the fine-grained needs of the consumer and meet those needs with an outstanding service offer.
That offer includes a mobile fitment van that will visit your place of work, or a street address; it includes a time-slot booking option and it includes feedback like you get on Amazon or TripAdvisor, so that consumers are given confidence that they will get great service as well as great tyres.
If we are to respond, then we need to offer not only great products at great prices, but improve service as well.
Over the shorter term, the battleground is moving to the distribution and retail chains. I think that it will be difficult for importers to compete on that front as they are effectively removed from the distribution channels. But I am convinced that in the longer term as the battleground moves to dominate the social media and internet channels we will be able to compete more effectively and the legacy brands know this.
In this article you will learn about Zenises’ Z tyre brand…..
New Brand – When was Z tyre introduced and what made it unique?
Design – What aspects of Z tyre’s design contribute to its performance?
Testing – How did the Z tyre hold up under testing?
Innovation – What are the latest Z tyre products?
An Exciting New Tyre Brand
Z tyre is a cost-effective, premium tyre brand that was first introduce to the European scene in 2014. It combines all the best aspects of luxury high performance brands into an affordable, quality tyre and has quickly become a favourite with European drivers. Z tyre was born out of a collaboration between the two great cities London and Dubai, representing the best aspects of old and new luxury. It was tested and designed with the challenges of European roads in mind, making it one of the safest tyres in all types of driving conditions.
The multinational tyre corporation, Zenises Group, is the company behind the Z tyre brand. Founded by CEO and experienced entrepreneur, Harjeev Kandhari, Zenises has been pushing the boundaries of the industry since its inception and now has a presence in thirty different countries. As well as being an innovative business leader, Harjeev Kandhari is passionate about the industry. He began working with tyre design in his family’s company in Dubai, so with Zenises, he knew right away he wanted a brand that would accurately represent the company name.
State of the Art Design
In all aspects except the price, Z tyre is premium high performance tyre geared toward drivers that expect the most. Speed ratings, the measure of how well the car handles at top speed, go all the way up to Y (300 km per hour) on the Z tyre even though most tyres stop at W (270 km per hour). At the same time Z safety and economy ratings are also impeccable with a consistent B level wetgrip in all tyres and a B or C in fuel efficiency depending on the tyre size.
These are some of the features which helped to make the original Z tyre design so versatile and revolutionary.
- Modern Tread Design – the special tread pattern maximises contact with the road. The wide central rib running all the way around the tyre allows for greater stability at high speeds while the contour of the shoulder conforms to the road for optimal handling and high precision driving.
- Asymmetric Tread Pattern – the inside and the outside of the tyre serve different purposes in Z tyre, so they are not designed the same. The inner edge reduces wear and allows for maximum wetgrip performance. Meanwhile the outer rim provides the high performance that discerning drivers expect, with easy steering and a comfortable smooth ride even on the narrow winding roads of Europe.
- Deep grooves – four deep troughs running around the entire circumference of the tyre help to trap and eliminate water. This reduces the tendency to aquaplane, even in lightweight vehicles, and supports Z tyre’s excellent wetgrip rating.
- Silica based compound – the tread compound is another important factor in wet and dry breaking. High silica content in the Z tyre’s surface means that slick roads are no longer a problem.
- Tread wear indicator – this lets the driver know when the tread level is becoming unsafe and it’s time to replace the tyre.
The Z tyre was the result of knowledge, years of experience and careful design. However even the most expert tyre design needs extensive testing to make it one hundred percent road worthy. Every Z tyre has to pass the Z 360 ⁰ testing criteria to make it worthy of the Z logo.
Zenises wants to make sure Z tyres conform to the most objective standards, so testing is carried out by an independent agency, Total Performance Testing, in Idiada Spain. Chris Davidson was part of the team that helped to evaluate the Z tyre. According the Davidson, a high performance tyre like Z tyre should have excellent handling and breaking power at top speed. ‘The sidewall stability is the key thing with this type of tyre.’ Davidson helped conduct a ‘full suite of wet and dry tests’ on the Z tyre in and found the tyre matched very well with top tier companies in both performance and safety. Z tyre has proved that premium tyres don’t need to come from the top brand names, or cost a fortune.
More Tyre Innovation
Harjeev Kandhari didn’t stop with the creation of a state of the art tyre. The Z tyre brand has continued to expand, adding several new product lines in recent years. The Z 1 flat tyre allows drivers to control the vehicle and continue driving safely for a short period of time even with a significant drop in tyre pressure. In the event of a flat, you’ll be able to get to a safe location where someone can help you, instead of being stranded at the side of the road. The Z tyre range also includes SUV sizes, and winter and all season treads will be coming to the Z family soon.
The latest Z innovation available in Germany is a Flat Rate Tyre Subscription which can help to avoid the high up-front cost of purchasing new tyres. For a monthly charge of 4.99 euros, customers are guaranteed all the ‘tyre-related services’ they need. This helps to ensure a long term relationship between the customer and their tyre-professional, but more importantly it promotes driver safety. With the new Z contract, tyres will automatically be replaced once the tread drops below a safe level; drivers don’t even need to worry about checking. This is an important concern, since a recent safety report found that more than a quarter of the cars on the road have tyres that are below legal tread requirements. Z tyres new subscription is just one of the many changes Zenises has brought to the tyre industry, helping to make tyres safer and more economically efficient for customers.
Making a business succeed is hard enough on its own. So now you want entrepreneurs to also add in aspirations of social impact and other niceties that are ancillary and not directly tied to Profit? Nobel laureate Milton Friedman argued that “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.” Maximizing profits and shareholder value has become conventional wisdom ever since.
But with the global economy brought to its knees by short-term profit maximization Millennials, who are our future, are getting more and more turned off by companies who focus only on profit. Saddled with student debt, they are unable to find work at twice the rate of those over 30 years old; twice as many live in poverty as in the 70s. The unstable nature of the world they are inheriting – and the knowledge that many of them will not share the opportunities their parents had – has led them towards an existential crisis. In the UK, millennials’ average disposable income is just a third of that of pensioners, with home ownership a distant dream.
As a result, millennials are making explicit their universal hunger and innate desire to contribute to something bigger than themselves. The most socially and environmentally conscious generation ever, they have become humanity’s conscience and self-correcting mechanism. They insist on a purposeful connection with companies they buy from, work for and invest in. They want to know why a business exists, what it does, how it treats people and the planet.
Nine out of ten believe that success should be measured by more than financial performance. For them, the idea of going to work with the singular goal of maximizing profits and shareholder value is pointless and abhorrent. They’re willing to put their money where their mouth is: more than half of millennials have ruled out working for an organization because of its values or standard of conduct. More than half have “chosen not to undertake a task at work because it went against their personal values or ethics”, according to a 2016 Deloitte survey. This is something to sit and take notice of as they’ve surpassed the baby boomer generation in size and are expected to own $41 trillion in transferred wealth.
It would be easy to dismiss this as the naivety of youth, were it not for the fact that many of the world’s most successful, admired and enduring companies are purpose-driven. Contrary to conventional wisdom that purpose is a tax on the bottom line, companies such as Patagonia, Virgin, Zenises, Starbucks and Southwest Airlines are demonstrating that purpose-driven enterprises have an inherent market and profit advantage giving them staying power.
The best entrepreneurs I know are the world’s greatest change agents precisely because they share a belief that the fundamental purpose of business is purpose. They view profit as essential oxygen to a company’s ability to survive and thrive, and the fuel that maximizes their impact. As Kickstarter co-founder and CEO Yancey Strickler puts it, “That’s so obvious, it’s not even a thought. It’s how you find long-term success.”
I also want to have considerable social impact and make money. These two goals are clearly complimentary. Social Impact and Purpose lead to greater value creation and that leads to more profit than trying to maximize profit as an endgame. Profit and purpose are force multipliers that reinforce each other. It’s strange that people see them as a dichotomy. I say, It’s best if you have both. It would never be satisfying to me to build something that was successful in either of those dimensions, but not both. Profit allows you to reinvest in purpose.
Great companies aren’t great just because they make lots of money. They make lots of money precisely because they’re great. Imagine a world that understands that purpose and profit are complementary. Imagine a world that unlocks our creativity because we are working toward a higher purpose that is worthy of our life effort. Imagine a world where businesses compete on being best for the world, and where that is precisely what makes them the best in the world.
Zenises Group is an international corporation that offers a unique approach to tyres. With its headquarters in the UK and a presence in twenty countries, Zenises is focused on spreading a spirit of global partnership through quality tyre products and a philosophy of social responsibility. Its company name combines the words ‘Zen’ and ‘Genesis’ to echo their reflective corporate philosophy. The corporation embodies this purpose in its day-to-day business and through its affiliate organisations which support disadvantaged people around the world.
Zenises was founded, and has been led since by Harjeev Kandhari, an experienced entrepreneur as well as an advocate for corporate philanthropy. Educated at Oxford University with an MBA from INSEAD France, Kandhari had already gained investment experience at Merrill Lynch and globally redesigned his family’s business in Dubai, before he went on to found Zenises. Within six months, Zenises had opened offices in six countries besides the UK, and now operates in South Africa and UAE, as well as throughout most of Europe. Since then, Zenises Group has defined itself as an important voice in the automotive industry, with tyre brands that appeal to adventurous and safety conscious drivers alike.
High quality Products for Every Driver
Zenises’ passion for the industry isn’t just theoretical. Harjeev Kandhari recognises the impact inferior tyres have on a driving experience, pointing out the self-evident, but important fact, ‘tyres are the only connection you have with the road’. Paint and trim might be more noticeable, but tyres are the driver’s instrument. They respond to each intention and control the motion of the car. A good driver depends on tyres like a violinist depends on a Stradivarius violin. Only in this case, safety is at stake as well as performance.
The high performance Z tyre that was unveiled in Europe in 2014 is just one of Zenises’ iconic brands. Z tyres are a favourite among people who love to drive; the Z line offers the highest standard in performance and fuel economy at an affordable price, combining a streamlined aesthetic with the high wet-grip rating and sidewall stability that are essential for narrow roads and close cornering. It didn’t take long for the Z brand to take off, with a second South African launch that included events across several different venues organised by Tyrecor, Zenises’ South African partner. The main gala in Johannesburg was hosted by Harjeev Kandhari, CEO of both companies.
As well as the Z brand, Zenises offers a traditional Westlake line of tyres made by the well-known Hangzhou Zhongce Rubber Company. This company has been manufacturing rubber products in China since 1958. It is the largest tyre producer in that country and ranks among the top ten in world sales. Zhongce tyres are found on every continent, but Zenises commands the European Market with a line of high quality tyres manufactured on state of the art equipment.
Zenises’ products include options for all types of motorists. A newer line of T tyres offers models for drivers who make economic value a priority, with winter grip tyres available for larger vehicles and four wheel drive. Lines from Kapsen and Ardent tyres have the latest in technological design for vans and SUV’s as well as cars. Commercial truck and bus tyres manufactured to fit European regulations are also available through several different brands.
Building Relationships through Tyres
Rather than simply securing individual sales, Zenises is focused on building relationships; quality products offered in a spirit of service inspire customer loyalty through satisfaction. However, Zenises doesn’t just build relationships with its customers. The company philosophy incorporates a belief in giving back to the communities it serves. With an international presence, Zenises defines itself as a global citizen and feels a responsibility to help the disadvantaged communities in those countries. Zenises Foundation was conceived with that goal in mind. The initial programme, Z Aspire, funds education at all levels for underprivileged children and young adults in India. As well as providing schooling, the organisation offers mentorship, job training, and job placement opportunities for those that complete the programme. Z Aspire provides three scholarships to Oxford University, as well as an endowment for a university chair at St Peter’s College. Several newer organisations have been added to further Zenises’ philanthropic purpose: Westlake Wishes works to feed 125,000 people in a single day in the Indian holy city of Amritsar and T Outreach supports problem solving initiatives in the countries where Zenises does business.
Zenises has turned tyre distribution into a compassionate, global way of life. The entire Zenises team offers automotive expertise that is unmatched in the industry, and Harjeev Kandhari’s focus on quality and social accountability has also made the organisation an international leader in corporate responsibility. With an exciting future ahead, Zenises continues to break boundaries and challenge the status quo at all levels.
Your tyres are the only the connection you have with the road. You might be thinking, “Doesn’t everyone know that?” and you’re not wrong. Yet, despite this common knowledge amongst drivers, most auto owners across the world delay or neglect their maintenance altogether. That negligence can be the difference between making it home safely after work and crashing into a guardrail on the highway. When’s the last time you checked your tyres?
According to TyreSafe’s 2015 Tyre Safety Month study, 65% of UK drivers need to check their treads more often. In other words, a majority of tyre owners are neglecting their safety and endangering the lives of other drivers. TyreSafe’s study painted a frightening image of UK roads with over a quarter of tyres (27.3%) having an illegal tread depth of 1.6mm or less. That’s 10 million tyres in 2015 alone! If that didn’t catch your attention, maybe the penalty will. In the UK, you could face a £2500 fine and three penalty points for each illegal tyre on your vehicle! Imagine how much you could have saved when comparing the price of new tyres against a potential £10000 fine.
Let’s pretend that wasn’t enough to convince you and move on to some other facts.
If you aren’t actively maintaining your tyres, expect to see a decline in your vehicle’s braking, cornering and gas mileage while your CO2 emissions go up. Just think, neglecting your tyres affects everyone’s safety, your wallet and the environment in one fell swoop! Even a tyre that looks safe could be worn beyond its use. And unless you are driving a mega-horsepower racecar on dry surfaces, you shouldn’t be driving on less than recommended tread. A tyre with even half its tread can be a massive liability on the road.
A Consumer Reports study found that, “tread can give up a significant amount of grip when it’s still at the halfway point.” That should be worrisome enough for drivers. However, some–whether their reasoning be cost, procrastination or something else–drive their tyres to the point they are “bald”, or lack any tread. This is incredibly dangerous. Bald tyres massively increase your risk of an accident on any conditions, especially wet roads. When your tyres lack the ability to channel water from beneath its tread, the vehicle is likely to hydroplane, where the car skims the water surface and can no longer work with the steering wheel.
Another study, this one from the Japan Automobile Tire Manufacturers Association, found that a vehicle going 80 km/h can expect a 10 metre breaking difference on wet surfaces when using worn tyres. That’s about two car-lengths, or the difference between breaking in time and slamming into the car in front of you.
To avoid these dangers, make sure to check your tyres at least once a month. This doesn’t mean a quick glance at your tyres or relying on your car’s TPMS (tyre pressure monitoring system) either. If you aren’t sure how to do it, follow Highways England ACT safety plan. It shows you how to use a 20p to safely determine if your tyres meet the 1.6mm or higher mark for legal tyres in the UK. If you’re still not sure, be sure to consult your tyre professional.
When it comes to purchasing and outfitting your vehicle, not all tyres are alike. Depending on your location in the world, you may require tyres for certain seasons. In certain European countries if you don’t change to winter tyres by a certain date it is illegal and even invalidates your insurance on the car.
Anyhow this may seem obvious to most car enthusiasts and other drivers, but there remains a large number out on the world’s roads that have not put these steps into action. If you or someone you know falls into this category, do yourself a favor and reconsider the importance you place on auto maintenance. It very well could save your wallet, your life and the life of others on the road.
So, what are you waiting for? Go check your tyres!
For the first 1700 years the two largest economies of the world were always those of India and China. The last three centuries of Western domination of world history have therefore been a major historical aberration. All historical aberrations shouldcome to a natural end. As such it is now the turn of Asia, and in particular India and China, to take their rightful place on the World economic stage. These economies have been observing and analyzing (lengjing guancha as Deng Xiaoping -China’s erstwhile leader – advised ) patiently and now have understood how to better implement the so-called pillar of Western Wisdom – the free market economy.
Amazingly, while the belief in the virtue of free trade is diminishing amongst the populations of Europe and America, it is increasing in Asia. This is why the largest Free Trade Agreements (FTAs) are now being signed and implemented in Asia,including the ASEAN-China FTA and the ASEAN-India FTA. The fastest growingtrade flows are also in Asia. In our industry like in many others, Europe and America are focussing on legislation and tyre labelling laws to act as quasi trade barriers rather than encouraging free trade. Before we get on to discussing this further let me tell you a little bit more of what is happening in Asia and how that will affect tyre labelling. As you all know in our industry the major investments in factories are being placed in India and China. Just look at the investment Michelin alone has made in India. Every global player of any substance has a manufacturing presence in China already. In fact China has already generated a top ten world player in our industry – Hangzhou Zhongce. I am sure by 2025 we will have an Indian player in the top rankings as well. The shift in power to Asia is therefore here and I am sure willover time be irreversible.
The world is going to be a completely different place in 2025. For example, people will be saying then that to visit a city of past, go to London; to visit a city of the present, go to Dubai; and to visit cities of the future, go to Shanghai or Mumbai. The most optimistic young people will not be found in the West. Instead, they will be found in India or China. Neither Europe nor America will be in a position to impose unilateral trade or economic sanctions on the rest of the world. Instead, both will work hard to create stronger ties to Asia to protect their long-terminterests in a world where the West represents a tiny percentage of the world’s total population. By 2025, there will be no doubt that the 21st century will be the Asian century. So how does this affect us in the tyre industry and in particular tyre labelling.
Well over the last few years the trend that has been really motoring along in the tyre industry is the emergence of Economy brands and the increase in both the quality and quantity of their production. Where are all these tyres made? Asia. So an Asian Century will also mean the century of the Economy brands. This is good for the industry as There are NO Bad tyres – All Tyres are good – Some are just better.
Today the number 10 factory in the world is HangZhou Zhongce Rubber Company in China. This is a factory that is commonly associated with building Budget or Economy brands such as Westlake. But today it is ahead of more ‘legacy’ brands; Infact few people know that in terms of Truck Radial Capacity it is the fourth largest producer of truck radial tyres in the world. A factory cannot get to this level of being a world class producer without being a quality producer – not in our industry anyway! If you then go down the list of the next ten producers there are again more producers of budget or economy brands. In fact legacy brands are actually also making their tyres in the Hangzhou factory and many others in China.
Over the last few years the quality of the factories have improved tremendously. All the factories are buying latest equipment from Europe and the USA to expand their lines and a lot of the equipment manufacturers for tyre making equipment have also set up shop in East Asia to cater to their demand. When one sees the shining brand new factories in China one can see why with their new equipment and new moulds and presses they can easily produce a better quality tyre than the legacy brands. I personally visit Chinese factories over seven times a year and the marked quality of improvement I have seen in these factories is rather commendable. This is not only in the major economy brand manufacturers but also in those that were previously classified as the second tier of these budget manufacturers. These factories are investing in the latest testing equipment to ensure that their tyres conform to the various standards in all the countries in the world that they are marketing to. They are also investing in quality people and ensuring that they start conducting Research and Development in house. Gone are the days of what people assumed was just copying the legacy brands. These factories are now developing in house talent with numerous engineers dedicated to developing the latest patterns and ensuring tyre safety.
Infact now in Europe the Economy brands really are taking a large piece of the pieso much so that the legacy brands seem to be fighting back through increased regulation. The economy brands are in a growing market and are doing this by eating the market share of the declining legacy brands. Currently 52% of the tyres sold in the UK are Economy brands and that is only increasing.. In France that is 28%, Spain 20%, Italy 20% and Germany 20% in Summer and 10% in Winter. But the growth in the economy segment is over 20% a year. This compared with a decrease on the legacy brands in many segments. In Europe as a whole the numberof tyres sold is just above 350 million tyres. So if Europe went the way of the UK about 175 million tyres sold in Europe could be budget tyres! Now that is a growing market! And that is a scary prospect to Legacy manufacturers – hence the increased regulation being lobbied for.
The first of these was to introduce the Clean Oil / REACH / PAH Regulations. Some say that this regulation has had little effect on the environment but that is a whole other debate. But what this has meant is that the economy brand manufacturers have had to set up separate lines of production using different ingredients especially made for Europe. This has increased their costs and reduced their efficiency. The legacy brands thought this would halt the increase of the Economy brands in Europe. Although there were some initial adjustments most of the manufacturers have managed to ensure that their tyres are Reach compliant.
The reason that I mention this is that the same is with the Tyre Labelling Laws – I believe that it is really just an increased trade barrier to curb the growth of Economy brands into Europe. The legacy brands were hoping that this will show consumers that their tyres are better than the Economy brands and as such they should pay more for them. In fact what has happened is that the major economy brands have been working hard, including changing many moulds and patterns to ensure that they will hit the levels close to the major legacy brands in this segment. Infact I believe that this tyre labelling regulation in the EU will allow economy brands to increase their presence in the EU Market and perhaps even increase their price. As brands will become less important at the retailer, especially in markets like the UK which don’t have a strong local producer, people will prefer to buy the cheaper tyre if the grades are the same. In fact the major beneficiaries will be the premium budget brands like Infinity and Westlake which will now be able to justify their premiums over their lower priced competitors. Economy brands have reached C and C and some patterns they are B as well. Where they have not reached this yet I have personally seen the plans in place to get this in place in a short time. Some of the major brand patterns have not reached beyond C and C yet and are selling tyres with C and E as well.
For example research has shown that the most expensive example of one popular tyre size (195/65 R15) for a Volkswagen Golf 1.6 TDi is about 120 per cent the price of the least expensive. The spread of prices is further evidenced by the fact that the most expensive tyre is around 60 per cent greater than the median price. Much of the talk pre labeling centered on how established brands could use the initiative to justify their higher price – in extreme cases, well over double the price – over those tyres coming from emerging markets. It seems clear now that if you have Asian tyres at C C and premium tyres at C C then it becomes difficult to justify such a premium.
So will the performance reassurances provided by the label on budget tyres force more expensive mid-range and premium brands to discount? I believe that manufacturers with large sales of V and lower-speed rated tyres are the most opento price pressure resulting from labeling. Put Simply, consumers who drive more expensive cars will be less likely to consider price as a more important factor in making their tyre purchase. Hence my cut off on V and lower speed ratings. Analysis of the market, done by Infinity Tyres, suggests that Michelin and Continental are of the top five manufacturers most active in this category, with 70 and 65 per cent of consumer tyre sales coming from this segment. The analysts reason that should economy brands’ rankings be able to challenge the quality levels perceived by the consumer Michelin would have the most to lose. Conti has some protection because it has more exposure to the Winter markets in Germany.
So is it all doom and gloom for the Legacy manufacturers? Not at all! I do believe that the labeling regulations will primarily be focussed on the consumer choice aspect rather than the premium Original Equipment manufacturers. I think that the original equipment fitments on premium cars are more or less exclusively the preserve of premium tyres. And just to be clear whilst Hankook is an Asian player I think that they are firmly established as a premium player today. In addition to conformity of brand equity between car and tyre, one major reason for this is the rigor of testing and the far larger number of performance indicators – other than wet grip and rolling resistance – generally used for determining a tyre’s suitability for premium OE fitment.
To take an extreme example, Michelin’s 225/40R 18 Pilot Alpin PA4 tyre was granted N-specification by Porsche, meaning it had to clear a high performance bar in dry handling and braking, longevity, hydroplaning, internal noise, and many more in addition to fuel efficiency and wet grip. On the tyre label, this tyre is awarded EC. More than one Asian manufacturer of budget tyres has comparably sized tyres that equalled and surpassed this rating.
Anyhow I would like to leave you with one final point on why I think that Labelling regulation is tantamount to trade barriers against Asian Manufacturers and that is The Largest Tyre Manufacturer in the world by units, based in Europe, is exempt from all tyre labelling regulations. That is LEGO!
The incredible rise of the Chinese tyre industry has been the major phenomenon within our business over the past decade. Rather than seeking major overseas acquisitions, the Chinese have steadily arrived on the global stage through organic growth and via impressive investment in new factories and state-of-the-art capital equipment. Enterprises like Hangzhou Zhongce and Shandong Linglong are now not only well established as domestic forces but are becoming increasingly global tyre players.
It’s a commonly held belief that the Chinese tyre industry is export-led. But an incredible 24% of all global car production now takes place in China – so it’s logical why so many tyres are also being built there – primarily to satisfy the new ‘first generation’ Chinese drivers. As the domestic vehicle market expands, so more and more tyres are needed – both for OE and replacement. It’s also worth noting that the Chinese currently own 80 vehicles per 1,000 people – compared to more than 500 per 1,000 people in the UK – and China is already the number one car market in the world! But domestic growth is also there to support global ambitions and Chinese tyre brands are now becoming more visible worldwide, following a trend in almost every other consumer product.
Take a closer look at your mobile phone – the brand message may be ‘California’ or ‘Finland’ but it’s probably made in China. The same with your blu-ray player or laptop or 3D TV or even the wallet in you pocket. The brand is global but the production is in China.
Why China? Of course initially it was down to cost advantages but now, although input costs still play a major part, the country also offers improving quality and reliability. Just as several decades ago with its neighbour Japan or maybe later in the 1980s with Korea, China is emerging. Some fifty years ago when they first started to export to Europe, there was maybe a reluctance to buy ‘cheap Japanese’ and I remember the reactions approximately 20 years ago that Korean tyres were not perceived as good as ‘Made in USA’ or ‘Made in Europe’. That has all changed of course. The world’s leading tyre producer is Japanese and Korean tyre brands (like Hankook) are now globally respected.
So it looks to me that we are entering a new phase in the tyre industry. An era in which we will witness significant shifts – so-called a ‘generational change’. In a few years’ time the list of ‘Top 20’ tyre manufacturers could look very different to today. The European and North American tyre markets have matured. To see where change is really happening, it’s time to look further afield to where vehicle ownership is in its infancy and undergoing a rapid transformation and to consider how this, in turn, will influence the supply of new tyres and new tyre names across the globe. It’s an exciting change to be fully embraced. A change that can only help to deliver better choice, better quality and more buying power in the hands of you – the local tyre dealer.
This isn’t a surprise if you’ve been fortunate to visit the Far East. I say fortunate in that amongst the incessant construction growth, let’s not forget that China is still home to some of the most remarkable places on the planet. I’ve been awe-struck by such sights as those along the Yangtze River, the views from up high on the Great Wall and the serene beauty of the West Lake in Hangzhou. But amongst this beauty it’s hard not to be affected by the incessant smog that hovers over most of China’s most industrialised areas (including the capital Beijing and the heart of ‘tyre land’ in Qingdao or Shandong province).
It’s got so bad recently that Chinese authorities now authorise pilots to ‘fly blind’ in poor visibility to reduce the long delays caused by the smog. Fewer than one in five flights leaves on time from Beijing Capital Airport, according to travel industry data – the worst delay record of any international airport. Air pollution in Beijing regularly hits very high levels and atmospheric particles have been recorded at a staggering 755 micrograms per cubic litre – 38 times the level recommended by the World Health Organisation. Pollution levels can hover around 400 micrograms in Shanghai and Beijing, posing serious long-term risk of cancer and lung diseases to over 30 million inhabitants of these two sprawling cities.
But before we shake our heads and complain of global environmental catastrophe, we must also remember that China is going through industrial ‘adolescence’, just as every other major economy has done before. We in the West still want our cheap toys and our cheap tyres. To provide these to us China has had to suffer the consequences of this pollution. So far be it for us to judge or condemn the Chinese for it as many in the West do.
The Chinese government is trying to change and improve its environmental record though. For example, Beijing plans to replace its oil-burning buses with 14,000 new greener models powered by electricity by 2017 to help clear the smog. Coal imports in the first quarter of 2015 were down 42% on a year earlier as tougher anti-pollution rhetoric starts to bite. “Environment pollution is a blight on people’s quality of life and a trouble that weighs on their hearts,” said Chinese premier Li Keqiang at the opening of the National People’s Congress in March 2015. “We must fight it with all our might”.
In our business, China should be applauded in that it’s already planning its own tyre label to help with these regulatory efforts. Just as many mutter that Chinese tyre companies don’t take the European label too seriously, our Asian counterparts look set to unveil a set of label regulations possibly even tougher than those over here (albeit with some striking similarities). Like the EU scheme, labels will apply to car, 4×4 and truck tyres and will include the familiar criteria of wet grip; rolling resistance and noise. It also seems that the grading differentials will be identified by the same letters (A to G scale) and noise bars.
Unlike Europe, the Chinese tyre labels will likely start on a voluntary basis during 2016, so as to help develop general consumer education into the importance of labelling. This so-called ‘transitional phase’, will become mandatory quite soon after that. Like most things involving China, the authorities haven’t been hanging around. China’s set up its tyre labelling executive in July 2014 and initial programme details were already published by March 2015. Many of the larger Chinese tyre manufacturers already have (or are most definitely planning for) tyre test facilities to rival those in the West. Not only will wet grip and noise testing become quicker and more widespread, these investments also mean several factories will be accredited to homologate rolling resistance credentials in line with European scores.
Will all this mean that Shandong province will roll back the smog? Not just yet and there is a long way to go as China needs to provide places to live, work and eat. But hand in hand with emerging tyre brands’ march up the value curve, we should also look kindly on the country’s visible commitment to pursuing ‘greener’ policies. Of course, nothing will trump the nation’s pursuit of economic growth, but now with more than one eye on environmental concerns, Chinese tyre makers not only look to match their Western counterparts on fuel efficiency, wet grip and performance, but also in the future would you also see China becoming the leader in ‘green’ tyre technology? Well the Chinese don’t do anything by halves so it certainly is possible…..