breaking news

Workshop groups and networks: more united than ever!

April 21st, 2020 | by Euro Pneus
Workshop groups and networks: more united than ever!

In the middle of the State of Alarm decreed by the Government on March 14 to try to combat the global coronavirus pandemic, and with the majority of drivers confined to their homes, the groups and networks of specialist tire and vehicle maintenance workshops coincide in that now they must be more united than ever, as stated in the magazine ‘EuroPneus’ in a report published in the previous March issue. Come in and read.

As we pointed out in the last issue of January, the Spanish tire replacement market closed 2019 rolling between lights and shadows: the whole of the consumer segment (tourism, van and 4 × 4-SUV) registered a drop of 2.6% to some 14,955,000 tires (395,000 fewer units compared to 2018!) But with large tires, the ‘all season’, RFTs and the slight growth of premium brands adding value; while the tire segment for V.I. it accelerated 6% (1,070,000 units, 65,000 more than in 2018) and the Two-Wheeled vehicle shot up more than 7% (1,145,000 tires), contrasting with the decreases in agriculture, OTR and maintenance, always according to data from Europool (sell in or channel sales).

At the same time, according to data from GFK, a company specialized in market sector studies in terms of sales to end users, at the end of 2019 – see detail on page. 37-, sales of consumer tires (passenger car, van and 4 × 4-SUV) in specialist workshops fell by 1.9% in volume and 2.2% in value; the autocentres rolled plans in volume and rose 1.4% in value; dealers, 0.2% and -0.5%; the rest of workshops, + 2.5% and 2.4%; and hypermarkets, + 3.4% and 2.2%, respectively. Thus, the share of specialist workshops drops again from 49.6% to 48.8% in volume, and from 51.8% to 50.9% in value, while mechanical workshops rise from 18.2% to 18.7% and 17.2% to 17.7%, respectively.

When analyzing these figures and the evolution of the sector in 2019, most of the groups and networks consulted by ‘EuroPneus’ agree that “the global reading speaks of a very flat year in tire volumes. It is a too stagnant market, which moves volumes from one channel to another, depending on the price level that each offers. All the actors are developing programs that encourage the sell out, but the reality is that people make fewer and fewer kilometers and less use of the vehicle, hence the lack of growth in consumption. ”

At the wheel of this, other experts add that “despite the general growth of the economy in 2019, the automotive aftermarket has generated the first symptoms of a slowdown. Overall, automotive aftermarket has fallen in all ratios, and new vehicle registrations have declined for the first time in many years. At the post-sales billing distribution level, it is increasingly made up of a greater number of actors and number of operations, but reducing the average ticket, increasing competitiveness and reducing margins. This causes tensions in the finances of the workshops, which have to find solutions to compensate for these drops in margins. “

Alarm state: the coronavirus ‘invoice’ for the workshops
However, they highlight that “the most relevant thing is to analyze the position of the tire specialist and it has two axes: on the one hand, the share of the specialists is the highest, as well as their average sale price and, therefore, their focus on the tire business as a key element in supporting the viability of the business. In this sense, it is normal for the tire specialist to be ‘attacked’ by actors framed in segments in which they try to gain share with a perspective that does not have the tire as the fundamental axis of business and value generation. The second reflection is derived from the first: diversification is a fundamental axis to guarantee the viability of the tire specialist ”.

A context of slowdown in the sector in 2019 that has been maintained at the start of 2020 and which has now become more pronounced and plagued by uncertainty as the Government decreed the State of Alarm on March 14, an exceptional and historic measure to combat the pandemic global by the coronavirus that entails the temporary confinement of the majority of the population and, therefore, puts the groups and networks of workshops ‘in quarantine’.

In this regard, from Claxon they analyze that “the coronavirus is a global pandemic that will undoubtedly affect our entire sector: manufacturers, workshops, spare parts, automobile manufacturers, etc., and many others that depend directly or indirectly on our sector. Particularly, with regard to the workshops, the economic dimensions will be very difficult to quantify, since the measures and restrictions will become more severe each day, leading to a total stoppage and the closing of the workshops. Therefore, we will have to assume that the year 2020 will not be a year of 12 months that we can compare with any other year. Since this crisis will affect the sale, profits, liquidity and the immediate future of our businesses, they may be threatened and involved in a new crisis. At Claxon, we have already taken measures to improve the cash flow of our partners and associates as much as possible, carrying out the following actions: advancement of absentee purchases and incentives, exemption from the payment of the fee and the maintenance payment of the Claxon management computer system. ”

Vialíder experts acknowledge that “at this time it is difficult to assess this situation, but it will undoubtedly affect it negatively. We are at the beginning of the crisis. In the case of Vialider, a large part of the workshops remain open to attend to any emergency or need that may arise and thus be able to maintain the necessary mobility in these circumstances, but obviously the services are minimal ”.

For the specialists of ContiTrade, a subsidiary of Continental that drives the BestDrive and Eurotyre networks, “2020 started in a line very similar to the end of 2019, with some instability, but it has been the coronavirus that has fueled this instability in recent weeks . The coronavirus and its disastrous effect on the economy are the main problems that we are going to encounter during these first six months of the year. Without this effect, tire specialist workshops would continue in a highly competitive market where they have to continue diversifying the business and adapting to new trends to compensate for such low margins. And it is precisely with this devastating effect of the coronavirus that the search for maximum efficiency in the processes, resources and budgets defined for each workshop activity becomes vitally important ”.

From Euromaster they point out that “the health crisis arrives just at the dawn of Easter and the May bridge, which are times of great movement of vehicles, but regardless of this nuance, the impact at all levels is being brutal. This will inevitably have an impact on the bottom line of all aftermarket players. Although mechanical maintenance is being postponed, the kilometers not performed will no longer be recovered, so that what is ‘not performed’ can generally be considered lost. We hope that this situation does not last long and we believe that we will be able to see a recovery in “V”, so that, when the crisis passes, the workshops return to normal almost immediately. However, it is presumable that the activity does not recover 100% from the first day, there will be a very significant global economic impact and it will require everyone’s effort to overcome it. It will undoubtedly be a turning point for many companies and individuals. It will be in our hands to give the best of each one so that the end of 2020 is as positive as possible ”.

For NEX, the distributor that powers the Boxxes and Maxxis networks, “the first two months of the year have been very positive, with a sharp drop due to the coronavirus crisis in March that is obviously affecting global sales for the quarter, especially in which refers to lightweight tires. Specialist truck workshops have some movement, although those that lead are the workshops that move agricultural tires that, although a considerable decrease has been noted, continue to have activity.

Grupo Salco experts consider that “in an already difficult start to the year, this situation will profoundly affect the sector. The workshops can remain open, even with the alarm state activated to provide minimum services to the transport companies, ambulances, security forces, obviously with the pertinent safety and hygiene measures, but obviously the movement in the workshops will be minimal.

Rodi’s specialists recognize that “we are facing a totally unforeseen scenario, unprecedented and of an unknown dimension for most of the people who are alive today. In the short term, there is a drastic drop in the level of activity in tourism workshops, derived from the measures taken to tackle the crisis and, as a consequence of that drop, a drastic impact on business, which has been forced to close massively. or drastically adjusted by ERTES. Truck workshops maintain a higher level of activity as is logical, since there are supply chains that continue to operate (Food, basic necessities, etc.) and also agriculture. However, we do observe a progressive decline in trucking activity as confinement progresses. This crisis will not only have short-term impacts, but will introduce structural changes in society and therefore in the consumer, to which we will undoubtedly have to adapt. ”

And they emphasize: “The coronavirus is a crisis of such a dimension that the reality that arises after it will be different and therefore also the priorities. We are going to a scenario so uncertain that as events progress we will act. There will be a significant impact on businesses that do not have solid foundations, so there will be closings and concentrations. In addition, there will be important changes in consumer behavior, especially regarding safety and health. However, it is a very uncertain scenario, and neither businesses nor people will be the same after this crisis. ”

In Carlíder, a network promoted by the distributor Safame Comercial and the Lassa brand, point out that “the start of 2020 is being slower than usual, partly due to the health situation in reference to COVID-19, which we will see increased as the quarantine, because the repairs and maintenance have only been postponed over time, if you have worn tires sooner or later you must go through the workshop. “

As a finishing touch and main ‘lifesaver’ for the workshop accounts, the groups and networks recognize that “now we must be more united than ever. The union always makes the force. COVID-19 has obviously scuttled any forecast for 2020, but we expect markets to react quickly and consumption to kick in to end 2020 similar to 2019. The sector is very much alive. ”

Article courtesy of: Euro Pneus

Leave a Reply

Your email address will not be published. Required fields are marked *