Got away with a black eye

Got away with a black eye

Automotive industry: How is the industry, the manufacturers and the specialist retailers, doing in times of Corona? 
Kilzer: I think the tire industry got away with a black eye when you compare it to other sectors of the economy. Of course, you have to differentiate in the tire industry. Those who are OE-heavy, i.e. who supply a lot of original equipment, have had it a little worse than those who specialize in tire retailers. But overall it's okay. It was a deep turning point, but we all learned a lot and many companies reorganized themselves. In most cases the situation was not life-threatening. 
Wondraschek: I see it similarly. Our industry has been hit differently before. But in this case the industry really got off with a black eye. However, we all don't know the long-term effects yet. For example, do home office applications really mean fewer kilometers are traveled on the road? But I think overall we can be happy that we are in this industry and not another. Because there is always driving. Now the winter season will also be exciting to see how it goes. 
Peschek: I would say that in the commercial vehicle sector there are two black eyes. And what is also being eliminated is what we call the holiday allowance. Where the beautiful aluminum rims are put on the new car from the vacation money. This has been proven; the rim manufacturers have suffered a greater slump than the rubber manufacturers. 

The industry is confronted with increasing competition - first from the Internet and then also because car dealers have discovered a love for tires. What are the current trends here? 
Wondraschek: The Internet tends to stagnate. We are noticing that regional car dealerships are again relying more on partners from specialist retailers because delivery times are better adhered to here. In general, I have the feeling that something will change in this direction: This regional awareness is increasing, similar to what has been the case with food for a long time. There will always be a certain part on the Internet. Just like the car trade has a certain share. But it levels off. 
Frauscher: What plays into the hands of specialist retailers is that there is no competent advice on the Internet. No configurator or ordering platform can replace this. Anyone who orders online often finds that something is wrong, either in terms of dimensions or the dimensions of the rims. And then people get frustrated. Of course you can return it, but the entire process takes a lot of effort. For most people, once things go wrong, it's too much and they don't use it anymore. That is our greatest strength: competent customer advice; no internet can keep up with that. 
Wondraschek: I always say: The advantage is that no tire irons are sent along. In other words, the customer cannot install the tires himself, which means we are still responsible for at least the installation. And we have to check whether the tire even fits on the vehicle. This often results in a rude awakening for customers who then say: “If I had known that, I would have come to you straight away”. 

Is the customer now better informed when they come to a retailer thanks to the Internet, or even more confused? 
Frauscher: I think drivers, especially male drivers, usually believe they are experts in the field anyway. It's always been that way! Independent of the Internet. But people often come to us more confused, with incorrect views, than fully prepared. The tire isn't just black and round - many people overlook that! 
Peschek: The complexity surrounding the bike has increased extremely and is overwhelming for most drivers. That's why you come across certain limits on the Internet when it comes to expert information or various comparison tests. It's about which rubber compound is the right one for the respective area of ​​application. And the specialist retailer does this better simply because of its geographical location. People from Burgenland will rely on a different product than people from Vorarlberg, especially in winter. And then there are also various detailed solutions. 
Stummer: I think there is a contrary development among customers. On the one hand, there are those who are very car-savvy and they know better today than in the past. But then on the other hand there are more and more customers who don't care. They just want to be mobile and rely on someone to advise them. 

How well positioned is the specialist retailer in the digital sector? I assume there's still potential here, right? 
Wondraschek: Yes, retailers are really challenged here. If only the business card is shown and that is the website, then that is of course not enough. The Corona crisis in particular has shown how much people surf the Internet and also buy things. It is important for retailers to have a proper website. Because then he will be seen by customers, who will then come to the store. Smaller companies in particular have a lot of catching up to do; they often don't yet attach any importance to it. 
Peschek: In the past, contact with the tire trade was passed down through the family, so to speak, but that's going away a bit. Now you have to be found when you are wanted. And these days people are looking for people on the internet. We conducted a study to see how widely the Yellow Pages, i.e. the physical telephone book, are still needed, and it turned out that the proportion of users here is already less than five percent. 

A relatively new trend is that the manufacturer serves the end consumer directly. Goodyear has already started online direct sales. How do you see the tension with specialist retailers, and is this an area that will grow in the future? 
Stummer: I certainly believe that this will happen, even if it is not yet a big issue in Europe. This already exists in America. And when it comes to specialist retailers, one does not exclude the other. Because even if a manufacturer tries to market its brand via the Internet, it usually has no workshops, with the exception of those that have a retail network. So you have to bring the specialist retailer on board as a partner - you still need them for technical advice and support on site. I even believe that this can be an opportunity for specialist retailers if they get a strong platform to play in this business. This business will grow, maybe slower than expected, but it will grow steadily and then level off somewhere at, I don't know, maybe ten percent or 20 percent market share in ten, fifteen years. This cannot be stopped and you have to find the right tools so that all participants have a chance to earn money with them. 
Peschek: In Austria we have customers in front of us twice a year through our depots. And if we don't make a mistake, it won't end up on the Internet. However, we do have to address the customer via new channels, such as apps, and also digitally optimize the portfolio management and make it more convenient for the customer. That's where the future lies. We will continue to act and not the manufacturers, simply because of the customer relationship. With the failed online platform Popgom we saw where it leads when you also have to share the internet sales. Tires were sent all over Europe and the money was ultimately given to the logisticians instead of leaving the margins to the tire dealers. The Internet share, B2C, is only six percent in Austria - you can't make a good living if you have to share it too. 
Stummer: Yes, I agree: sending the tires centrally from one point won't work. The partners must be involved to such an extent that you can also access the warehouse there. Then you can react quickly instead of constantly sending tires back and forth. However, it is all still in its infancy, the systems are not yet fully developed and people are still learning. But we will have to develop in this direction, especially since individual retailers cannot afford to develop everything further on their own. A small business does not have the potential to run a webshop and keep the website up to date. This can be done through collaborations, through trading groups or even through a manufacturer. 
Frauscher: I have to contradict something. You can do a lot yourself using simple means. In the area of ​​social media, for example. Every employee uses it privately anyway. If I encourage them to use it professionally, for example taking photos of a cool car or a full warehouse of winter tires, and then posting it, then the effort is manageable and the impact is sometimes great. We recently had 3,200 clicks on a Facebook post about the stocked winter tire inventory within four hours. This is great advertising that costs nothing and is even fun for the employee! 

Back to online direct sales or online trading in general: Can you say that the US market works differently than that in Europe? 
Kilzer: Absolutely. In Europe, especially in Austria, we have a big advantage over America: quality awareness and emotion are on a different level here. That's why the B2C market works differently here. We must uphold the flag of emotion! This is how we can continue to assert ourselves as an island of the happy. 
Wondraschek: In America the tire only has to hold air because the requirements there are completely different with straight roads. Things are different here with the winding roads and changing conditions. 

What are the most exciting technological developments in tires? 
Kilzer: Definitely in the area of ​​all-season tires. This is a young area in which there has been little progress in recent years. Otherwise, you have to further analyze the driving behavior and optimize the products accordingly. You have to stay on the ball because if it's just about making the tire last as long as possible, then the emotion is lost. 
Peschek: What’s also exciting is the recyclability of the product, the reuse. Every retailer is struggling with the massive increase in disposal costs. If tires are no longer burned, we will be faced with a huge mountain of tires. There are already solutions, but they are not yet suitable for these large quantities. This will still be a big topic. 
Stummer: At some point the development will also move towards airless tires, even if that still seems futuristic at the moment. 

We have already touched on the topic of emotion. Doesn't the tire product have a fundamental problem here? Very few people actually have any joy when they have to buy a new tire...
Wondraschek: We do have the problem that tires don't have that much emotion. Aluminum rims are emotional when they shine in the sun. But the black ring around it is less so. The joy when you have to buy new tires is usually limited. 
Stummer: Unfortunately, the emotion is declining. For the masses, the car is increasingly just a means of transport to get from A to B. You can see this in the original equipment, where there are often no premium products left on it and customers often don't care what is on it. 
Frauscher: I notice that with many customers, before they pay a horrendous surcharge for the next larger or nicer set at the car dealership, they come to us as a specialist dealer, have the smaller set exchanged for winter and add the next larger one because that is still cheaper than what they would have paid when buying the car. So it's not a matter of concern for everyone, but rather a question of cost. 

What speaks for this is that the premium share is still high. How exactly are the current market shares of the different qualities distributed? 
Peschek: They have been stable for years: the Austrian has an average of 43 percent premium, 48 percent quality and what is left for cheap brands is negligible. And one thing has to be said: between a premium tire and a budget product, which is sometimes even used by manufacturers as original equipment, a braking distance difference of 13 meters was found when braking hard from 100 to 10 km/h - that's the length of a tractor-trailer! With one car you'll stand still and with the other you'll slam into it at such a speed that you won't be able to argue about your tires anymore! Right now, you spend 60 euros more every few years. The rubber compound is crucial. 

And yet more and more people are buying all-season tires. In any case, it is experiencing a triumph in many countries. How do you assess the situation in Austria? 
Peschek: The all-season tire has a certain justification from Portugal to Hamburg and not in niche regions. We are such a niche region in Austria and have a minimum tread depth of four millimeters in winter. If you buy an all-season tire with a seven millimeter tread from us, you don't have to do a lot of math to realize that a premium winter tire with nine millimeters has a longer path to reach four millimeters. And I don't think that in the next few years we will have a transport minister who, in order to curb the relatively unimportant PM10 particulate matter - the worst part, which harms the water but not the body - accepts more traffic deaths in winter. Such a transport minister wasn't even born yet! This means that we keep our depots and thus the direct approach to the customer. 
Wondraschek: That's really something that many end customers don't know: They always think that all-season tires apply all year round. But many customers are not aware that the four millimeter limit also applies to all-season tires. You have to explain this to them again and again, so you have to buy new tires all the more often. 

Especially in Eastern Austria, the recent mild winters have benefited all-season tires... 
Stummer: Yes, but you also have to put that into perspective. If you have a family vehicle and go on a skiing holiday in winter or your parents live in Upper Styria or in the Waldviertel, then you would rather put on a winter tire than an all-season tire. I do believe that this market will grow, but it will always be in the single-digit percentage range. 
Kilzer: There is already an authorization for all-season tires in Austria. This is in urban areas, among those who drive infrequently. Or even for second and third vehicles. But these are niches, the market is not getting any bigger. The country is too small for that and the regional differences are too great. Every Viennese goes skiing at some point, so it mixes together. And for that you clearly need a summer and a winter tire.