Deldo benefits from its own size
Belgium wholesaler plans further expansion in Europe
International tyre wholesalers’ role as sales intermediaries between the manufacturers and the tyre trade appears to becoming increasingly significant. Until about a decade ago the impression was that wholesalers were enemies to tyre manufacturers. Today, this has changed to a “more open relationship with the industry.” This is at least the opinion at Deldo Autobanden where improved relations have resulted in consecutive years of record annual business results. For example this year the Belgium company which is based in the harbour city of Antwerp reported an annual turnover of about 250 million euros (£170 million) from the sale of about 6 million tyres.
Since Deldo Autobanden was founded 33 years ago by Jos Delcroix and his wife Paula Donckers, the daughter of a tyre dealer from Antwerp, the company has developed in only one direction: upwards. Differences in international and in particular the European pricing policies of tyre majors promoted the position of Deldo as an international wholesaler and provided the basis for a successful business model. Deldo bought tyres where they were offered cheap and sold them where they could be sold at a higher price throughout the whole of Europe.
Since the early years the successful business model has been combined with other relevant factors which make Deldo Autobanden an important player on the European tyre market, says Tom Van Dyck, sales manager at Deldo and responsible for the German, Austrian and Swiss markets. When in the early years different price levels were mainly responsible for the profits, in recent years the number of sold tyres has become equally important. Every day about 60,000 tyres are moved – 30,000 tyres as incoming stock in Deldo’s central warehouse in the free port of Antwerp (Europe’s second biggest container port after Rotterdam) and another 30,000 leave the warehouse again. All in all, the Belgium wholesaler sells more than 6 million tyres every year, says sales manager Van Dyck in an interview with Tyres & Accessories. It is obvious that buying and selling in these quantities results in further benefits from the economies of scale.
However, according to Tom Van Dyck, there is no parallel correlation between the number of tyres the wholesaler buys from the industry and the prices and conditions it gets. These are certainly “not proportional” to the additional number of tyres Deldo buys today. Needless to say there are price advantages that can be forwarded onto Deldo’s customers.
Deldo doesn’t buy all its tyres from the industry but also frequently from other wholesalers and co-operations throughout Europe and the world. The only thing that’s really important is the price – as in the early days of the company. At Deldo nobody claims that the wholesaler always has the best prices for its products. But the prices are “very competitive” combined with a “fast and faultless delivery,” says the sales manager.
Another important factor for Deldo’s success is obviously logistics. The company which says it is “number one among Europe’s independent tyre trade” sells about 95 per cent of its tyres on the European markets. And because Deldo is not alone in the world of logistics it has to make the difference on a highly developed market like Europe. A trading business today does not only have to offer the right goods for the right price but also has to be a reliable logistics partner. “Logistics is a very important factor to our success,” says Tom Van Dyck. Deldo Autobanden therefore operates a fleet of 40 tractor units and about 80 trailers and even founded its own haulage company (Tyretrans N.V) nine years ago. But still the transportation capacities are not sufficient to cover demand. It is important to find “the best and the most efficient way to our customer,” Van Dyck told T&A. And this frequently means using parcel services and external freight companies when necessary. Every week about 120 trucks leave the docking stations at Deldo’s central warehouse in Antwerp. But for all that, optimised logistics is not considered as the only secret to success.
The ability to supply is also part of Deldo’s success story. The Belgium wholesaler used the premises of a former brewery in Antwerp as its warehouse from 1973 until 1997 when the company moved to its current location in the free harbour of Antwerp. With a gigantic floor space of 40,000 m² Deldo’s Antwerp site is one of Europe’s biggest tyre warehousing facilities. It is also the home of the company’s corporate headquarters. It was necessary to build these constructions to hold the vast amount of stock that passes through the company’s gates. Holding between 1.5 and 2 million tyres in stock on average allows Deldo to process almost any order at very short notice. Consequently European tyre dealers don’t usually have to wait long until they get their tyres from Deldo Autobanden.
At the same time Deldo tries to help its customers as far as possible with marketing support, says Rutger Veerman. Deldo’s new sales and marketing manager points out that it was also core business to the Belgium wholesaler to keep a good personal relationship with its customers across the continent and beyond. Although the customers basically set the rules on how to communicate – by online media, by fax or by telephone – personal contact was always and still is central to Deldo’s way of doing business.
Although Tom Van Dyck and his colleague Rutger Veerman didn’t witness the foundation of Deldo Autobanden themselves over 30 years ago, both agree that there must have been a change in the past years from which the Belgium wholesaler and its young team of tyre professionals has benefited more and more. “Today, the industry cannot do business without us,” explains Mr Van Dyck. The Dutch sales and marketing manager Rutger Veerman even uses the word “dependence” in order to explain the advantages of international tyre wholesalers of today.
International wholesalers have become strong in such a way that tyre manufacturers can barely afford to lose this distribution channel. Not to mention the administration advantages of having some financially strong customers who pay on time. When the two parties have fought each other over years – the industry obviously couldn’t live with strong and independent wholesalers – today the situation has changed towards a “good relationship.” It appears that the industry has realised what Tom Van Dyck puts like this: “If you can’t beat them, join them.”
Since the company moved to its location in Antwerp’s free harbour nine years ago Deldo has grown about 10 to 15 per cent every year. Today Deldo claims to be the biggest single customer worldwide for one or other tyre manufacturers. Furthermore, the wholesaler is among the biggest supplier of budget tyres from the Far East. Deldo has, for example, had an exclusive relationship with the Chinese tyre manufacturer Guangzhou South China Rubber Tire Co. Ltd since 2000. This modern state-owned company produces about 6 million tyres every year and sells a significant number of these as Wanli, Sunny or more recently Fortuna brand tyres through Deldo in Europe. This year Deldo will receive about 2.2 million tyres from South China Tire and next year it will grow to as much as 2.5 million units. The Belgian wholesaler is therefore responsible for buying about one third of South China Tire’s production. This Chinese company is based in the south eastern province of Guangdong (close to Hong Kong) and operates two factories. In total Deldo sells about 3.5 million budget and low budget tyres per year following a general market trend towards budget and low budget products. Part of Deldo’s product portfolio is also the Nexen brand Roadstone. It appears that the wholesaler can benefit from its long lasting relationships with Far Eastern manufacturers in order to provide tyres with an adequate cost-performance ratio.
Last year Deldo started selling the promising new Fortuna private brand. Currently Fortuna products are only available as passenger car summer tyres in 24 sizes. However the programme will be strongly extended in the next two years, Rutger Veerman promises. For example the decision was taken that South China Tire (Fortuna’s producer) will supply winter tyres from 2007/2008.
For the Belgium wholesaler winter tyres represent the biggest growth market in continental Europe. Last year about 40 per cent of the annual turnover was made with winter tyres, says Tom Van Dyck. Deldo’s second private brand, which can be distributed globally, is Minerva. It is widely known on the market, although not communicated officially, that Continental is responsible for the “German engineering” that this brand’s slogan boasts of. Minerva is also available as a commercial vehicle tyre.
It is easy to see that Germany and the German-speaking markets play an important role for the Belgium wholesaler. From Deldo’s annual turnover of 250 million about 75 million are generated in that region, says sales manager Tom Van Dyck. So almost every third euro Deldo turns over stems from its German, Austrian and Swiss operations. Last year, it sold about 1.5 million tyres in that region which again is about one quarter of the number of units Deldo sold. Car dealerships aren’t even on Deldo’s list - “these are the customers of our customers.”
Bron: Tyres & Accessories