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May, 21 2012

RIDING THE WHEELS OF SUCCESS

After dealership and distributorship models, it's now the turn of franchising to cast its spell on the tyre industry and to rock-and-roll on the road that leads to success.

AS India's automotive industry is riding high on success with the coming of many foreign automobile companies in India, the segment of tyres has also evolved in a big way in the last few years. The rise of four-wheeler automobile majors in India has given a boost to the radical tyre manufacturers too. Currently, tyres made in India are accepted the world over. As the automotive demands in the passenger vehicles, two wheelers and export demands for tyres is strikingly moving with fast pace, the India's tyre industry has been rolling out a double-digit growth every passing year.

In India, the industry's major share is captured by the homegrown big-shots such as - Apollo Tyres Ltd, Ceat Ltd, MRF Ltd, JK Tyres and other foreign players such as Good year, Yokohama, Dunlop India Limited, Michelin Tyres, Bridgestone India Pvt Ltd, Kumho and Continental. At present, India's tyre industry is mainly dominated by retail distribution models of dealership and distributorship, while, franchising has just begun to take off in the tyre industry.

Market potential

While India produces fewer tyres, the market scenario is likely to change with the replacement of bias-tyre market by radial-tyre market. As the demand for good quality tyres is increasing by the day, the scope for radial-tyre market is expected to take a giant leap. When it comes to product consistency and offering quality after-sale services, India's tyre industry still lags behind tyre industries of developed countries. Therefore, here is an opportunity for Indian tyre manufacturers to emulate their western counterparts in offering quality after-sale services to customers as well as embark on the path of constant innovation in product offerings. Till now, JK Tyre caters to 40 per cent of the tyre requirements of leading car manufacturers who account for 70 per cent of the total car production in India. JK Tyre also commands a 21 per cent share in the original equipment commercial vehicle segment.

On the current market scenario in India, Vikram Malhotra, Vice-President, Marketing & Sales, JK Tyre & Industries Ltd, says: “India's ongoing automobile boom and expansion of the highway network have paved a huge business opportunity for the country's tyre manufacturers. Shrugging off a sluggish phase between the period 1999 and 2001, the industry is now climbing a steep growth curve that is already peaking at an annual rate of 8 per cent. In an arena marked by intense competition among homegrown players and imported brands, companies are re-organising their sales, distribution, marketing, and brand strategies to stay one up in the battle.”

En route to franchising

Expanding via franchising is the latest fad among players in the tyre industry to get a grip on unexplored regions or cities of India by opening exclusive retail outlets.

Tyre companies such as JK Tyres, MRF Tyres Ltd, Ceat Ltd and Apollo Ltd also operate their exclusive stores through franchising. As a pioneer of radials in India, JK Tyre established a nationwide chain of franchised retail outlets branded as 'JK Tyre Steel Wheels'. It's an extended arm of JK Tyre distribution network and has helped the company in reaching out to the customers and showcasing their high quality products and services. On taking to franchising for expanding their brand's chain of stores, Vikram Malhotra, adds: “JK tyre has taken the franchising route to establish a wide area network and leverage strengths of its channel partners. Franchising also enables consistency in product availability, distribution, branding, and as an extended service arm of the company to customers.”

On the other hand Pradeep Jauhar, who runs an independent consultancy in the automotive sector, believes that in India, dealer or retail distribution is the way to go forward. He feels that for reasons of distance and remoteness of locations, a dealer or retail model has been proved to be more successful. “The best tyre companies in India have adopted this model and have the largest number of dealers and sales. Spread of distribution is the key to success in the business here,” he says.

For owning JK Tyre's franchise, franchisees are required to invest up to Rs 20 lakh for a space of 1,000 sq.ft with 25-foot frontage. Currently, JK Tyre has established a strong foothold in over 85 cities with 130 franchised stores of its brand “JK Tyre Steel wheels.” The company also has a nationwide distribution network of 140 offices and over 3000 dealers. Currently, JK Tyre already exports its tyres to 75 countries across 6 continents, and its tyres enjoy premium brand status in various sophisticated markets, including US markets.

Guidebook for growth

By redefining tyre retailing in India, JK Tyre Steel Wheels offers its customers a one-stop solution for complete tyre sales and service requirements in a unique ambience. To stand in this fiercely competitive market, JK Tyre has made significant investments in its retail network by providing financial support to its franchisees for equipment as well as showroom development and in training the manpower.

Spreading its reach

Many brands have been able to penetrate within and outside the country through strategic alliances or tie-ups with existing owners and globally renowned chains. To ramp up their brand's presence across the nation, the companies in the tyre industry have started consolidating their distribution channels by aggressively targeting the cities with higher customer footfalls. For building their robust network of franchisees, JK tyre is bullish about opening 140 stores of Steel Wheels by the end of this year. The company also plans to continually expand its Steel Wheels retail outlet network in metros and mini metros, and tier II and III towns of the country.

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