Since the automotive industry is projected to hit another all-time high in 2015 with overall vehicle sales projected to breach the 300,000 mark, I thought I’d check and see how the aftermarket industry as well as the supporting businesses surrounding the automotive industry have been faring.
I met up with an old acquaintance, Chris Chilip, at his latest pet project, the Dunlop Tireshakk Magallanes in Paseo de Magallanes in Makati, which opens today, Feb. 18.
Chris is the big boss at Armstrong Enterprises Corp., which is the sole recognized importer and distributor of Dunlop tires in the Philippines.
I met him years ago through common friends when at the infancy of track days and fun runs, which have now become a mainstream activity for car enthusiasts.
Chris shares with me some of the challenges of running his business.
Botchi Santos: Chris, the industry is expected to hit another landmark year for vehicle sales, how does that affect you?
Chris Chilip: Of course it’s going to be a positive and favorable condition, but the truth is, we at Dunlop only feel the impact after three to four years, which is when most of these new car owners will change their old, worn-out tires.
While we had a good year this past 2014, it really only reflects the industry’s performance back in 2011-2012. There’s a lag, so to speak, from how the car industry performs, before it trickles down to businesses like us.
BS: Interesting! Although your competitors might say otherwise.
CC: Many of our competitors, especially the smaller brands, focus on retail, end-user sales. The bulk of our business is in wholesale distribution to our dealers, which is also our primary business. So while our retail sales, especially to upper-segment clients in the aftermarket modification segment, has also grown, it represents a small size of the pie.
We sell to dealers, who in turn also carry our competitors, so it’s hard for them to push our products because ultimately, it’s down to pricing versus confidence in our products’ technical advantages.
BS: Since you mentioned pricing, how are you faring against the cheaper brands made throughout Asean?
CC: The truth is many of these brands are smuggled in, or do not pay the correct taxes. They don’t operate a proper office with a store front either, and cut corners wherever they can.
Many are also parallel or gray market tire importers who misrepresent themselves as the officially recognized dealer of a particular brand. However, since they are not official importers, they do not have quotas to achieve or corporate identity protocol to adhere to.
Many of these brands also do not have US DOT (Department of Traffic) certification; they haven’t been tested for reliability and safety.
Plus, these brands also do not undergo testing and ICC compliance from the Philippine Department of Trade and Industry (DTI).
Our brands (Dunlop as well as Toyo and Sumitomo tires) are all DOT, TUV (German Technical Inspection Committee board) and DTI-ICC compliant so you can be assured of our products’ safety, reliability and performance everywhere in the world.
Testing and compliance costs us both time and money, but it is the peace of mind which consumers get from our products. This is the Japanese way, the honorable and responsible way, which is how our principals prefer to do business.
BS: Your new Dunlop Tireshakk Magallanes is impressive! Can you tell me about it?
CC: Since our wholesale distribution is our biggest and most important business, we always protect our dealers. However, we also acknowledge that we need to be present in areas where we do not have any dealers to strengthen the brand and grow the business further, especially at the retail side.
Here in Makati, we do not have a dealer that’s easy and convenient to go to, so we opted to open a facility which is easily accessed via SLEx. Aside from our Magallanes facility, we also have a dealership in Taytay, Rizal, and of course our head office with a small retail showroom at Ortigas Avenue in San Juan-Mandaluyong.
Aside from the tires, these retail outlets also showcase our large collection of aftermarket wheels, another product lineup which tends to go unnoticed at our dealers, who also carry a large selection of aftermarket wheels from different brands.
Hopefully, our presence in key areas will help strengthen top-of-mind brand recall.
We also offer professional wheel-tire mounting, wheel balancing, computerized four-wheel alignment and other small quick services. You can see how our workshop is clean, well-lit and of course, spacious too. It is very safe, which helps professionalize our services further.
BS: Aside from the automotive industry, what else is keeping you guys busy?
CC: The motorcycle segment, particularly the small scooters and underbone bikes, have been performing impressively! We’re happy because this is one area that has really allowed us to continue to grow.
Motorcycles tires are cheaper compared to car tires, are easier to stock, and the motorcycle industry has grown in volume significantly over the past few years, and continues to do so at a rate faster than the automotive industry.
BS: Is there anything you’d like to share with our readers?
CC: Yes, please maintain your tires carefully and thoroughly. Tires that are over five years old cure (degradation of rubber compound) and harden, which makes them unsafe to use.
Remember to change your tires, regardless of tread depth and condition if they are over five years old. Old, hardened tires can blow out when you hit potholes at speed, have a harsh, unusually firm ride, and offer poor grip.
You should also check your tire pressure regularly, and have your wheel alignment checked and done at least annually. Also remember that cutting corners and buying cheap tires is a very risky proposition: You might save a few pesos but endanger your life, as well as the lives of others.
Next week we’ll look at another aftermarket business and see how it is doing with the booming auto industry.
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