MEXICO CITYGroup Michelin has re-launched its TyrePlus Automotive Service Centers network in Mexico, six years after initially rolling out the retail franchise program.
In the past one-and-a-half years, we have restructured the network, Stephane Idier, the TyrePlus country franchise manager, told Tire Business in a recent telephone interview from Michelin Mexico's corporate offices in Querétaro.
We realized it was necessary to be much more selective in terms of location and franchise profile.
Introduced to the country in 2008, 31 TyrePlus outlets were operating in Mexico by November 2011, according to the TyrePlus Mexico website. The decision to restructure the operation was taken in January 2013, Mr. Idier said.
TyrePlus stores that did not meet Michelin's new criteria were converted back to the Michelin Alliance program. Today the TyrePlus network comprises 19 outlets in Mexico and the target is to have 100 by 2019, Mr. Idier added.
We went back to basics, he said. It's important to have the right business model.
A Frenchman in his late 30s, Mr. Idier said Michelin is targeting large urban areas primarily as it seeks to grow the network. The Mexico City metropolitan area is a priority.
This is our No. 1 focus, he said. After that I would say other big cities like Monterrey, Guadalajara and the central part of the country will be targeted.
He declined to reveal how much Michelin, which employs about 700 in Mexico, is spending on the TyrePlus re-launch. But he said: We are very confident.
Asked to explain his optimism about the new business plan, he said: Because it works in the company-owned store we have to the north of Mexico City, in Cuautitlán Izcalli, which is a municipality in the State of Mexico.
It's the only passenger and light vehicle retail facility owned by Michelin in North America. It has helped us to prove (test) the business model. It (Cuautitlán Izcalli) is also a training and testing facility.
In our ramp-up plan, the idea for the coming five years is to attract existing businesses to the TyrePlus concept, Mr. Idier emphasized. We want to attract existing storespeople who already sell our brand.
Applications from light vehicle maintenance shops that want to join a winning concept were also welcome, he added.
In an interview with Tire Business in 2009, Mr. Idier said Michelin Mexico charged TyrePlus licensees a $25,000 signup fee. In addition, program participants paid royalty fees of 3 percent of sales for advertising, 2 percent on tire sales and 6 percent on sales of all other products and services, such as oil and shocks.
Launched in 2002, the TyrePlus programwhich does not exist in either the U.S. or Canadaoperates at about 1,300 locations in Eastern Europe, Asia, Africa/Middle East and Latin America.
It's starting in Brazil, Mr. Idier said without disclosing specifics.
In a separate interview with Tire Business via email, Michaela Yasin, country marketing manager for Mich-elin in Mexico, said that the company has not scaled back our target number of (TyrePlus) stores, but we adjusted our timeline from our first goals.
In her email, she alluded to the complexity of running the franchise and added: We are certain that we have the winning formula to make each point of sale successful and now our revised timeline can be achieved.
She said that across the country, when considering everything, from roadside shops to big box stores to professional tire dealers, there are more than 7,000 (Michelin) retail outlets in Mexico. The stores are spread relatively evenly throughout the country.
By expanding its retail presence in Mexico, Michelin's goal is to be convenient to the consumer when the consumer is ready to purchase, she said. Obviously, by being closer to the consumer it makes the purchase process easier.
Asked what she considered to be Michelin's major competitors in the retail field, she replied: In Mexico, all major competitors have a retail network.
Stephen Downer is a freelance writer for Tire Business based in Cuernavaca, Mexico.