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SAUDI ARABIA
Global Retreading Brands Eye up the Saudi Market
Saudi Arabia is fast emerging as one of the most significant markets in the Middle East even though the size of the retreading market is merely one tenth of the new tyre market. Nonetheless, the major global players have entered this market. While Bandag, Goodyear and Michelin are already present in the market with their state-of-art operations, Marangoni is a new entry into the market. Moreover, the middle and smaller stakeholders too are either expanding their plants or are looking for sites for another plant. Even with the presence of some of the major international brands in the business, the market still is termed as being in its infancy and some time away from attaining maturity. “The market has not matured as it has in the US, Europe or S Africa. It will take another five years to reach respectable levels considering the size of the new tyre market, “ believes Ahmed Khalifa, Country Sales Manager, Tyre & Rubber Products, Rashed Abdul Rahman Al-Rashed and Sons Co. Saudi Arabia is about a 1.6 to 1.8 million new tyre market annually according to various independent sources. Merely 140,000 tyres are retreaded by about 14 retreading unit spreads across Saudi Arabia.
One of the biggest news stories remains Marangoni’s entry into the Saudi Market. Interestingly, the entry of the bigger brands could help retreading gain a firmer ground in this market, which by and large is controlled by Chinese tyres, which are not good enough for retreading. Most of the A-class retreaders do not prefer to handle Chinese tyres even if they find the casing good enough. The Italian company is setting up a state- of-the-art retreading plant on the outskirts of Dammam. “Our partner, the Al Sheikh Group in Saudi Arabia is making a total investment of around US$ 3.5 million in the upcoming plant. Al Sheikh is investing around US$ 2 million in equipment alone out of the US$ 3.5 million investment,” admitted Mike Emanuel, consultant in setting up the Tyre Solution Factory for Al Sheikh on behalf of Marangoni in Dammam. He also claimed, “This is going to be the biggest Marangoni plant in the Middle East.”
Amongst the earliest firms to introduce hi-end retreading to this country is none other than Al-Dobowi subsidiary General Retreads. The company struggled educating fleet owners about the concept. Not only that, it is the first to introduce a Tire Management System (TMS) – General Fleet Solution (GFS). Saudi Arabia has grown to become the second largest retreading market in the Middle East after the UAE but it is still only a
quarter of the market for new tyres compared to the UAE. The company is chalking out an aggressive plan to promote GFS amongst the fleet owners in the Saudi market “We are doubling the workforce, planning to hire 30-40 people in production, sales and services,” Kandhari stated. Though global players are entering the market and building state-of-the-art units in the country, the billion dollar question remains, is the market ready and willing to pay for the high-end brands? The overwhelming presence of Chinese tyres in the market indicates the price-sensitive nature of the market. “We have to convince and
prove to the transporters that they could make big savings by adopting retreading,” Emanuel explained. He also noted that finding casings good enough for retreading is also a major problem. The Saudi Arabian market is coping with the challenges of long distances, overloading, high temperatures and fast driving coupled with bad drivers resulting in bad casing conditions. Moreover, the government does not allow the import of old casings. General Retread has launched a drive among the fleet owners to collect the old casings. With the Saudi government announcing US$ 400 billion worth of
construction projects around the country, the move could benefit the industry in the long run. The biggest retreader in Saudi Arabia Al-Howail is gearing-up to tap the demand emanating from construction activities and is even planning to set up a plant near the project sites. “We have identified two sites Sakeka and Yauba in Medina and Jeddah respectively for the plant. Both the sites are near the construction project announced by the Saudi government,” informed Tariq Mamdouh Al Subale, Deputy General Manager, AL-Howail Company.
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