Page 18 - RB-63-12-4

MALAYSIA
Malaysian Retreaders to Face Big Challenges
In Malaysia, retreads have long been part of the life cycle of the truck tyre. Despite severe competition amongst retreaders, the retreading market in Malaysia has been considered good and healthy for the past three years. “Yes, I would say we have enjoyed the last three good years. Annual new commercial truck tyre consumption in Malaysia is estimated at 600,000 pieces. With 1.1 million pieces of truck tyre retreads annually, the Malaysian retreading industry consumes about 16,500 tonnes of natural rubber every year, which is a significant contribution to the rubber industry. However, instead of a continual growth, I foresee that the radial truck retread tyre market will start to slow down, which will eventually decrease the demand without taking the possibility of economic downturn into consideration, ”commented Kenneth Teh, the Tyre Retreading Manufacturers Association of Malaysia (TRMAM) President, during
an exclusive interview with The Tyreman recently.
Kenneth explained that during the good years, demand was high and retreaders had many tyres to retread. In order to capture a bigger market share, some retreaders tried to speed up the retreading process rather than applying the the proper radial retread process, which eventually increased the failure rate of retreads, and contributed to a negative general public perception towards retread tyres. The situation became even worse with the increasing cheaper imports of Chinese new truck tyres, selling at almost the same price as the stock retreads.
“Losing the price advantage plus the perception that using new tyres is always better than retreads have pushed the majority of fleet companies to opt for new Chinese truck tyres. Chinese truck tyres now constitute around 50 per cent of the new radial truck tyre market share,
and the number is on the rise. The quality of Chinese tyre casings varies from brand to brand, and some of them are not retreadable at all due to the tyre’s potential life. Hence, once the tread depth reaches the tread wear indicators, these tyres tend to be be transferred either to rural or off-road usage to utilise the balance of the tread. Fleet companies will not continue to use these casings until they burst as this is a dangerous practice. In the long run, the result of these activities will be a shortage of casings.” Currently, according to Kenneth, there are about 90 retreaders in Malaysia, with half of them located in West Malaysia and another half in East Malaysia. The number, according to Kenneth is about the same as compared to five years ago. There are a few new entrants, but there are also a few retreaders that have stopped operations. “The threat from new players is very low because this industry is very tough, with exposure to long
credit terms and not so much in equipment investment. In addition, the retreading market in Malaysia is already quite mature. The profitability of the industry will naturally flex with the changes of the price of key raw materials, such as rubber and crude oil.”
Radialisation of tyres is growing at a pace. In Peninsular Malaysia, up to 90 per cent of trucks and buses run on radial tyres. However, a high percentage of light truck retreaded tyres are used in the agricultural sector. This means a high percentage of light trucks use only new tyres. “Light trucks use retread tyres in West Malaysia mostly in the agricultural applications, for example, transporting palm oil fruits. With limited models from the truck manufacturers, the light truck tyres have only a few sizes. Almost half of the light truck retreaded tyres are 700-16. I do not see any effort in this segment. I think the truck and OE tyre manufacturers have to start
the ball rolling before we can speed up the radialisation process.”
The rate of radialisation is in fact an index of the status of the road and infrastructure development. East Malaysia is behind Peninsular Malaysia in these two areas. The rate of radialisation in East Malaysia is unknown with a high percentage of vehicles for on/off road or off-road application still running on bias tyres as compared to a 90 per cent radliasation rate among road users in the Peninsular Malaysia market. Thus, radialisation still has room to grow.
“In Peninsular Malaysia, only about 10 per cent of truck tyres are bias tyres. A high percentage of these are for on/off road applications, such as tipper vehicles and construction site vehicles, which, in general, opt for the cheaper tyres in the market due to the high tyre damage rate. From what I foresee, they will eventually switch to radial tyres in view of the shortage of bias tyre casings as road vehicles are already 90 per cent radialised.
Though retreading has successfully penetrated almost into all commercial vehicle industries, Kenneth stressed that tretreaders need to upgrade their radial casing retreading technology know-how and should be able to differentiate between the quality and grade of casings in terms of potential retread life and applications in order to reduce failure rate. This is important because a higher failure rate means higher down time and additional costs for the fleet companies as well as a bad image for retreaded tyres. “Apart from the above, the most important area is retreading process management. I urge that Malaysian retreaders look into this area, as an efficient retread process management will help us all to maintain our competitiveness in this highly competitive market, especially facing the low price Chinese brands of new tyre . A good system will manage the retread process from the time the tyre is picked up through to the finished delivery, providing us with the data and visibility that help us to manage our retread plants in the most efficient way, ” added Kenneth.
18 Retreading Business