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RUSSIA
Hills-Capital AM” Natalya Samoilova.
However, there are serious reasons for optimism due to the correction of the exchange rate of the Russian
sectors are almost fully associated with the currency fluctuations. Importers of tyres in Russia in general confirm this forecast. Thus, South Korea's Hankook plans to
2014 the Russian market for retreaded tyres rose to about 710,000 units, with the volume of domestic production totaling 360,000 units – 2 per cent more than in 2013. The industry has been strongly developed in recent years with average annual growth amounting to 9 per cent and investments of EUR 60 million since 2010.
Small Benefits
It is hard to predict how the size and the structure of the market this year will change, but in general it is expected that there will be a decrease in import supplies, which may cut the overall figures of sales. Even given this fact, representatives of the largest manufacturers of retreaded tyres say that the market outlook is not so bad. Most forecasts suggest a tightening of the competition in the tyre market, resulting in increase in demand for budget products. This in turn may support the sale of retreaded tyres, as they remain more attractive on cost than new tyres.
"One of the major trends in 2014 was a decline in demand for passenger car tyres in all price segments and an increase in the market competition. However, despite the current world political situation, the majority of companies expect to actively develop sales in Russia, including engaging local production capacities” - commented Alexei Uchuvatov, manager of marketing analytics and pricing for Continental Tyres Rus.
“In our opinion, in 2015, those manufacturers of products that can adapt to changing conditions will strengthen their market position and increase their share of the market. One of competitive advantages in the current situation is the local production capacities, as well as a wide range of products in all price segments” – he stated, adding that the market is currently shifting towards cheaper products. This position is also supported by representatives of Goodyear Russia. "In 2014 the market for car tyres saw a marked shift in demand towards the budget and mid-priced categories. It is noteworthy that the low-price segment of the market experienced the growth of Chinese manufacturers. In general, an overall reduction in tyre sales in the country was partially compensated for by the strong growth of the car fleet market in the previous periods” – commented Michael Minaenko,
Marketing Manager for Passenger Car Tyres of Goodyear Russia.
It is expected that Goodyear can really benefit from the growing demand for cheap production, as the cost of its retreaded tyres is half the cost of a new tyre. Interestingly, the representatives of Michelin do not believe in the possible decrease of the size of the new and retreaded tyre markets in Russia in 2015, also due to the growth of the car fleet in the country in recent years.
“In 2015, we expect modest growth of the market’s size. On the one hand, the demand will be driven by the rapid increase in new car sales in 2011-2013, and as a result, the need for replacement tyres for these cars. On the other hand, the uncertain economic climate will constrain consumer activity” - stated Dmitry Molokanov, director of marketing for Michelin Passenger Car Tyres in Russia and CIS region.
At the same time, the improvement of the overall market situation probably will let the companies get back to the implementation of their investment plans, most of which have been postponed with the beginning of the crisis in Russia. Interestingly, Michelin announced the expansion of its retreading plant at the Davydovo city with the launching of new production line of retreaded truck tyres under the Kormoran Retread brand at the end of 2014, when the crisis-related fears were growing.
According to representatives of Michelin’s retreaded tyres department Kormoran Retread will be presented in the markets of Russia and CIS countries in the most popular models, similar to the model numbers of new Kormoran truck tyres, and the most popular sizes: 315/70R 22.5, 315/80R 22.5, 385/65R 22.5. According to the representatives of Michelin, in future the company plans to expand the range of sizes of retreaded tyres manufactured at the new production unit.
"The new products under the brand Kormoran Retread will strengthen the company's position in the segment of truck tyres in Russia and the CIS region, which will let the company increase its commercial and industrial presence,” said Mikhail Zhuravlev, head of the truck tyre department within the East European Geographical Area of Michelin, adding that retreaded tyres from Kormoran Retread will be sold not only in Russia, but also in Belarus and Kazakhstan.
Michelin remains the largest retreader in the Russian sector
ruble, which, after last year’s drop, has, since the beginning of the year, jumped by 25 per cent against the dollar and 31 per cent against the euro. According to the Association of Retreading Businesses of Russia the exchange rate plays an important role as most carcasses are imported – primarily from Europe. As a result, the correction of the Russian ruble will make the decrease in cost of carcasses not as great as was expected, which will allow producers to avoid sharply increasing prices.
"Prices of importers may rise according to the scale of the overall decrease of the ruble against the euro and the dollar - about 30 per cent, so domestic producers can raise the prices by 5-10 per cent" - stated the executive director of the National Association of Automotive Component Manufacturers Mikhail Blokhin. According to him, the rise in prices in general will be almost the same in the segment of retreaded tyres and casings as these
raise prices by 10-15 per cent. "Because of the general economic situation in 2015, we expect a decline in demand for tyres in the [Russian] market and an increase in competition. Therefore, in 2015 we plan to increase the price of our products by 10-15 per cent"- said General Director of the Russian branch of Hankook Tyre Kim Jong. Japanese Yokohama has notified its distributors on the increase of prices by 7 per cent. Michelin and Pirelli could not say how much the price of their production will be increased during the year, stating only that an increase cannot be avoided. Cordiant’s price increase will amount to 15 per cent due to the rising cost of raw materials. Initial projections suggest that the price of carcasses in 2015 will jump by 50-70 per cent compared to 2013, which may seriously hurt the position of some local producers. However, this situation should mostly affect only small- scale retreading businesses. According to official information, in
There are hopes for renewed investment in Russian retreading in the coming months
60 Retreading Business