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UNITED ARAB EMIRATES
Retreads Down but Not Out in UAE Market
The United Arab Emirates retreading industry is currently in reverse mode with the conventional version of retreading making a comeback. As recently as half a decade ago, traditional hot retreading was considered to be on the way out with hardly any retread sites in the kingdom offering the mould cure process. There was a time when almost 80% of the industry shifted to the precure retreading.
But the glut created by low-priced Chinese tyres forced the precure sector to shed volumes by almost half. With Chinese new tyres in popular sizes available as low as AED 500-650, fleet operators prefered to buy new low priced tyres rather than retreads.
“The customer is not willing to shell out money, resulting in retreaders shifting towards hot retreading again. The retreads cost anything between AED 300 – 450, and a price gap of merely AED 100-150 is no longer a deterrent for fleet owner from buying a new tyre,” complained retreader Mohmoud Subuh, Emirates Tyre Factory L.L.C.
Retreading is now fast losing ground in the UAE market, as volumes have continued on a downward trend over the last five years. The market, which at its peak five years ago, reached something between 25,000 – 30,000 units per month, has now been reduced to less than half of what it used to be, with most of the retreaders in ‘wait and watch mode’.
“I don’t see much future in the retreading industry unless there is government support to the sector. There is no money left in the business. We have made money about 20 years ago, when retreading was a novelty,” recounts Surender Singh Kandhari, Chairman, Al Dobowi Group.
Moreover, there is a slowdown on the infrastructure side too. There are hardly any infrastructural projects ongoing, or any new projects announced by the government. It is always growing infrastructure activity that adds buzz to the retreading business. “With the oil prices crashing globally, government has not been
announcing new projects. Besides, it is becoming difficult to hold onto business that survives on long credits. While the input
costs of raw materials are rising along with rent, the retread price remains low due to the presence of low-priced Chinese tyres,” argues Kandhari.
Even globally acclaimed tyre brands bow to the Chinese prices. The prices of a number of global brands have decreased consistently. Bridgestone prices are on the downward side, as its prices on an average dropped from about AED 2,000 to about AED 1,500, whereas Chinese new tyre prices are firming up from about AED 450-500 to AED 550- 600.
But what forced the retreaders to turn back to the system that was on the verge of complete wipeout only few years ago? It is the indifference of authorities, specifically traffic police on the streets of UAE that randomly stop vehicles to check whether tyres are retreaded or not. “If it is found to be running on retreaded tyres, the fleets are heavily fined to the extent of AED 1,000 or sometime even more, leaving fleet owners with no alternative but to buy new Chinese tyres,” said Abdul Shukoor, Managing Partner, Top Tyres.
There are no instructions or policy decision from the government that ban vehicles running on retreads. But still
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