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LATIN AMERICA EXPO
Kees-Jan Riemersma,(right) sales director of Kargro
In this regard, Eastern Treads believes that the retreading industry has some bright prospects further down the road, but it may take some time to see the real improvements. “Most likely we will
have to wait. We need to have patience, including on this market. In India the picture is very similar, and now things seem to be picking up as well,” he added.
to cross Atlantic to reach their users in the Latin America region, they are still in high demand there, Riemersma added.
“Our clients organize the transportation of tyres. As a rule, we are not doing that. If necessary, we can do it, but mainly our customers do those things themselves, using their ties with the shipping companies. These products are still
attractive to be used in that part of the world,” Riemersma said.
This is primarily because in this region European tyres are considered as a top-quality product. “We are dealing with 2.5 million car tyres and 1 million truck tyres per year, and we have a very strict selection criteria, so I can safely say that we are dealing only with the best tyres,” Riemersma said.
The retreading industry is passing through rather tough times in Latin America, but it is still competitive, at least if the companies count their costs in the right way, said Heriberto Romero, director of Hules Banda, in his presentation at the Latin American Tyre Expo recently. It is the final cost per km that must be taken into account, he said, and this cost needs to be estimated with at least two retreading cycles when the companies are dealing with the premium quality casings.
The price per new tyre of the premium top-4 categor y is around $400 and is designed to run for 100,000 km. The price of the first and second retreading cycles is $120 each, and in both cases it would add around 100,000 km of mileage under proper usage, Romero said. This makes the total cost per tyre around $640 and the overall mileage amounts to 300,000 which make the price per km equal to $0.002, Romero estimated.
With the other premium tyre brands the picture is ver y similar. The price per new tyre is $300 and
the expected mileage is 80,000 km. With both the first and the second retreading cycles would cost the same $120 and add 100,000 km and 80,000 km of mileage respectively, the overall costs would climb to $520, and the overall mileage is expected to be around 260,000 km. This means that the price per km is $0.002, exactly the same as with the top-4 premium categor y, Romero said.
Premium Asian tyres are cheaper compared to those of the premium brands, and this makes them rather competitive. The costs on average are $220 for a new tyre, $120 for the first retreading cycle and $100 for the second retreading cycle, and the mileage is 80,000 km, 100,000 km and 70,000 km, respectively. With the overall costs per tyre of $440 and the expected mileage of 240,000 km, the cost per km is rather low – at only $0.0018, according to Romero.
The premium tyres are followed by the cheap Chinese tyres. Although, they are commonly described as cheap, a simple calculation shows that for the customers these products are the most expensive
Heriberto Romero: How to Activate the Retreading Industry
Eastern Treads Set
to Expand in Latin America
Heriberto Romeros at the Panama Conference
Eastern Treads plans to expand its international sales within the Latin American countries, according to Mr. Pradetkumar, spokesperson for the company.
“We have just got a customer in Bolivia to start with,” Pradetkumar said. “Of course, we have evidenced a downturn on the market over the past several years, but we believe that now the sales have begun to pick up again. So, this is the right time to enter the market”.
“As retreading is a service-oriented industry, we tend to provide our customers with comprehensive solutions – not only the raw materials. This is our strategy that we apply to not only in Latin America, but also in the other regions of the world and in India as well,” Pradetkumar added.
“We’ve been really successful with our business model on our domestic market, so now we want
to expand it to some new areas, like this one,” he added.
The retreading market everywhere has been affected by cheap Chinese tyres, and Eastern Treads has decided to help retreaders to combat those challenges by introducing a competitive price on raw materials, including rubber compound, but without “compromising the quality of the product”.
According to Pradetkumar, it is obvious now that the global expansion of cheap new tyres is coming to its end, because it is becoming clear to ever yone that they had low prices due to the lower quality. “The customer could be attracted by the low price, but in our understanding, as soon as he finds out what the real quality of that product is, he will not be willing to use it in future,” Pradetkumar said.
48 Retreading Business