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ALSHOYOUKH LEVERAGES
HISTORICAL EXPERTISE OF JORDANIAN RETREAD SECTOR
According to Mohamed Nabil Subuh, the CEO of Jordanian retreader Alshoyoukh Establishment for Tire Retreading, the tyre retreading business was started in Jordan in 1960 by the Jordanian army, which established the first retread shop at that time. In the beginning, the situation was tough due to unpaved roads, overloading and poor tyre maintenance, but the number of retread shops increased gradually over time until they counted eighteen factories in 2012. One of the main reasons behind that was the export – legal OR illegal – of retreaded tyres to Iraq. This boomed the investment in that field, to the extent that the Jordanian government legalised the importation of retreadable casings to Jordanian retread factories from countries such as UAE, Saudi Kuwait, Qatar, Germany and the UK. This law encouraged many businessmen to invest in the retreading industry, thereby creating huge potential for those retread factories.
However, explained Subuh, there was then a change in the situation, when the supply of retreads to Iraq stopped, and the Jordanian government applied a sales tax of sixteen per- cent on tyre retreading materials similar to that on new tyres. The penetration of Chinese tyres into the Jordanian truck tyre market, the import of low-quality retreading materials, and non-compensation for damaged tyres due to technical defects, combined to cause many retread shops to close, with the result that the remaining retread shops in Jordan now number only two, which is very much related to the potential of the Jorda- nian truck tyre market.
THE IMPACT OF CHINESE TYRE PRICES
The number of working trucks in Jordan is estimated at around six hundred thousand vehicles, added Subuh, but the transport market is suffering from an increase in fuel and spare parts pri- ces, causing a significant increase in the total cost of operation. Under different circumstances, that would have been a moti- ve for the end users to retread their tyres, but the shortage of retreadable casings caused the end users to buy new tyres, ra- ther than retread them. Also, there is not a big gap in the price between Chinese tyres and retreads, especially when both are
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