Tyre to tyre: rubber retailers on the tyre segment

Tyre to tyre: rubber retailers on the tyre segment
Published: 2 April 2017 - 7 a.m.
By: John Bambridge

Anand Hegde, GM, Automotive Allied Division of Al Naboodah Group Enterprises, touched upon payment issues in the business. He pointed to the common problem of large fleet owners trying to delay payment or more severely customers defaulting altogether.

On a separate note, Javed Iqbal Khan, GM at Dunlop, said: “The industry and the UAE market are going through significant changes and shifting from a wholesale export oriented trade to one that is far more focused on retail. The last 10 years have seen more and more focus on customer service — and that’s where the competition is.”

Countering these comments, Khan added: “Having said that, there is an element of unfair competition being provided by the vast number of players that have entered into the market and who are bringing in tyres in the parallel market, and this is a huge challenge. It has a big impact and we can only hope for stricter enforcement of the existing laws, because it’s not that the laws do not exist; we have very good laws.”

Returning to the overall outlook, Alireza Moaref, GM at Varga Trading, said: “The last quarter of 2016 was one of the gloomiest times in the industry — everyone had problems with credit defaults and huge stock and for the first time we saw the major brands giving very low price offers, and this was a shock to everyone.

“It was a very positive change to see that the prices were increasing. I don’t know what would have happened otherwise: I think we would have seen a lot of closures or maybe even runaways, but the prices hit the bottom last November, so thankfully it’s over.”

Moaref also touched an issue tying together both international and local considerations: the problem of production dates and their perception in the Middle East region.

He explained: “One of the major issues that we face for this region and one that seriously needs to be addressed is how to get the authorities involved to help in making the market understand that a one-year-old tyre doesn’t need to be cheaper. It’s a very serious issue, and it wasn’t like this one year ago.

“The Chinese have started producing tyres with new production dates before the year has even changed, whereas major brands will deliver 2016 stock in June 2017. But it’s a major challenge to sell this in this market, because there is a misconception that it’s now expired.

“So towards the end of the year, everyone starts panicking and they start slashing prices, just to get rid of their old stock — so this is a major issue that needs to be addressed. This needs to be addressed in the same way that Automechanika and the whole industry has advocated against counterfeit parts.”

Ashwin Jain, GM, Apollo International Trading, added: “There have been a lot of issues this year and for the last two years, and they are commercial issues. One of the big changes that has happened in the last half a decade or so is that everybody has become so price conscious. Nobody is talking about performance. Nobody is talking about renewable resources. In a short while all of us will have to start seeing things differently. We have to get back to performance, and back to kilometres per 1kg of rubber used.”

Prachi Satoskar, business group manager for automotive (MENA) at GfK added some closing figures, noting that overall, between 2015 and 2017, the average price of tyres in the market has fallen from $143 to $119. However, organised retailers are seeing greater success with larger, more expensive tyres, as these customers want comprehensive service packages.

 

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