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Tyre manufacturer building retail markets to secure growth

NEW TYRES
The performance standards, wear characteristics and manufacturing requirements of tyres used on electric vehicles are different to those used on internal combustion engine vehicles

NEW TYRES The performance standards, wear characteristics and manufacturing requirements of tyres used on electric vehicles are different to those used on internal combustion engine vehicles

27th March 2020

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

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With export and original equipment demand in the automotive industry in Africa growing year on year, it is critical for companies to expand their reach into high-growth markets in Africa to secure long-term growth, says Sumitomo Rubber South Africa (Sumitomo Dunlop) CEO and National Association of Automotive Component and Allied Manufacturers (NAACAM) VP Riaz Haffejee.

The proportion of imports in a market depends on currency fluctuations, with more favourable exchange rates leading to more imports, and vice versa during periods of less favourable exchange rates, he notes.

Amid tyre sales having declined in South Africa for a third consecutive year, the company’s strategy is to penetrate white spaces in Africa in which demand for replacement tyres and new tyres is expected to grow in line with these high-growth markets of Kenya, Nigeria, Ethiopia, Ghana, Rwanda and Côte d'Ivoire.

“To secure long-term growth, we have developed a retail chain of 70 stores in growth markets outside Southern Africa to build our customer base and brand affinity through distributors. High-quality tyres, good service and good customer experiences are important to win customers in these markets when competing directly with imports,” he says.

A key differentiating factor in the tyre market is supporting products and vehicle models on the ground throughout the continent.

“While original-equipment manufacturers grow their presence in these key growth markets, we are simultaneously expanding tyre retail outlets like Dunlop Zones in these territories to enable service providers to offer original equipment replacement tyres to consumers.”

The next step for Sumitomo Dunlop is to provide tyres to original equipment manufacturers moving from semi-knockdown to complete knockdown assembly in the countries they operate in.

“Manufacturing in South Africa is currently a challenge given the myriad of issues the country is currently facing. However, working closely with the Provincial Government in KwaZulu-Natal, we have been getting tremendous support for all our initiatives.”

Technical Edge

Sumitomo Dunlop’s strategy in Africa is also helping it to secure corporate and fleet operator customers, but this market share is more strongly linked to the company’s technical competencies and capabilities and level of support.

Sumitomo Dunlop provides technical training for distributors and partners in African markets to enable them to provide technical services for business clients, which also boosts customer service.

“What we are going through now is a huge shift in the auto industry and as a result there will be effects to the tyre industry as well,” says Haffejee.

The design and performance standards of tyres will also change to match the torque profiles of new electric vehicles, which have full torque from start and have different wear characteristics to tyres used on internal combustion engine vehicles.

“The durability of tyres for electric vehicles requires different designs and depends on how they are made. Additionally, weight is a more significant consideration in such vehicles, which require lightweight, high-performance tyres that are still durable and safe. This might require using less materials while handling dynamic and high loads.”

Noise creation, called tyre roar, is also a consideration, as electric vehicles are expected to be much quieter than internal combustion engine vehicles.

The tyre industry has to be led by original equipment manufacturers, and the design of new tyres will depend on consumer demands and the vehicle models introduced. The rate of adoption of new propulsion will also influence tyre replacement markets, and Sumitomo Dunlop will be able to provide tyres for new vehicles for vehicle manufacturers and throughout its global distribution footprint, concludes Haffejee.

Story highlights:

* Local manufacturers are expanding their reach into high-growth markets in Africa to secure long-term growth as local demand is expected to remain depressed.

* Companies must ensure that they keep up with technological changes as the design and performance standards of tyres will change to match new propulsion requirements.

Edited by Zandile Mavuso
Creamer Media Senior Deputy Editor: Features

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