Iran tyre market
By Sharad Matade
After the lifting of economic sanctions on Iran by Western countries in January last year, the oil-rich country is expected to see a surge in GDP growth that would be better than the 6 per cent last year. Today, the country is expected to witness a flurry of new investments in major industries, and the tyre sector is no exception. However, Iran’s tyre industry is still requires upgradation of its R&D and manufacturing. It needs investment support and technical collaboration with leading global polymers and tyre-related institutions, says Hassan Shaebani, Managing Director of the Rubber Industries Engineering and Research Company (RIERCO). In this exclusive interview to Tyre Asia, he unveils the growing opportunities in the tyre and polymer sectors for investors and manufacturers
Iran’s economy is picking up momentum following the lifting of sanctions in January last year. It is in this emerging scenario that the country’s Rubber Industries Engineering and Research Company (RIERCO) is seeking to leverage its knowledge resources to boost the domestic rubber and tyre industry.
RIERCO is one of the only rubber expertise centres to support rubber and tyre industry with technical and engineering services, training and professional publications. It also works as a strong linkage between university and related industries.
“We are still far behind in technical advancements in rubber and tyre sector compared with the developed world,” says RIERCO’s Managing Director Hassan Shaebani. “Most research work in the rubber and tyre sector by Iranian researchers revolves around polymers. We need to focus more on tyre designing and new compound developments in our efforts to tap future growth opportunities,” he explains.
He also emphasised the need of collaboration with global rubber and tyre industries in order to gain expertise, and boost research institutions and universities to train Iranian researchers in various subjects apart from just polymers.
“We need cooperation with other reputed institutions for training our researchers in the design of tyres and compounds,” he adds. Today, most Iranian research efforts are focused on reducing rolling resistance, he reveals.
However, funding for research and development of new products is another major issue facing the Iranian tyre industry. “Along with research and technical support, we also need financial support to conduct research in various segments of the industry,” he says.
Shaebani also stresses on the need of establishing a strong collaborative relationship among universities, research centres and tyre makers to tap into the domestic research talent.
According to the World Bank, Iran is the second-largest economy in the Middle East and North Africa (MENA) region after Saudi Arabia, and the 18th biggest in the world. After the lifting of sanctions, the country’s tyre industry is anticipated to see double-digit growth in the next five years.
According to a recently released TechSci Research report, “Iran Tire Market Forecast & Opportunities, 2021”, Iran’s tyre market is expected to grow at a CAGR of over 12 per cent during 2016-2021 on account of the anticipated growth in automobile production and sales.
Moreover, the lifting of sanctions and anticipated economic revival are further expected to augment demand for tyres in the country through 2021, adds TechSci Research.
In the last decade, when Iran was under sanction, the country’s tyre industry had shown decent growth. Production of tyres and tube between 2004 and 2014 grew 8.26 per cent to 248,144 tons, while consumption in the same period surged 53 per cent to 370,111 tons, according to a data compiled by RIERCO.
The glaring difference between production and consumption shows that the country had been a net importer in the last one decade. “Around 100,000 tons of tyres and tubes were imported, mostly from China, through Dubai. Imported tyres consisted of both branded and cheap priced ones,” says Shaebani.
The country’s tyre industry had gone through many changes due to the prolonged economic sanctions. Today, its tyre industry consists of only domestic companies. The government’s intention is to double the industry’s size by 2025.
Pre-Revolution, Iran market had only a few international brands such as Bridgestone, Pirelli, BF Goodrich and General Tyres which had technical collaboration with local tyre manufacturers. However, there are recent reports that many international giants are keen to enter the country to tap projected demand rise for tyres.
“There are only nine major Iranian tyre companies producing the entire range of tyres. A year after the sanctions have been lifted, negotiations are going on between tyre companies for market expansion,” says Shaebani.
According to a report, Michelin is exploring opportunities to resume business with Iran as the country was its biggest market in the Middle East until the imposition of international sanctions. The French tyre company stopped exports to Iran in 2011.
China’s Shandong Linglong Tyre also said that it has entered a strategic partnership with Iranian company Tosse Tabdil Sina (TTS). Under the deal, TTS will act as an exclusive agent for the Linglong brand and provide both original equipment and aftermarket customers with sales, marketing and after sales service.
India’s Apollo Tyres has also reported to have increased its exports to Iran. Apollo sells its products with a local channel partner and claims it has a dominant position in Iran’s cross-ply truck and bus tyre market.
Iran produces synthetic rubber, carbon black, tyre cords, some processing oil and chemical additives. It imports natural rubber, curing agents, special chemicals, and additives.
Radialisation of the passenger car segment has already reached 95 per cent, while in the bus and truck tyre it has reached 50 per cent. “The auto market is changing rapidly in the country that is leading to an increase in radial tyre demand,” explains Shaebani.
RIERCO provides, technical and engineering support and services, indoor testing centre and quality inspection unit, laboratory equipment and facilities, training and professional publications and seminars and conferences.
“We want to become the most reliable tyre and rubber engineering and research company from a customers’ point of view,” says Shaebani. It also aims to increase technical credibility in providing services, increasing reliability and trust among its customers and developing services and activities in different engineering sectors.
RIERCO’s tyre test centre is equipped with the latest equipment for speed and endurance tests. It is has bead unseating and plunger test facilities. In the near future, it will be equipped with other equipment to run laboratories to test rolling resistance, wet grip and noise. RIERCO is aiming to set up facilities for testing tyres according to R117 regulations and become an accredited test centre for gaining E-MARK in Iran, he revealed.