Retreading the Asian Scene
The first Asian Retread Conference (ARC 2016) cannot be better timed or better placed than now. This is for no reason other than the fact that Asia plays a vital role in the global retreading industry, throwing up a challenge many companies are trying to overcome. The current economic scenario and the way Asian infrastructural developments are happening, Asia remains one of the most potent market for tyre retreading industry. At the same time, ironically, the import of cheap Asian tyres is posing a threat to the retreading industry in the matter of pricing.
One of the biggest issues this sector currently faces is the price factor. When new tyres are available in plenty at a price close to or even better than a retreaded tyre why should one opt for the latter? Low priced new tyres are definitely impacting the retread industry and experts are wondering what could be done to alleviate the problem.
ARC 2016 will pick on this very relevant subject. Two papers are being presented on this at the conference. Rajiv Budhraja, Director General of Automotive Tyre Manufacturers Association (ATMA) will speak on “The Challenges of Cheap Tyres vis-à-vis Retread & New Tyres: The Indian Experience.” Another paper is by David Wilson of Retreading Business, UK, who will speak on “How the Retreading Industry Can Face Up to The Challenge of Budget New Tyres,” which will focus on the global scenario.
Apart from this, there will be a Panel Discussion on Retread Vs Cheap Imports, which will be chaired and participated by leading industry experts. The discussion is expected to evoke great delegate interaction as the issue is close to everybody’s interest.
This is an interesting paradox. Asia holds great potential for the future of retreading and also breeds one of the major challenges to it. Certain degree of regime control is obviously needed to streamline both aspects.
However, the general perception is that new tyres cannot replace retreaded tyres. The arrival of major tyre makers like Michelin into the retread segment itself shows how competitive the market is turning into.
Michelin’s entry into the truck retread tyre market played a big role in Bandag deciding to regroup its strategy. Bandag, a part of Bridgestone since 2007, used to rule the roost in global retread segment and is now feeling the heat from companies like Michelin, Goodyear, Marangoni etc. Michelin has recently announced its new retreading plant in Mexico and Bridgestone Bandag opened a new retreading plant in Thailand. The plant will produce retread tyres, accelerate development for truck and bus tyre segments and will provide solutions-based business offerings using the Bandag retread manufacturing process, says the company. It will also conduct training for retreading businesses.
Like in other markets, Asia also sees tyre retreading concentrated in commercial vehicle-fleet segments. Passenger car segment remains a fort unconquered. Tyre and vehicle management concepts are a fairly new approach in the Asia Pacific region, especially for small-middle sized fleet operators. Companies like Bridgestone are focusing on providing professional training to fleet consumers to enable them upgrade their business.
Retreading in India
The retread industry in India, one of the fastest growing automobile market in the world, is highly skewed towards the commercial and mining industry and lesser popular in the passenger segment. The number of OTR tyres retreaded is three times the number of new OTR tyres purchased in India. This itself shows the importance of retreading in the Indian OTR industry. “Indian companies, being well-known for their frugal engineering, the retreading cost for a customer accounts for only 30-35 per cent of the cost of a new tyre while it gives minimum 60-80 per cent running life compared to a new tyre,” says K. Muralidharan, Director of CIO Tyres, the first and the largest OTR retreaders in India.
Retreading is an important aspect of an OTR & Commercial Vehicle tyre’s life span as a tyre casing can be retreaded at least 3-4 times. The market for retreading is daily increasing with more people being aware of the concept and ready to take the Green path by using the same casing repeatedly also giving them additional cost benefit.
Over 80 per cent of the Indian re-treading industry is fragmented and lies with numerous un-organised participants. Organised participation in re-treading is limited in India to a few participants. In the OTR segment there are not more than four or five big players who capture approximately 90 per cent of the total retreaded OTR Tyres.
However, small scale retreaders in the country have not taken enough efforts to grow in this business. One of the reasons for this is the lack of affordable new technology to make high quality products. Tyre technology has improved by leaps and bounds. But the technology used in manufacturing new tyres has far eclipsed the technological advancement rate of retreads. Therefore if a user can afford a new tyre it is clearly the better option.
Citing reason for such attitude towards the retreading business, a north India-based retreading professional says, “Actually major tyre companies see larger margins in making new tyres rather than retreading business. While small retreaders are mostly happy with their current volume of two to four tyres a day and they just can’t afford to invest Rs2.5 to 3 million in testing and inspection of machines to improve the quality of tyres.”
According to Rajiv Budhraja of ATMA, with improvement in road infrastructure, increase in the number of multi-axle vehicles and LCV market and growing radialisation in commercial tyres are some of the factors that are pushing retreading business in India.
Growing radialisation in commercial vehicles is not seen as hampering the growth of retreading business though life span of radial tyres are longer than bias/ply tyres. Improving road conditions and growing awareness about tyres and retreading benefits will prevent tyres to get damaged to the degree that they are no longer retreadable.