Inflation could see growth in retread sector
The spiralling increase in the cost of raw materials is impinging on all tyre manufacturers around the globe. Even the Chinese, for so long the purveyors of “budget” tyres are beginning to feel the squeeze. The rising cost of materials largely explains the string of poor financial returns reported by the world’s leading tyre manufacturers, and lies behind the numerous price rises announced over the last few weeks. Many industry experts believe that this may result in a renaissance in the sales of retreads.
Chinese manufacturers have made an impact in the UK in recent years, appealing to the British motorist seeking to counterbalance the ever increasing cost of driving. However, a 23 percent increase in the cost of raw materials, coupled with the falling buying power of the pound, has made these Chinese tyres less of a bargain.
Another problem with the Chinese tyres is the perceived inconsistency in terms of quality and durability. Suppliers of retread tyres are now highlighting the fact that their tyres, with low rolling resistance and good durability, represent better value than the budget offerings from China.
Another indicator of the resurgent retread market lies in the recent acquisitive actions of some of the leading tyre manufacturers. In the UK Bridgestone recently acquired retread company Bulldog, and is now able to offer both new tyres and retreads.
This trend will not affect the premium tyre market in the UK, but its impact on the budget sector could well prove significant over the coming months.