Tire revenues in Mideast to reach $3.6bn by 2021: Study

Tire revenues in Mideast to reach $3.6bn by 2021: Study

File photo shows exhibits Automechanika. — Courtesy photo
File photo shows exhibits Automechanika. — Courtesy photo

DUBAI — Automotive industry professionals have weighed in on the debate about the Middle East’s tire industry, with the future headed for positive growth, as the sector swings from a buyers’ to a sellers’ market.

More than a dozen key figures from the regional tire industry gathered to discuss future growth prospects, challenges, and the way ahead at the 1st Automechanika Exclusive Tire Gathering Tuesday (March 7) in Dubai.

Panelists at Dubai’s H Hotel were headed by Surender Kandhari, the Chairman of Al Dobowi Group; Mohammed Aqel, the General Manager of Central Trading Company, and Alireza Moaref, Managing Director of Varga Group.

Varga Group is the Middle East representative of Marshal, Kenda, Deestone, Achilles and Alexia tire brands.  Moaref said the region has reached the bottom of its sales cycle.

“The tire market normally goes through five year cycles where one sees five years of a buyers’ market and five years of sellers’ market”, said Moaref. “I believe it bottomed out by November 2016 and we’re now witnessing a change from 5-6 years of price decline to a price incline market.  There’s a small chance prices might steady out after a few months but we won’t see a decline in the near term.”

Moaref’s comments were shared by Mohammed Aqel, the General Manager of Central Trading Company, which represents more than 25 auto aftermarket brands, including Michelin and Kormoran tires. Aqel said the region is on an upward trend due to recent price increases in raw materials such as rubber after three years of decline. “There will be positive growth coming from price increases but we don’t expect much growth in tire volumes,” said Aqel, who added there were some challenges ahead to brace for as well. “We were facing the price drop challenge, now we will face the price increase challenge.”

The Automechanika tire industry roundtable was hosted by Messe Frankfurt Middle East, organizer of Automechanika Dubai, the region’s largest automotive aftermarket trade fair, which will run on May 7-9, 2017 at the Dubai International Convention and Exhibition Centre.

Among the other hot topics up for discussion was future trends and innovations in a Middle East market where, according to Frost & Sullivan, revenues from tire sales will reach $3.6 billion in 2021, growing nine per cent annually from $2.4 billion in 2016.

“These are dynamic markets and contribute a good share to all major tire brands in the replacement market,” said Aqel.  “Keeping in mind that the GCC region in particular has a very high GDP with high purchasing power when compared to other markets in the region.

“However, it needs to be further regulated and controlled, especially in the UAE, as the country is a very open market and a hub for re-export.  We’re still considered as an emerging market here in UAE and there’s still a lot of development required.”

Added Moaref: “The UAE is probably going to have the biggest percentage growth for us in the next couple years leading to the Expo 2020 Dubai. On the other hand, Africa has a bright future and we predict a resumption of sales soon in some African countries that were affected by currency devaluations and the oil slump.”

“We believe that we are headed for a good year considering the recent upward trend in prices. When prices are on the upside purchasing increases and there’s capital inflow into our market. Tires are after all a commodity and people buy on a bullish market.”

The 1st Automechanika Exclusive Tire Gathering comes amid growing interest from tire manufacturers and suppliers from across the globe at Automechanika Dubai 2017, which has a dedicated Tires & Batteries product section featuring more than 200 exhibitors.