South African Automotive Masterplan 2035 to act as a major growth Proponent for Tire Market in South Africa
South Africa has the reputation of being the most politically stable and business-friendly country in the continent of Africa. Such a favorable business environment and economic reform-oriented initiatives are projected to assist the automotive market in terms of manufacturing capacity expansion and its backward and forward integration. The country's strategic location provides it an advantage to act as an automobile manufacturing and export hub for Latin America, Middle East & Africa, and the Asia Pacific.
According to MarkNtel Advisors’ research report “South Africa Tire Market Analysis, 2020”, the South African tire market (units sold) is projected to grow at a CAGR of 3.73% during 2020-25. In 2019, more than 50 automobile giants were operating their automobile manufacturing units in the country. This robust manufacturing ecosystem offers immense potential to the tire suppliers to maximize their earnings. Therefore, companies such as Bridgestone, Sumitomo, Goodyear, and Continental have already started manufacturing tires in South Africa. Moreover, a rise in purchasing power has also contributed to the growth in the country's vehicle fleet size, thus inducing greater tire replacement demand.
The sedan is the most preferred type of passenger vehicles in the country. Out of the total cars sold in South Africa in 2018, around 72% were Sedan, followed by SUVs, other compact cars and Bakkies (light truck).
Automotive Masterplan 2035, an opportunity for local manufacturers
The “South African Automotive Masterplan 2035”, designed by the country to transform its automotive market to become a global leader, is a primary factor towards the growth of the tire market in the country. As a part of the plan, South Africa is aiming to become an automobile manufacturing hub by 2035. The country is targeting to capture 1% of the global vehicle production market, increasing the number of units produced to 1.2 million from 600,000 units in 2018.
Moreover, the emergence of App-based cab service providers in South Africa like Uber, Bolt, and Yookoo Rides, has been adding to the demand for tires. As of 2018, the fleet size of Uber crossed 5,000 passenger cars, while Yookoo is growing its numbers from its current quota of 150. As this is a major end-user segment utilizing tires, the growth of the cab service market is projected to push the tire market forward in the forecast period.
According to MarkNtel Advisors, the South African tire market is highly competitive and fragmented. The key players with a considerable market share in the South African tire market include Goodyear, Bridgestone, Michelin, Continental, Sumitomo, Pirelli, etc. However, the growing market share of Chinese tire suppliers has intensified the competition. These companies are offering tires with a substantial price difference in comparison to the American and the European tire suppliers. Thus, negatively impacting the margins, revealed by MarkNtel Advisors in its research report “South Africa Tire Market Analysis, 2020. The Chinese tire suppliers dominated the medium and high commercial vehicle tire segment in 2018 while expanding their footprints in passenger cars and light commercial vehicle tire segments.
The tire imports in South Africa invites a high import tariff. Therefore, the local manufacturers are capitalizing on the opportunity by strengthening their sales & distribution network, introducing new product lines of tires, etc.
Evolving Distribution Channels
In 2019, there are more than 750+ tire dealers, distributors, and retailers operating in the country. Also, few e-commerce players such as Tires and More, Tire City, etc. offer tires through the online platform. However, the sales through the online platform are expected to remain feeble in the upcoming years.
- By Type of Vehicle(Passenger Car, 2 Wheeler, Light Commercial Vehicle (LCV), Medium & High Commercial Vehicle (MHCV), Off The Road Vehicle (OTR), 3 Wheelers)
- By Demand(OEM Vs Replacement)
- By Radial Vs Bias
- By Region(North, East, West, South)
- By Season (All Season, Summer)
- By Sales Channel (Online, Distributors Channel, Others)
- By Price Category(Budget, Economy, Premium)
- By Rim Diameter(Upto 12”, 12.1” to 15”, 15.1”- 18”, 18.1” to 20”, 20” to 22.5”, 22.6"- 25", 26"-35", 36"-48", Above 48")
- By Company
Key questions answered in the study
- What are the current and future trends of the South African Tire Market?
- How the market has been evolving in terms of end-user demand, seasons, rim size and application areas?
- What are the expert opinion on the future current and future outlook of tire market of South Africa?
- How the competition has been shaping across various vehicle tire categories followed by their comparative factorial indexing?
- What are the key growth drivers, challenges and hotspots coming up in the tire market of South Africa?
- What are the margins of stakeholders at various levels of the value chain of tire market in South Africa?