The automobile business is idle. It cannot carry out full-fledged activities, the situation of manufacturers and sellers of spare parts looks just a bit better, but the contraction in demand is rather noticeable here too as car owners stay at home. We talk about the impact of the COVID-19 spring on the tyre market, the prospects for its development and consumer preferences with Timur Sharipov, Acting CEO of KAMA Trading House, a subdivision of KAMA TYRES, the tyre manufacturing business of TATNEFT Group.
How the COVID-19 has affected the tyre business?
In many regions, tyres have been included in the essential goods category. The authorities understand that the timely service and maintenance of cars is the key to the trouble-free functioning of essential service organizations, manufacturers and suppliers of vital goods, transport and logistics and other enterprises. Therefore, our task, as one of the largest Russian tyre manufacturers, is to support our partners and customers providing them with quality products just in time and with all necessary sanitary precautions.
Last March for us was even a month of records in terms of sales in the secondary market and export. But we are not overoptimistic about the future – we live and adjust along with market conditions.
Has the demand for tyres from the end customers changed?
This year the winter-to-summer tyre-change season has come earlier than usual, but at the same time, customers are less active in April, and that is quite expected in the current situation. This is due to the need to stay at home and here we can talk about pent-up demand. Also we should keep in mind the changed consumer behavior, when purchasing is almost always rational. Therefore, under the current conditions, products with optimal price-quality ratio will be in demand. It is the thing that we always focus on when developing new models and setting our tyres mix, and it’s the reason why the products of Viatti and KAMA brands can often be found as the leaders of sales rankings.
If we talk about the truck tyre market, then it is primarily affected by the state of carriers. The traffic on the roads of the country has decreased. The logistics flows have changed not only in Russia, but in the whole world, and not least because of enhancing security. This cannot but affect sales. Along with this, we are seeing an interest in all-steel tyres retreading. This service allows you to extend the service life and significantly optimize the cost of 1 km of tyre run.
What are the key trends in the tyre market now?
Online purchasing is growing, but this has nothing to do with coronavirus. Over the past five years only in Russia, its share has doubled. Therefore, last year we launched our own online store KamaTyres.Shop*. The experts say that after the end of self-isolation online shopping will be still on trend. Buyers are accustomed to the fact that purchasing online even such thing as tyres is convenient, practical and save time on delivery. The experts forecast about 2.1% growth of the global tyre market in the next five years (according to Auto Tyre Market 2020). Even adjusting these figures for what is happening in the world today, this segment has strong positions.
As for the B2B segment, the market of retreaded all-steel tyres has been developing in Russia for 20 years, and now it is on the upswing as never before. Carriers seek to optimize costs and switch to retreaded tyres as this technology increases the resource of the product by almost 3 times (on KAMA, KAMA PRO carcasses). At the same time, it costs 40% -50% less than new ones. And after the “urgent optimization” in the face of the COVID-19, such tyres will keep on trend – after the “storm” many customers will not return to more expensive ones. Indeed, in terms of performance, the retreaded all-steel tyres are highly competitive with new ones, but the price is lower.
* KAMA Trading House, Limited Liability Company. Legal address: 423570, Russian Federation, Republic of Tatarstan, Nizhnekamsk, Territiriya Promzona, AIK-24 bld., office 402. OGRN 1021602510533.