OTR sector worth more than $100 million to China’s retreading industry
In its report, China Tire Retreading Industry – Overview and Forecast to 2017, Shanghai-based China Research and Intelligence states that China’s retreading market increased by more than ten per cent year-on-year to reach a volume of 18 million tyres in 2012. This volume represented a market scale in excess of RMB 6 billion (£575 million, $972 million). Most retreading is carried out by smaller operations, added China Research and Intelligence; of the 500 or so retreaders in China, in 2012 only 20 had an annual production of more than 100,000 units.
Given that 200 million tyres reached the end of their working life in China in 2012 – and this figure will inevitably continue to rise in the coming years due to new tyre production levels – retreading uptake is very low in China. There are a number of reasons for this, shares China Research and Intelligence. The first of these is consumer misconceptions about the retreading industry. Many believe retreaded tyres to be unsafe products of small workshops, and this opinion is reinforced by some within China’s media, who vilify the industry as being an “illegal business” and “highly polluting.” The result of this negative attention is that many vehicle owners refuse to fit retreaded tyres.
In addition, China still lacks the necessary regulatory clout and policies to effectively handle end of life tyres and their recycling. Large quantities of scrap tyres are burned or simply discarded, simultaneously creating environmental pollution and wasting reusable raw materials. A third reason, and one that Aeolus Tyres’ Fu Trayqiang highlighted to Tyres & Accessories two years ago, is that many drivers in China keep tyres mounted on their vehicles until they are worn to an unsafe level, a practice that significantly lowers retreadability rates.
Due to the above factors, China’s retreading industry has developed very slowly in the past decade. According to China Research and Intelligence figures, less then seven per cent of all tyres taken of vehicles in China were retreaded in 2012, an amount that is far lower than that in mature markets.
China Research and Intelligence singles out the OTR segment as an area of potential growth for China’s retreading sector. It estimates that China’s annual demand for OTR tyres has exceeded five million pieces in recent years, and that the country’s OTR retread market capacity holds a value of more than US$100 million a year.