Bumpy ride for tyre sellers

Everything was going good for the automotive tyre market, as the number of vehicles was spiralling keeping pace with the growing economy of Bangladesh.

But the coronavirus pandemic changed the whole scenario since March.

The deadly pathogen hit the market with a tsunami of problems, which started with a huge slide in the number of vehicles on the roads thanks to a movement restriction imposed by the government to curb the spread of the virus.

The demand for tyres also experienced a steep fall when its supply dried up as the local and international manufacturers closed their doors amid lockdowns to keep the Covid-19 at bay.

Now the market players in Bangladesh see a 20 per cent year-on-year decline in automotive tyre sales this year because of the complete halt in business in the three months since March.

Some Tk 5,000 crore worth of tyres were sold in 2019, of which Tk 3,900 crore were of commercial vehicles and Tk 1,100 crore of passenger vehicles, according to industry estimates.

Now they fear sales of commercial vehicle tyres may fall by 10 per cent to Tk 3,500 crore and the passenger vehicle tyres to see a drastic 54 per cent cut in sales to end the year with Tk 500 crore.

At least 1.9 lakh pieces of commercial vehicle tyres and 1.2 lakh pieces of passenger vehicle ones were sold in 2019, said Mohammed Shahidul Islam, chairman of HNS, an importer of Korean tyre brand Hankook, one of the largest tyre manufacturers in the world.

The private car users prefer premium quality tyres for reliability, safety and the value for money, he said.

But substandard and cheap tyres imported without any quality test are also available in the market, which are one of the major reasons for road accidents in Bangladesh, Islam said.

Tyre sales have been improving since June, particularly in the commercial segment with the opening of economic activities, said Shahadat Hossain Chowdhury, chief financial officer and company secretary of CEAT AKKHAN.

The joint venture company of CEAT Ltd (India) and AK KHAN Co (Bangladesh) distributes tyres for trucks and buses, light and small commercial vehicles, motorcycles and auto-rickshaws.

Tyre sales were the lowest in the April to July period, said a senior official of Gazi Tyres, the largest local manufacturer of commercial vehicle tyres for three-wheelers, buses and trucks.

The sales of commercial vehicle tyre have reduced a lot amid a fall in its supply from the Indian and Chinese manufacturers, said Nazrul Islam, general manager of Veloxo Trading, the sole importer of Indian tyre brand MRF.

"We used to sell tyres worth Tk 30 crore a month, which is hovering around Tk 17 crore now. The demand was there, but the supply crisis is now pulling us behind."

The prices are also a bit higher now thanks to the supply shortage, he said, adding that the crisis will be short-lived.

During the pandemic, the shipping cost from Chennai to the Chattogram port increased around $100 per container, but none of the 74 distributors Veloxo has across the country increased the retail prices of commercial vehicle tyres, he said.

In the commercial vehicle tyre segment, the MRF's market share is 30 per cent. Apollo controls 5 per cent of the segment, Birla 10 per cent, CEAT 3 per cent, and Hankook 1 per cent. The rest 51 per cent is controlled by non-branded Chinese tyres. 

In the private car tyre segment, the combined share of Japanese brands Yokohama, Bridgestone and Toyo and US brand Dunlop stands at about 70 per cent, according to a study conducted by HNS.

Thai brand Maxxis owns 20 per cent share, Korean brand Hankook 2 per cent and non-branded Chinese tyres the rest 8 per cent.

Japanese tyre brands are popular among consumers, and there is also a good demand for Thai and Korean tyres, said Mojibur Rahman Sheikh, manager of The Tyre & Battery Bazar, a retailer in the city's Karwan Bazar.

There are two types of tyres in terms of manufacturing: bias and radial. And 90 per cent of owners of commercial vehicles use bias tyres to minimise cost. Apart from this, you can take Goodyear viva 3. 

The future of the tyre market is bright as the number of cars is increasing by around 10 per cent a year, said Amzad Khan Raju, managing director of Shawan International, an importer of Maxxis tyre.

Hasanur Zaman, owner of Dhaka Battery Sales at Shyamoly on Mirpur road in the capital, said sales decreased by almost 40 per cent year-on-year since the beginning of the pandemic.

"I am struggling to sell a single product a day or making Tk 40,000 a day. My capital is reducing fast, and the owner of the shop space is not at all interested in exempting me from the monthly rent."

According to him, the car owners prefer to keep the vehicles indoors, for which their need for tyres has declined drastically.

Abul Mansur Mojnu, owner of MS Khan Tyre and Battery Shop at Uttara Sector-3, said he has also seen a 50 per cent fall in business.

He had applied for support from banks under the stimulus package the government announced for small and medium enterprises. But he had to return empty-handed.