2013 Special: Tire manufacturing to be buoyed by vehicle sales

BUOYED by investment rating upgrades by the world’s top credit rating agencies, as well as being adjudged as the best performing economy in Asia as evidenced by its annual growth rates, passenger car ownership in the country is seen to rise in the coming years.

 

With increased investments in the automotive industry, more cars and newer models are expected to hit the road in the next several years. This leads to a rosy outlook for the tire industry in the country.

 

According to “Philippine Tyre Market Forecast & Opportunities 2018,” a recently published report by TechSciResearch, Philippine tire market revenues are expected to reach up to $2.8 billion by 2018. The major revenue generating regions include Metro Manila, suburban Metro Manila, Cebu City, Davao City and Cagayan De Oro City. The introduction of the National Automotive Manufacturing Industry Strategy (NAMIS) in 2013 and the plan to expand the rubber plantation areas in the country will be expected to push the local tire market to newer heights.

 

The industry is now witnessing growth in the demand for vehicles. In fact, automotive giants such as Toyota and Mitsubishi are planning to increase their production output during the forecasted period. This would also contribute directly to the demand for tires in the country. Likewise, the growth in the replacement tire market and an increase in tire retreading will contribute significantly to the domestic tire industry.

 

Expanding natural rubber production

The government aims to increase the natural rubber production to over 200,000 hectares by 2016 from 138,710 hectares in 2010, denoting a yearly increase of over 10,000 hectares.

 

This would encourage local players to set up new production units as well as attract foreign investments in tire manufacturing. There are only a few tire manufacturers in Philippines, with Yokohama Tire Philippines Inc. being the leading manufacturer.

The said report also noted that the country’s tire market is accounted more by the two-wheeler and utility vehicle segments. Yokohama announced its plans to invest $640 million by 2017 to increase its tire production by 250 percent from the existing level.

Yokohama produces an average of 19,600 per day or an equivalent of 550,000 to 600,000 tire units a month in a mix of 13- to 18-inch tire sizes. Some 95 percent of the production is exported around the world while the remaining is allotted to local sales.

Bridgestone, another major tire brand which is being distributed by Philippine Allied Enterprises Corp., celebrated 60 colorful years in the business with the launching this year of the new Ecopia product line. PAEC was founded six decades ago by Teodoro Tagle who was responsible for introducing the Japanese brand into the local market.

Ecopia is one of the banner products of Bridgestone and the centerpiece of the company’s ongoing green campaign. These tires are not only designed to contribute towards saving Mother Earth, they are also produced through a greener process and designed to save fuel by giving vehicles more distance.

 

The tire market in the country is expected to witness trade liberalization with the formation of the Asean Economic Community (AEC) by 2015. It is expected that by 2018, Asean would become the sixth largest automotive market in the world and regional vehicle sales would double, hence directly contributing to the growing market for tires.

“The increasing investments in the sector along with a growing demand for passenger cars would contribute significantly to the demand for tires in the country. The growing number of vehicles is also driving the demand for replacement tires. It is forecasted that the market will witness an increased demand for commercial vehicle tires and passenger car tires in next five years which will make it a whopping $2.8 billion-market by 2018,” said Karan Chechi, research director with TechSci Research, a research-based global management consulting firm