Analysts: Slowdown May Cause Russian Tyremaker Growth
Following several years of consistent sales increases, full year 2008 figures may hit show a drop in Russian passenger car tyre sales by value. The profitable premium segment, which is dominated by non-Russian premium manufacturers, is expected to be the first to feel the pinch. On the other hand, the share of the market occupied by budget products is likely to increase, and some sources predict that Chinese and Korean tyre sales will be replaced by domestic Russian tyre makers’ products.
According to the estimation of Ernst & Young’s automotive industry service group leader, Ivan Bonchev, the Russian car parc accounts for 30 million passenger cars and 14 million trucks. As a consequence of the predicted decline in new car (and therefore OE sales) replacement sales are expected to grow. “Tyre sales are predominantly oriented at aftermarket, Bonchev told journalists, adding: “It is clear that the customers will buy cheaper tyres, which will lead to premium segment decline in favour of the cheaper one.”
The latest analyst reports suggest the premium tyre segment share of the Russian market has declined by 5 per cent in 2008. If correct, this represents a marked slowdown in the Russian market as, as recently as 2006, this segment was growing fast. Sales in the following B segment have also been healthy however, the thinking is that the South Korean Kumho, Hankook and Nexen and Taiwanese Maxxis are also likely to be hit, by the devaluation of the rouble in addition to the wider market slowdown.
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