Nigeria – A Tough Retreading Market

Nigeria has huge potential but until recently has been a virgin market, where retreading has not found many takers.

However, it is not a new concept it just has not been properly nurtured in this West African country known in the world more for its oil reserves in the Niger Delta. It was about 20 years ago when Odutula (the name of the company as well owner) started retreading casings with the traditional hot process. While Solimpic owned by half Nigerian, Greg Solomon, set up the first Bandag plant in Lagos about at the same time as Odutula began the hot but both the plants shut down creating a void in the market. Over the years new players entered the field but they are still too small in number to make a major dent in the fortunes of the retreading industry. But yes, they are trying to push the concept in the difficult market where personal security remains a major issue. Though Infinity entered into the market with lot of hope.

“We thought we would do around 2,000 – 3,000 tyres per month, but we were nowhere near the figure,” explained A S Chadha, Managing Director, Infinity Tyres Ltd. But when asked if there is so much threat to life that volumes are not rolling as per expectations, Chadha who has been living in this dangerous place from close to 25 years agreed, “It is a tough, but if you know the system, it is a good place to live and do some serious business.”It is difficult to walk on the street if your are not African in Nigeria and it is again all praise for the Indians who are controlling the stakes of the retreading industry in this country.

According to an independent study, Nigeria’s new tyre market is anything about 50,000 units per month and in value terms about US$ 400-500 million. Nigeria is the only country that has had tyre making units from Dunlop and Michelin. “Though Michelin is still present in this market, the company has wound up its operation in Nigeria as overheads increased too much.

Electricity is a major problem in this country and no company can run its plant for most of the time on generators. As a result, Michelin bowed out of the market,” reported Mr Raj Shamnani, Managing Director, Tyreplus Ltd. Meanwhile, Tyreplus brings lot of professionalism to the struggling concept of retreading in Nigeria.

“We sell the pattern as per application, load etc not as size, which is our core competence,” add Raj. The other factors that are responsible for the poor fortunes of the retreading industry in this country are from the stiff competition from new tyres coming in from China and Korea. Chinese radials are available in the market for 35,000 Naira, whereas Tyreplus charge 38,000 Naira for good quality imported retreaded casing. And players like Tyreplus operating in the hi-end segment could not compromise on the price of retreaded casings as they offer high quality.

“The duty on the import of new casings is about 20 per cent and almost same on the good quality imported casings,” argued Sunil Chadha, Director (Marketing), Infinity Tyres Ltd.. Moreover, Nigerian market is unable to generate casings because of poor maintenance and a stagnant economy. How indifferent Africans are towards retreading is evident from the fact from a Tyreplus survey which says retreading in Africa is just 1 per cent against 99 per cent new tyre market. “You can easily imagine the gap in preference for retreading but it also shows there is huge market potential in the region,” said Raj Shamnani.

Issue 2008/1