South Africa Tire Market Poised for Modest Growth: Forecast to Grow at a CAGR of 5.2% by 2027
Published | 01 January 2022
South Africa's tire market has been witnessing a high CAGR because of the country's growing automobile industry. Another factor driving the market growth is the increasing disposable income and purchasing power of the people, which influences domestic sales of automobiles, particularly passenger cars…..
A recent study conducted by the strategic consulting and market research firm, BlueWeave Consulting, revealed that the South Africa tire market was worth USD 1,872.3 million in the year 2020. According to the study, the market is estimated to grow at a CAGR of 5.2%, earning revenue of around USD 2,693.4 million by the end of 2027. South Africa tire market is growing at a high rate because of the country’s flourishing automobile production industry and increasing foreign investment towards local tire production. Leading global players such as Volkswagen, Mercedes-Benz, Mahindra, Toyota, etc., are outsourcing their production in South Africa for exports, which is propelling the demand for tires. Also, several international tire brands are setting up production units in South Africa to meet the growing demand for tires, which is predicted to drive the market's growth during the forecast period. There is, however, a lack of stringent government regulations regarding the use of secondhand tires, which may act as a major constraint on market growth.
Increasing Demand for Heavy-Duty Vehicles is Driving the South Africa Tire Market
The demand for heavy-duty vehicles, such as buses, trucks, tractors, etc., is very prominent in South Africa. These types of vehicles are gaining significant traction in the mining and construction industry. South Africa is considered to have the largest reserves for platinum-group metals such as manganese, chromite, gold, etc. This sector is playing a significant role in boosting the country’s economy. Therefore, the government is investing in expanding the mining operations which will boost the demand for heavy-duty vehicles, further propelling the demand for tires in South Africa.
Growing Online Sales Channels is Presenting Lucrative Growth Opportunities to South Africa Tire Market
Based on distribution channels, the South Africa tire market is segmented into online distributors and offline distributors. The offline distributor segment accounts for the largest market share. The growth of this segment is attributable to the end-users establishing partnerships with trusted tire suppliers. Also contributing to the growth of the offline distributor segment is consumer preference for specialty stores with branded tires and an increasing number of such stores in this region. However, the online distributors segment is expected to grow at the highest rate during the forecast period as tire manufacturers are launching exclusive websites in order to take advantage of the growing market.
South Africa Tire Market - By End-User
Based on end-users, the South Africa tire market is grouped into OEM and replacements segments. The OEM segment accounts for the largest market share because of the established and flourishing automobile manufacturing industry in South Africa. Several international players such as BMW, Volkswagen, Ford, Fiat, Nissan, Damian Chrysler, etc., are concentrated in this region, due to which demand for tires among OEMs is very prominent. On the other hand, because of the rise in private and commercial vehicle usage, as well as higher tire replacement rates, the replacement segment also accounts for a large share of the market.
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South Africa Tire Market - Regional Insights
Geographically, the South Africa tire market is segmented into Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, North West, Northern Cape, Western Cape, and the Republic of South Africa. Among these, the Western Cape dominates the South Africa tire market. The Gauteng and Eastern Cape is also gaining traction because of the prominence of leading manufacturers including Isuzu, Mahindra, Ford, Mercedes-Benz, Nissan, etc. Gauteng is considered the wealthiest province in South Africa and is at the center of the country's economy, due to which demand for passenger vehicles is gaining significant traction in this region.
Impact of COVID-19 on South Africa Tire Market
The growth of the South Africa tire market was negatively halted by the sudden outbreak of the COVID-19 pandemic. The continuous lockdown and closure of non-essential services, including automobile and tire production was completely restricted due to social distancing measures and shortage of workforce. However, the market was anticipated to recover from this setback in the post-COVID-19 period as the government takes various initiatives to boost production activities and economic growth. Nevertheless, the ongoing fourth wave of COVID-19 pandemic caused by the newest strain of Omicron may dampen the market's enthusiasm.
South Africa Tire Market - Competitive Landscape
The leading players in the South Africa tire market are Bridgestone Corporation, Sumitomo Rubber Industries, Continental Tyre SA Ltd, Yokohama Rubber Company, Goodyear South Africa Ltd, Apollo Tires, Auto and Truck Tyres Ltd., Bandag Southern Africa (Pty) Ltd., Michelin, Dunlop Tyres, and other prominent players.
The market is highly fragmented due to the high concentration of multinational tire manufacturers in the country. The market players increasingly launch a wide range of products for all types of vehicles to expand their market share and boost their revenue. They also invest extensively in research & development activities to launch new and innovative products, such as smart tires with sensors, to stay ahead in the market. Furthermore, the adoption of competitive strategies such as partnerships, mergers, acquisitions, joint ventures, etc., is also prominent in this market.
The in-depth analysis of the report provides information about growth potential, upcoming trends, and statistics of the South Africa tire market. It also highlights the factors driving forecasts of total market size. The report promises to provide recent technology trends of the South Africa tire market and industry insights to help decision-makers make sound strategic decisions. Furthermore, the report also analyses the growth drivers, challenges, and competitive dynamics of the market.
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