South Africa’s tyre market has been witnessing a high CAGR because of the country’s growing automobile industry, increasing disposable income and increasing demand for passenger cars, according to a study by BlueWeave Consulting, a strategic consulting and market research firm

BlueWeave SADemand for tyres used in heavy-duty vehicles gained steady traction, thanks to the burgeoning mining and construction operations. (Image source: Adobe Stock)

The study revealed that the South Africa tyre market was worth US$1,872.3mn in the year 2020 and is estimated to grow at a CAGR of 5.2%, earning revenue of around US$2,693.4mn by the end of 2027. The country’s tyre market is said to be growing at a high rate because of the country’s flourishing automobile production industry and increasing foreign investment towards local tyre production.

Leading automobile players such as Volkswagen, Mercedes-Benz, Mahindra and Toyota are outsourcing their production in South Africa for exports, which is propelling the demand for tyres. Several international tyre brands have set up production units in South Africa to meet the growing demand for tyres. According to BlueWeave, there is, however, a lack of stringent government regulations regarding the use of secondhand tyres, which may act as a major constraint on market growth.

Increasing demand for heavy-duty vehicles

The demand for industrial heavy-duty vehicles, such as buses, trucks and tractors are prominent in the country because of the burgeoning mining and construction industry. South Africa is considered to have the largest reserves for platinum-group metals and the government is investing in expanding the mining operations which will boost the demand for heavy-duty vehicles, further propelling the demand.

Growing online sales channels

Based on distribution channels, the South Africa tyre market is segmented into online distributors and offline distributors. However, the offline distributor segment accounts for the largest market share. The consumer preference for specialty stores with branded tyres is also a factor. However, the online distributors’ segment is expected to grow at the highest rate during the forecast period as e-commerce websites make their way into the market.

Tyre Market for the end-user

Based on end-users, the South Africa tyre market is grouped into original equipment manufacturer and replacements segments. Several international players such as BMW and Volkswagen are concentrated in this region, due to which demand for tyres among OEMs is very prominent. With the rise in private and commercial vehicle usage and higher tyre replacement rates, the replacement segment also accounts for a large share of the market.

Regional Insights

The Western Cape dominates the South Africa tyre market. The Gauteng and Eastern Cape is also gaining traction because of the prominence of leading manufacturers including Isuzu, Mahindra, Ford, Mercedes-Benz and Nissan.

Impact of COVID-19

The growth of the South Africa tyre 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 tyre production was completely restricted due to social distancing measures and shortage of workforce. The ongoing fourth wave of COVID-19 pandemic caused by the newest strain of Omicron may dampen the market’s enthusiasm, finds the study.

Competitive Landscape

The market is highly fragmented due to the high concentration of multinational tyre 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 and development activities to launch new and innovative products, such as smart tyres with sensors, to stay ahead in the market.

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