Review of tyre markets and General Tyre and rubber company of Pakistan.

Byline: S. Kamal Hayder Kazmi

Researchers calculated that the worldwide tyre market reached worth 3 billion units during 2017, increasing at a CAGR of almost 4.5 percent during the last 7 years. Researchers also stated in a report that the worldwide automotive tyre market is predicted to boost significantly during 2018-23. They have also predicted that global tyre market will continue rising progressively right through 2018 as total annualized tyre sales volumes are anticipated to cross 3.6 billion units mark in 2018. No doubt, the growth of the market is attributed to rising automotive market and increasing need of high performance tyres. They also mentioned in a report that this market can be broken into two sectors - the OEM and the replacement market. The demand from the OEM tyre market is dependent upon the sales of new automobiles and is thus prone to a high degree of cyclicality.

Demand in the replacement tyre market depends upon the usage patterns and the replacement cycles of existing tyres. The replacement tyre market is comparatively less cyclical and shows a higher margin business. Region-wise, China presently shows the world's biggest market for tyres. Presently, Chinese O2O (Online to Offline) model, practiced in tyre industry, can organize backward and forward supply linkages in Pakistan.

Despite of all above, in Pakistan General Tyre and Rubber Company of Pakistan Limited (GTR) is a renowned name in the tyre industry and is one of the prominent players in the automobile parts sector. Historically, General Tyre was organized by General Tire International Corporation (GTIC) of USA, with a total capacity of only 120,000 tyres per annum. GTIC sold 90 percent of their shares to the present owners M/s Bibojee Services Ltd in 1977 and retained 10 percent of the ownership. In 1985, the Company completed a major expansion, which took the capacity to 600,000 tyres yearly.

Continental AG, Germany's number one tyre manufacturer purchased GTIC during 1987 and thus became 10 percent owners in GTR. The company's officials urged that the capacity of the Company stands at 2.5 million tyres about meeting one third of the country's demand. General is producing tyre sizes and patterns that cover almost 85 percent of the sizes in demand in Pakistan. GTR is presently the first and largest automotive tyre manufacturer in Pakistan producing tyres for cars, light commercial vehicles, trucks/buses, tractors, CNGRickshaw. While motorcycle tyre plant...