Tire industry to bounce back; Al Saeedi Group, Nexen Tires anticipate greater demand in 2022

Nexen Tires, one of the fastest-growing tire manufacturers in the world, began an exclusive partnership with Al Saeedi Group in 2018 for distribution in the UAE.

After a lacklustre year for the tire industry, it is believed that the tire industry in the UAE is to exceed the expectations and bounce to the pre-covid level in 2022.

At a recent event where the winning MCFC trophies for Premier League and Carabao Cup were at the display, Anish Malattiri, Managing Director – Al Saeedi Group and Jason Yoo, General Manager, Nexen Tires Corporation talked about the tire industry at length.

“We expect 2022 to show an improvement for the tire industry. Due to Covid-19, Al Saeedi saw a 15 per cent decline in demand for tires in 2021 from 2019 but we are excited for 2022, as things are returning to normal. Covid-19 significantly reduced the demand for tires because most people are staying at home. We are hoping that now, with things getting back to normal, we’re going to see more cars on the roads with a greater need for tires,” said Anish Malattiri, managing director, Al Saeedi Group.

There was a demand of 3.7 million units in 2019. We are hoping to get back to the same levels as 2019.” he added.

Greater economic stress, brought about by higher levels of unemployment due to the pandemic also means that there were going to be fewer people willing to spend money on buying a car. Wholesalers are finding it difficult to stay in business due to decreased cash flow and rising commodity prices. Covid-19 therefore adversely affected the performance of all stakeholders in the tire industry; from vendors to channel partners.

Al Saeedi and Nexen Tires have adapted to these changes in the economy by transforming the way they do business.

Nexen Tires, one of the fastest-growing tire manufacturers in the world, began an exclusive partnership with Al Saeedi Group in 2018 for distribution in the UAE. For the two companies, the biggest factors to survive the pandemic and to stay ahead of the competition is having cooperation and mutual efforts between partners in the industry to support one another. Their strategic partnership is what gives them great confidence for the coming years. ‘Nexen Tires manufactures products of the highest quality and Al Saeedi has a strong presence in the local market which gives Nexen’s products the platform they deserve,” said Jason Yoo, General Manager, Nexen Tires corporation.

“We are looking to gradually ramp up our operations, smoothly, as the economy begins to reopen. Over 2022 and years to come, we are expecting great growth and revival for the tire industry, and we are better equipped than our competitors to take advantage of it because of our partners,” he added

As much as Covid-19 has hurt demand, it has also been a boon to the tire industry in the UAE. The pandemic has had a sizeable effect on people’s individual transport habits. People are now avoiding taking public transportation in favour of driving or riding a bike. Dubai’s Roads and Transport Authority (RTA) is also contracting the building of new road infrastructure and improving older infrastructure, which will induce more traffic. It is a well-documented phenomenon where drivers tend to drive more than they otherwise would and more people drive when traffic frees up, counter-intuitively causing more traffic.

The RTA has also launched initiatives to raise public awareness on the technical tests that tires need to pass to be considered safe. Drivers are encouraged to be proactive about compliance and are incentivised to change their tires every 5 years.

Despite the optimism for the future, there is a risk for the tire industry. A sudden increase in demand led to a shortage in the supply of key raw materials all over the world. This coupled with growing freight costs has resulted in a huge increase in input costs.

These concerns however do not outweigh the optimistic prospects for the future. Jason Yoo, General Manager, Nexen Tires Corporation said, “There is a lot to look forward to. We have increased consumer buying power and there is a greater preference for personal mobility modes, and we will be there to capitalize on these opportunities. We are aiming to expand our distribution in the coming years by getting more distribution channels for tire sales to reduce risk. Al Saeedi has also begun supplying tires to the RTA for taxis.”

As Covid-19 cases continue to decline and the world returns to normalcy, the economy will also continue to recover and grow. The Al Saeedi Group and Nexen Tires have positioned themselves to capitalise on the increasing demand for tires in the UAE. — business@khaleejtimes.com