Cheap imports affect NTS
NATIONAL Tyre Services (NTS) says its business is being negatively affected by imported tyres from the Middle East and the shrinking local economy.
The company however, expects a rebound premised on a number of initiatives being undertaken to shore up volumes.
Speaking at the company’s annual general meeting this week, managing director, Kennedy Mandevani, said the second half of the year offers better trading volumes since “a lot of activities happen during the festive season”.
“In the tyre industry a lot of down trading is happening in favour of cheap substitutes, not only from the Far East but from all over the world and they comprise both new and second-hand tyres in terms of the substitution effect,” he said.
“We have also seen a trade-off between quality expectation and affordability expectation where the consumer has tended to be in favour of affordability as opposed to quality. The traditional cost-per-kilometre argument seems weak at the moment. Consumers are looking at the initial cost outlays when buying a tyre as opposed to the mileage they get from the particular tyre,” said Mandevani.
He said the rebound will be premised on the promotions the company is undertaking and the lobbying for restrictions on the imports of tyres.
“Overall we are 20 percent down on sales (in the first quarter) but our second half normally sees a rebound. Also traditionally H2 has always been better than H1. We have the festive season coming up…a lot of activities tend to happen around that time,” said Mandevani.
“I’m premising the second half projections on the activities that NTS is going to do. promotions, budget brands and changing the distribution footprint and the lobbying that we are doing with Government in terms of restricting the entry of second hand tyres. That’s also a key pillar in our recovery strategy,” he said.