Hi again readers, Stryker the Cat is back again with even more tire industry insider info. South Africa is one of the fastest developing countries in the world and it maintains a large motor vehicle market, which is continuously expanding, and thereby increasing the country’s tire demand. A number of factors contribute to the growth of the automotive market in the country and, with the signing of the three-year service agreement between automotive OEMs and the labour unions, automotive production in South Africa is projected to experience much growth in 2020.
Exploring the Tire Trade Industry in Ghana & South Africa
According to “SA Tire Market Forecast & Opportunities for 2020,” the tire market in the country is forecast to exhibit a compound annual growth rate (CAGR) of more than 11 per cent through 2020. Rising per capita income, expanding automotive fleet, increasing automobile exports and continuing launch of new vehicle models in the domestic market, are the major factors driving the automotive industry in South Africa.
Growth in the automotive sector is resulting in increased demand for both OEM and replacement tires. Segment-wise, passenger car tires are expected to remain dominant in the market through 2020.
Earlier this year twenty-seven South African companies got the opportunity to explore trade and investment opportunities in Ghana when they participated in an Outward Trade and Investment Mission. As part of South Africa’s economic strategy for Africa, which is premised on implementing an outward investment-led trade approach which will result in two-way trade and investment to benefit both South Africa and its trading partners, including Ghana.
This investment-led trade approach is aligned to the Integrated National Export Strategy (INES) which aims to increase South Africa’s capacity for exporting diversified and value-added goods and services to various global markets.
Trade between South Africa and Ghana increased considerably from almost R4 billion in 2014 to R13bn in 2018. South Africa exported R4.4 billion worth of goods to Ghana in 2018 while imports were valued at R8.7 billion, thus registering a trade deficit of R4.3 billion with Ghana in 2019. In terms of the tire market, in particular, Ghana imported US$2.71 million’s worth of car, motorcycle and truck tires in 2018 – a 29% increase over the 2017 total. In 2016, on the other hand, the country bought only US$1.2 million’s worth of tires from South Africa.
It appears, therefore, that the tire trade with Ghana is on an upward trend, in contrast with some other African countries, where South African manufacturers are struggling to compete with Chinese suppliers. Ghana is thus a very lucrative destination for South African tires currently.
The growth potential of the tire and automotive repair industry in Africa is enormous. The tire industry, which contributes close to R20 billion a year to the South African economy, is steadily expanding. The African tire market is expected to surpass $8 billion by 2022, creating a myriad of new growth and job opportunities.
According to a Future Market Insights report, the global automotive repair market is expected to grow at a CAGR of 5.6% and to exceed US$750 billion over the next 10 years.
That’s all from me Stryker the cat – at least for now. Tire World Exports is a key facilitator in the trade of South African tire manufacturers with buyers across the continent. Contact us for more information.