On the contrary, sometimes it could even help them increase their sales figures substantially. In earlier years tyres for earthmovers have literally been driven run-through. Today, consumers “somehow try to keep them rolling” for as long as possible admitting that they have paid good money for a good product.
As a consequence, the RÖsler group market leader in Europe in this OTR niche has been able to increase its annual number of retreads by about 30 per cent. On the one hand this growth has been induced by the general market expansion, on the other hand sales figures have been triggered by increasingly urgent demand on the part of the customers that were unable to get hold of any new OTR tyres whatsoever.
Because usually the OTR tyre replacement market does not develop in a cyclic way, an annual growth last year in Europe of about eight per cent is quite impressive, says Paul RÖsler Jr, who has run the company with his brother Martin for about 10 year after they officially took over from their father. As a result, RÖsler’s “Schelkmann” and “Rodos” brands have become better known-than they were before. The company’s founder Paul RÖsler is convinced that a major part of the excess demand for OTR tyres be they new or retreaded has been down to a kind of panic buying on the part of customers.
Many customers were acting on a “supply-as-much-as-you-can” philosophy fearing that the tyres they actually required would not be available. Thus they over-ordered more OTR tyres than they had need for and hoped that they would get at least half of their orders. These precautionary measures were understandable from a customer’s point of view, but they negatively affected the statistics here in Europe.
Looking at the reasons for the initial increase in global demand for OTR tyres there the RÖsler family agrees it is the growing demand for raw materials resulting from the economic developments of emerging markets such as China, India and Southern America. This has triggered demand for vehicles that are used in quarries and mines and thus demand for OTR tyres has grown too. It is in particular the standard OTR tyre sizes where the supply bottleneck will continue for another one or two years, the Dortmund-based company representatives agree. Investments that are done by the new tyre industry in order to build up OTR tyre production capacities are mainly directed at the most lucrative larger sizes, where the demand is even surpassing the general market trend.
It doesn’t matter how and in what period of time the OTR tyre market develops as long as there is an artificial or real scarcity on the new tyre market, retreaders such as RÖsler will benefit from the situation. Only last year for example the European market leader in OTR tyre retreading incresed the number of retreaded OTR tyres by 30 per cent. “Some customers are now using retreaded tyres for the very first time,” says Paul RÖsler Jr.
Partly caused by bare necessity, customers now look out for possible alternatives to the new tyres they weren’t able to buy in a sufficient number. “This is our opportunity. These customers now test retreads and thus can be convinced that a retreaded tyre always is a good alternative,” adds his father whose company also successfully produces and distributes the Zeus branded flat proofing system (Polyfill, Liquifill, Trionfill).
Before the run for OTR tyres started earlier last year, almost every second casing was run till it almost fell apart and there were no chances left for retreading. Now customers have finally been become aware of the benefits of retreading their tyres for economic reasons.
This has led to a growing number of casings becoming available for retreading. This number would even have been increased even if there had not been a growing overall replacement market. “Today customers acknowledge the value of OTR casings,” thus there is – if at all – only a minor casing availability problem at the moment, RÖsler says.
RÖsler has a major number of regular customers that are sending their own casings for retreading. Last year the German company retreaded between 9,000 to 10,000 OTR tyres in its up-to-date facility in Dortmund. Although RÖsler distributes its retreaded tyres across Europe, Germany remains the main market for the company whose success started in 1960. As the German tyre retail association, BRV, published some months ago, on the domestic replacement market 10,350 retreaded OTR tyres were sold in 2004; 2005 are not yet available. However this sheds a light on the just how important the RÖsler group is in the German as well as European OTR markets.
The current boom could finally turn into a boomerang, warns Mr RÖsler Sen., and it could hit manufacturers as well as retreaders hard. Over investing in additional production capacity now could eventually be counterproductive when demand and supply have fallen back into their natural equilibrium.
Such a situation could lead to a price crash, Paul RÖsler Jr. told Tyres & Accessories. But during the last 10 years, the retreading business had to deal with prices falling 25 to 30 per cent “because of the competitive situation.” That’s why it was justified to have had “small price adjustments” over last year. However, RÖsler wants to make sure that there has not been unjust price increases. On the other hand, the company founder adds with a smile on his face: “Within 25 years there finally has been one good year.” The RÖsler group does not plan to announce any additional price increases for retreading although possible higher raw material prices could be passed onto customers.