A new report published by TechSci Research suggests that economies of scale will benefit tire manufacturers working in Russia, with cheaper raw materials, lower energy costs and the availability of cheaper labor factors over the next five years.
In addition, the country has a developing domestic market for premium tires as its car parc increases. Karan Chechi, research director at TechSci Research argues: “Economies of scale would benefit the major global tire manufacturers in Russia by limiting their restraints. The exponentially increasing demand from OEM and aftermarket will continue to drive the Russian tire industry landscape in coming years.”
The report makes the point that in many advanced economies, including Russia, the percentage of tire manufacturers in reality has risen sharply in recent years; in many cases for specialized tire businesses.
TechSci argues that the availability of raw materials at cheaper prices – available more in Russia than any other European country – and energy costs lower than the home countries by as much as 40% makes Russia an attractive manufacturing base. In last couple of years, Russia has emerged as a huge labor-intensive market, making the availability of economical labor favorable when compared with any other European country. Major tire manufacturers are also attracted to the country’s growing domestic market.
In recent years, Nokian, Continental, Michelin, Pirelli and Yokohama have either entered Russian soil or are in the process to set up their manufacturing units in the country, helping them manage cost difference as profits. The report forecasts that Russia will emerge as one of the single largest automobile and tire demand-generating countries in coming years. (Tyres & Accessories)
