Sumitomo to invest additional US$ 55 million for expanding tire production facility in South Africa

South Africa: Sumitomo Rubber Industries Ltd., in order to fulfil the increasing demand for truck and bus tires across the continent, announced an additional investment of US$ 55 million for the expansion of their production facility based in South Africa. The company has already invested approximately US$ 66 million in 2014 for expanding its production capacity in South Africa.

The demand for tires have witnessed a promising growth mainly due to the rapid economic development in the country in recent years, and further a substantial growth is anticipated in the coming years which led the company to take this step.

The company’s production plant located in South Africa has been producing tires only for passenger cars and light trucks till now but with the completion of this expansion plan, the company will be equipped to produce tires for medium & heavy trucks and buses as well in order to meet the inclining tire demand across the continent.

Sumitomo Rubber South Africa Ltd. the regional subsidiary of the Japanese tire company currently supplies medium & heavy trucks and buses tires in African market through imports, but with this additional investment the company will be equipped to produce tires within the continent ensuring a balanced supply of domestically produced tires in the country’s tire market.

According to a recent report published by TechSci Research, “South Africa Tyre Market Forecast & Opportunities, 2020”, tire market in South Africa is forecast to exhibit a CAGR of over 11% 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 automotive industry in South Africa. Growth in 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. In 2014, replacement tire segment dominated the market, predominantly on account of extensive use of commercial vehicles for construction purposes.

As per TechSci Research, the move to invest additional funds for the expansion of their production unit is expected to increase the company’s market share in the country as well as across the continent further widening the company’s presence in the commercial vehicle tire segment globally.