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.