Goodyear sees region as most dynamic market

Goodyear, one of the world's largest tyre companies, has recently signed a deal with AW Rostmani, the family-run UAE conglomerate that has Arabian Automobiles as its flagship company, for exclusive distribution of its Sava tyres in the country.

"We are targeting double-digit year-on-year growth in this part of the world," said Octavian Valcan, Managing Director, Goodyear, Middle East and Africa. The company's strategy for the UAE, he said, is centred round a "multi-brand approach", which means "not just to address the premium segment but also to address other market segments".

What would be the total size of the tyre market in the UAE?

We estimate that only for the consumer tyre market, it is about two million units and [is worth] about $80 million [Dh293.84m]. We do not have access to the exact statistics; this is our estimate and the margin of error could be around 10 per cent.

Now, moving to the truck tyre market, which is an important market in the Middle East, it is about 400,000 units in total and about $160m in value. We estimate that the total market value of the tyre market in the region is $240m.

What is the company's strategy for growth in the region, especially after the deal with AW Rostmani?

We are looking at the Middle East and Africa as the most dynamic market. We are targeting double-digit year-on-year growth in this part of the world. We are optimistic about the distribution contract that has been signed for the Sava brand.

Though this is not giving us a jump in the market share immediately, we are building a foundation for a long-term partnership. We aim to serve the mid-segment of the tyre market that has not been in focus. The mid-segment is about 30 per cent of the total market and we think this should not be ignored.

We have a multi-brand approach strategy for the UAE market. This means not just to address the premium segment but also to address other market segments. Also, we are putting all our efforts into seeing that our product range adapts to the needs of the market in terms of performance and price. One more thing we are working on is making our relationship with business partners stronger. We are planning to put programmes in place and hence making our relationship better. It would be more co-operational than transactional.

What would be the Middle East's contribution to the top line of the company?

It would be marginal because the company has a turnover of above $17 billion, [while] this market is still in its nascent stage. But this is not important. It is important to note that the Middle East and Africa have enormous growth, the kind of growth you do not see in Western Europe or North America anymore. Our focus now is outgrowing the dynamics of the market.

Do you see a year-on-year increase in the total tyre market in the UAE?

We see the consumer tyre market in the region growing at about 10 per cent year on year. But we see the truck tyre market decreasing. We think this is linked to the financial crisis and the credit crunch.

Most of the truck hire, and hence the demand for tyres, was linked to the construction industry, and this has been affected. The sales of new cars decreased in 2009 due to the same reason. This, however, has affected the tyre market in a positive way – if people are not buying new cars, which come with new tyres, they will have to replace their old tyres with new ones.

Who are your major competitors in this part of the world?

I do not mind mentioning their names, but I would like our competitors to do their own advertisement. The Middle East market is very competitive and all global players are here. There are certain Asian makes that are strong in this market, but not so strong anywhere else in the global market. The fact that we are coming out with the Sava brand is going to give us strength in this market segmentation.

Which country in the Middle East and North Africa is the strongest in terms of the tyre market?

For the tyre market, Saudi Arabia is really important. The Saudi market has huge potential for consumer as well as commercial tyres. The UAE's market potential is not very big, but what makes it attractive is the mix it offers. The consumer tyre market [here] offers a rich mix that is seen nowhere in the Middle East and North Africa region. This makes the UAE an important market for us.

PROFILE: Octavian Valcan Managing Director, Goodyear, Middle East and Africa

Valcan worked with Whirlpool before joining Goodyear in 1999 as General Manager for Goodyear Dunlop Tyres in Romania. He later became Managing Director, Middle East, tasked with tapping the huge potential in the region. Valcan graduated in 1990 with a degree in metallurgy and then got a Master's in Business Administration.

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