MEXICO CITY — The president of Mexico's tire dealers association is urging members to compete on technology and quality rather than price.
“We have to reinvent the future of the tire business” in Mexico, Raúl Castillo Arteaga said in a telephone interview with Tire Business.
By competing on price, “we are damaging the market.… We have to start educating the end user,” Mr. Castillo, head of Andellac (Asociación Nacional de Distribuidores de Llantas y Plantas Renovadoras AC), told Tire Business in the interview.
In a speech at Andellac's 41st annual congress in Cancun in October, Mr. Castillo told delegates to “stop selling tires as though they were commodities.”
In an official Andellac magazine article, published to coincide with the congress, he wrote that “the information we regularly pass on to our customers, who know little about a tire's features, is based on price….
“I disagree with those who affirm that…customers make decisions based on price,” he wrote. “They do that when we, whose job it is to act as consultants, fail to offer them any other means of comparison.”
Tires are not commodities, he continued, but rather are manufactured goods that require a high degree of engineering sophistication.
There are tire 2,400 distributors across Mexico, he said, adding that outlets and manufacturing plants in the country are “first world, more modern than in most other countries.”
On other matters, Mr. Castillo said he knew of no other company that was copying Group Michelin's TyrePlus Automotive Service Centers concept in Mexico, and he said he was unconcerned about the increase in tire imports, particularly from Asia, in recent years.
“The Mexican economy is very open,” he said. “After Chile, it has the largest number of free trade agreements with other countries — 44 in all. There are a lot of imports but also a lot of exports.
“The (tire) industry in Mexico is very strong.”
According to Mr. Castillo, the production of tires in Mexico has nearly doubled since 2009 to 25.1 million units in 2013 from 13.8 million.
Meanwhile, imports rose to 20.1 million units from 11.7 million in the same period while exports increased to 14.1 million units last year from 4.6 million in 2009. Exports to the U.S. alone totaled more than 10 million car and light truck tires last year, according to U.S. Department of Commerce data. Imports from the U.S. were nearly 8 million units.
The country has nine tire-making facilities, operated by six companies, he said. Bridgestone Corp. has two; JK Tornel S.A. de C.V. three; and Continental A.G., Cooper Tire & Rubber Co., Pirelli Tyre S.p.A. and Group Michelin, one each.
Together they employ about 16,500 workers.
By one measure, the value of Mexican tire market is expected to hit $8 billion by 2018, according to a new market research report, “Mexico Tyre Market Forecast and Opportunities 2018” by TechSci Research.
The report notes that tire market revenues grew nearly 19 percent annually from 2009-12 as sales of both passenger cars and heavy commercial vehicles grew at double- digit rates the last three years.
Stephen Downer is a freelance writer for Tire Business based in Cuernavaca, Mexico.