LONDON--(BUSINESS WIRE)--Technavio market research analysts forecast the tire retreading market in the US to grow at a CAGR of close to 14% during the forecast period, according to their latest report.
The market study covers the present scenario and growth prospects of the tire retreading market in the US for 2017-2021. The report also lists pre-cure and mold cure as the two major segments based on process type, of which the pre-cure segment accounted for close to 94% of the market share in 2016.
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Technavio analysts highlight the following three market drivers that are contributing to the growth of the tire retreading market in the US:
- Lower cost of retreading compared with new tires
- High cost pressure on fleet operators
- Regulations to push the adoption of fuel-efficient tires
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Lower cost of retreading compared with new tires
Fleet operators consider tires as an important contributor to their expenses of operating fleet. The cost of tires contributes to one-third of the annual expenditure incurred by fleet operators. Therefore, the adoption of cost-cutting measures in tires is the best way to streamline financial resources.
The cost effectiveness of retreads is about 40% higher than the new tires, which gives fleet operators a significant edge in achieving operational efficiency. There are various factors that contribute to the lower cost of retreads. The prime factor being the reduced consumption of rubber, which decreases the dependence of retreads on raw materials, which are highly susceptible to price fluctuations. The multiple recycling of tire increases its lifecycle, as well as reduces its cost. Moreover, retreads do not attract certain taxes, such Federal Excise Tax (FET) charges, which range up to USD 34 for new tires.
High cost pressure on fleet operators
Fleet operators constantly endure the cost pressure from operations owing to price fluctuation of fuels, tire costs, and inefficiency of fleet operation. To efficiently manage the cost, fleet operators are adopting various cost optimization strategies.
“As tire cost contributes to one-third of the annual maintenance costs, optimizing the cost of tires can also reduce the spending to a large extent. The expenditure can be greatly reduced by using retreaded tires instead of new ones owing to their low cost. Additionally, adoption of premium tires can allow fleet operators to retread them for up to 3 times, which provides significant cost advantages,” says Ganesh Subramaniam, a lead analyst at Technavio for wheels and tires research.
Regulations to push the adoption of fuel-efficient tires
Reducing the greenhouse gas emissions, along with the resultant environmental impact, produced by heavy-duty vehicles is the center of focus of regulators. The California Air Resources Board (CARB) approved regulations that mandated the use of US Environmental Protection Agency (EPA) SmartWay-verified LRR tires or retreads in California.
“These regulations define low-rolling-resistance tires as those designed to improve the fuel efficiency of vehicles by minimizing the rolling resistance. Further, California has imposed the mandatory use of US SmartWay-verified LRR tires when traveling in the state. The state is also working to mandate SmartWay verification in retreads during the coming years, which will be a positive driver for the tire retreading market in the US as quality retreads will be given access to low-cost imports,” says Ganesh.
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