We all are together in this. The Coronavirus has affected almost every business in every region around the globe such as tyre industry in UAE. Even due to this pandemic many businesses had shut down and growth in many sectors has declined. The tire and automotive industries haven’t been immune to the impact of this Covid-19. In 2020 it has been forecasted that the sales of lightweight vehicles declined by 20 percent compared to the sales in 2019.
Supply Chain of Tire Industry
The automotive and tire industry is the crucial element for the growth of an economy. Before the current pandemic, tire manufacturing companies like Continental based in Germany were cutting back some of their production. The major declining factor is a disruption in the supply chain.
Suppliers throughout the world completely shut down or halt their productions for some time. Due to this disruption, the industry is now facing a major demand shock. But after some declining in Covid-19 cases the tire production companies are becoming eager to resume manufacturing process.
With a population of more than 10 million United Arab of Emirates is amidst the prime region in terms of economic focal points. The tire market of Dubai is mainly dominated by Dubai, Abu Dhabi, and then Sharah. The county’s automotive and tire industry has seen steady growth in the past decade. UAE becomes one of the top global suppliers of tires, batteries, and tubes.
Tire Industry in U.A.E
In the United Arab of Emirates there are 1050 tire outlets, and most of them are in Dubai. The tire industry mostly depends on passenger car tires that contribute above 85 percent of the market share.
Dubai is contributing the highest sales both in terms of value and volume with 35% and 32% respectively. The factors having a clear association with disposable sales and income are lowering the price, a huge amount of tire brands available in the UAE. But the pandemic has become a deterrence in the growth. Due to this, there are many challenges which the tire industry is facing like unemployment, changing consumer behavior, declining in demand and sales, and supply chain disruption.
We want you to understand how these factors are affecting the tire industry mainly in the UAE. We simply provide some in-depth analysis of these factors.
Unemployment
The pandemic not only impacts the businesses but also the individual’s life. The unemployment because of Covid-19 skyrocketed throughout the United Arab Emirates. The major employment source is the workers who came from abroad, but they left the country soon after the lockdown was started.
There was unemployment even before the pandemic, but it got worse during this outbreak. Due to the closure of businesses in the UAE or around the globe, many skilled or unskilled, professional employees lost their jobs. The rate of unemployment in every industry including the tyre industry has increased. But it is the responsibility of the government to support those people and provide incentives to the businesses so that they can be able to operate again.
Precautions and Limitations
There are some precautions which the UAE had to take. Also, the capability of spending on luxury items and other stuff has been reduced to just basic needs and survival measures. People sell their cars at very minimum prices so that they can earn something for fulfilling basic needs.
To revive the economy of UAE post-pandemic and increase the employment rate, then the government needs to take proper measures before it is too late.
Change in Consumer Behavior
Consumer behavior is important for selling any product or service. The current pandemic has changed consumer buying and spending behavior. They are now starting to purchase everything online from needle to diamond. This is a huge change in the behavioral landscape of customers and it heavily impacted businesses.
The pandemic not just alters purchasing behavior but it also changes the consumption pattern of customers. This includes the modes and means of individual transportation. Prior to pandemic people drive their own cars but now most of them sell their vehicles to meet their basic needs.
The automotive industry is making efforts to reduce the fall in sales that results from negative economic growth and behavior changes. Now what the tire manufacturing companies have to do is that they need to understand this shift and introduce the products with special offers on tires so that they can easily purchase, it is also in the benefit of the company itself.
Customers can be more attracted to products when they see or hear about special offers and discounts.
A decline in Demand and Supply
Demand and supply is an important factor in a company’s success, as companies must act according to the demand from customers or the market. If they make the product in high volume and demand is low then they have to store it in the inventory for which they have to pay the cost.
When the pandemic spread, everything came to a standstill. The supply of the product is heavily relied upon by the demand of consumers. Because of the changes in consumer behavior, there is a fall in the demand for automobiles and tires. Due to this the demand and supply have been greatly affected. Customers are battling to fulfill their basic needs, and companies are battling to survive. The UAE has witnessed a reduction in the number of pre-owned vehicles.
Now the automobile industry is waiting for the situation to become better so that they can go for normalcy.
Disruption in Supply Chain
It is the backbone for the company, as they ship or deliver the products to the end consumer. Global supply has been greatly affected by the current pandemic. The automotive and tyre industry also faces a huge disruption in the supply chain. The tyre industry is battling very hard to cope with this challenge.
There is huge usage of tyres in the logistics industry whether it is planes, trucks, forklift, small vehicles, bikes or cycles, there is a need for tyres. But due to the decreasing supply chain around the globe, the tyre industry is facing majorly affected, as the demand is decreasing.
Companies need to tackle the challenge of supply chain, but consider the important aspect of consumer buying behavior. The demand of the supply chain will increase in the future if restrictions within the country or internally lifted up. Till then we just have to wait and rely on the less current demand.
Wholesalers are Also Suffering
Not just the manufacturers but the wholesalers are also suffering due to the pandemic. The demand for tyres has reduced, and that is why the retailers and wholesalers are both facing huge financial losses due to limited purchasing of tyres.
These are temporary crises, and non-permanent decline in demand. However, as soon as the economy of every country including UAE recovers post pandemic trauma, you will see that there is an increase in demand of tyres.
Conclusion
The pandemic has not spared anyone from its effect. The tire industry is also affected greatly. When after the pandemic is over companies need to come up with new strategies, new campaigns, and value-added products, as consumer behavior is shifting. There is also some factor through which they can make and implement new strategies effectively. If you want us to talk about them, let us know in the comment box.
