An engineer monitors a tyre production line. Rising automobile sales and increasing foreign investment in Viet Nam are driving the growth of the local tyre market. — Photo vietbao.vn

HA NOI (Biz Hub) — The tyre market in Viet Nam is forecast to touch US$2.7 billion by 2020, according to a September report by TechSci Research, a research based global management consulting firm.

The company briefed the report on the website of PR Newswire, a global provider of platforms for marketers and corporate communicators, on Wednesday.

It said prominent factors driving the market included growing automobile sales, favourable government policies and increasing foreign investment in the country's automotive sector.

Viet Nam's rubber production capability also provided considerable opportunities for tyre manufacturers to increase production and establish new manufacturing plants in the country.

As of 2014, around 14 tyre plants accounting for a production capacity of more than 65 million units per year operated in the country.

TechSci said that, considering the growing demand for vehicles, many domestic and global players were strengthening their footprints in Viet Nam by establishing plants here.

The Government, on its part, had inked World Trade Organisation and ASEAN Free Trade Area agreements with neighbouring countries to encourage foreign investment.

"All these factors have been fuelling OEM (original equipment manufacturer) growth and replacement demand for automotive tyres in Viet Nam," the report said.

According to TechSci, the two-wheeler tyre segment dominated the market, followed by passenger cars, commercial vehicles and off-the-road (OTR) tyre segments.

However, the passenger car tyre segment was expected to exhibit the fastest growth over the next five years, followed by the commercial vehicle & OTR tyre segments.

Karan Chechi, a research director at TechSci, noted that Viet Nam's tyre market was dominated by the replacement tyre market, which accounted for over 80 per cent of total demand in the country.

"The replacement tyre market share is expected to increase due to growing automobile sales," he said.

The Ministry of Industry and Trade told Doanh nhan Sai gon (Saigon Entrepreneurs) last month that Viet Nam's car consumption was likely to grow strongly, especially when free trade agreements the country had entered into took effect.

The ministry forecast that domestic demand for automobiles would reach about 800,000 to 900,000 vehicles by 2025, and some 1.5 million to 1.8 million units by 2030.

According to TechSci, DRC, SRC and Yokohama were a few of the key foreign tyre companies operating in Viet Nam, besides Bridgestone, Kumho and Maxxis, as well as Pirelli and Michelin.

Among domestic tyre companies, the Da Nang Rubber Company, whose net turnover reached VND2.46 trillion ($109.33 million) and pre-tax profits hit VND370 billion ($16.44 million) during the first nine months of this year, dominated the local tyre market last year. 

TechSci Research has offices in Canada, the United Kingdom and India. — VNS