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Dumisani Nsingo, Senior Business Reporter
THE country’s sole tyre manufacturer, Auto Tyres Zimbabwe, formerly Dunlop and Apollo Tyres Zimbabwe has set sights on diversifying into the provision of automobile related products in a bid to improve its financials as it grapples with competition from cheap imported tyres on the local market.
Auto Tyres Zimbabwe managing director Dr Kennedy Mandevani said the company continues to feel the pinch of competing for markets with imported tyre brands and as such it has considered diversifying in an effort to enhance its business prospects and revenue.
He said the change of name from Apollo Tyres Zimbabwe to Auto Tyre Zimbabwe, which was effected as from 22 September was in-line with their diversification strategy.
“The name change is in-line with our strategy of pursuing a multi-brand approach given the influx of cheap and competitive tyres. In addition it gives us flexibility to expand into other auto related product diversification areas,” Dr Mandevani said.
Imported tyres especially from Asian countries and the rampant smuggling of second hand tyres mostly from South Africa has negatively impacted on Auto Tyres Zimbabwe’s business.
“The Government has agreed with our position that second hand tyres are both unsafe and prejudice the fiscus as they are smuggled and are dumped on the Zimbabwe market. We were advised that the issue will be addressed at the forthcoming budget. We eagerly await this as local production and general company viability is being negatively affected,” Dr Mandevani said.
The company manufactures Dunlop and Regal brands. Last year it also started distributing the Maxtrek brand.
He said the depreciation of the South African rand against the United States dollar has made Auto Tyres Zimbabwe’s products less competitive.
“The strong US dollar is now negatively affecting our exports to South Africa where the rand continues to depreciate.
“Our export customer there is now pushing for price reductions to enable our exports to remain competitive and consequently affecting margins,” Dr Mandevani said.
The company manufactures allotted tyre sizes for its sister company Apollo Tyres South Africa in Durban.
Economic analysts are of the view that Auto Tyres Zimbabwe’s diversification strategy might fail to make any positive impact to the company’s revenue base as the automobile industry was already flooded.
“From a generic perspective Dunlop (Auto Tyres Zimbabwe) is going down mainly due to the influx of Chinese tyres and it’s unwise to diversify when you have already lost your market. This will only act as a survival strategy,” said Zimbabwe National Chamber of Commerce economist, Mr Kipson Gundani.
Renowned Bulawayo based economist Dr Bongani Ngwenya said Auto Tyres Zimbabwe’s diversification strategy can only yield positive results if the company wholly focuses on venturing into another industry.
“The concept of diversification is a financial management strategy to manage or spread risk. If that diversification is done in the sense of vertical integration like what Dunlop (Auto Tyres Zimbabwe) intends to do, it’s like addition of lines of products in the same industry. If it was a proper diversification strategy we should have seen them venturing into a different line of business altogether. Anyway we wish them good luck since it’s a trial,” he said.
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