ON GENERAL TYRES & RUBBER CO. OF PAKISTAN
DATED: Wednesday, October 09, 2002
GENERAL TYRES & RUBBER COMPANY OF PAKISTAN(PVT) LTD.
• General tyres was established in Pakistan in 1963
• Continental A.G., a Germany based multinational is the holding company of General tyres in Pakistan, which has a 10 per cent equity stake in the General Tyre Pakistan and Biboji, the heirs of late General Habibullah having the single largest equity stake of 34 per cent. Other partners in the General Tyre are Pak-Kuwait, 27 per cent and National Investment Trust, 12 per cent
• Previous MD of the company was Dr. A.S. Mufti who has recently resigned
• The zone incharge for Rawalpindi is Mr. Rashid.
• General Tyres produces all range of tyres from 800cc cars to large size Hino Trucks. It is a fact that general tyre is the only tyre manufacturing company in Pakistan that produces the complete range of tyres for the Pakistani market
• Production plant is located at H/23/2, S.I.T.E, Landhi, Karachi
Passenger car tyres; e.g. Taxi, Hilux and other small vehicles including Suzuki, Toyota and Honda: Market share of 40%
Light Truck tyres: Market share of 20%
Agriculture Tyres: Market share of 60%
Truck/Bus Tyres: Market share of 10%
Out of the total production of General tyres, 80% consists of passenger cars tyres.
Major brands include ST, XP2000, PJC, VSS, AWAMI SPRINT, DURAJET, JETAIR.
Public sector: Most Government organizations use general tyres in its vehicles and it constitutes a major share of General tyres’ business. These organizations include PTCL, Armed forces, OGDC etc.
OEM(Original Equipment Manufacturing)Sector: Every vehicle manufacturing company, is bound by contract(Ministry of Commerce) to use general tyres in its vehicles.
General Market: There is a good perception in the market that General tyres is a better option for the vehicle owner because of the quality as well as value for money.
Whatever number of tyres the general tyres company produces, they are completely sold out in the market.
General tyres Distributor Dealer Retailer Customer
• Contractual binding(Ministry of Commerce) for the vehicle manufacturing/assembling companies to incorporate general tyres in all its vehicles.
• Very strong customer repurchase factor (due to above point)
• Large dealership network(11 dealers in Rawalpindi only)
• General tyres gives comprehensive warranty for any manufacturing fault
• Limited production(8-10 lacs tyres per year whereas Korean Kumho tyres production varies from 8-12 lacs per month)
• Very minute advertisement or promotional activity
• The total market potential for truck/bus tyres is 150,000(monthly) whereas general tyres is producing only 1,500 to 2,000 tyres for this segment.
• To capture the market for motorcycle tyres
• To increase production to achieve economies of scale to remain competitive in the market
• Increase the quality and production of truck/bus tyres(existing 10% share) to improve market position.
• Threat from other multi national imported tyres including Bridgestone, Kumho, Dunlop, Yokohama etc.
• Major threat posed by Chinese imported tyres
• As dealers and retailers are not profiting much from general tyres, therefore they emphasize on the sale of other tyres (due to profit margin)
• Approximately 40% of the total tyres sold in the market are smuggled
The real competition faced by general tyres is from the Chinese imported tyres. The reason is that the price difference between the two is large whereas the quality is comparable with general tyres being slightly betteroff in quality. As we know that Pakistan is a price conscious market and the purchasing power is decreasing day by day, as a result, the customers prefers to use the low-priced tyre. The price differences are:
• In passenger car tyre the price of Chinese tyre is 30% less than the general tyre.
• In light truck the price of Chinese tyre is 50% less than the general tyre.
• In agricultural tyre the price of Chinese tyre is 20% less than the general tyre.
• In truck/bus tyres the price of Chinese tyre is 20% less than the general tyre.
Due to these price differences there is a perception in the general market that Chinese tyres are quickly gaining on the market and soon they will hold the major share of the market.
The company involves in very limited advertising and promotional activities. Some examples are as follows:
• Ad of “Power Plus” tyre on television
• Distribution of calendars, diaries, key chains etc.
Recently it is observed that General tyres is doing no advertisement at all nowadays.