MIAMI—The overall outlook for tires in Latin America is good, despite the substantially different situations in national and regional markets, according to a major longtime participant in Latin American tire and auto sales.
“Obviously, Latin America is not one market,” said Gustavo Lima, CEO of both Oriente Triangle Latin America Inc. and the Latin Expo Group, which sponsors both the Latin Auto Parts Expo and the Latin American & Caribbean Tyre Expo.
“But overall the tire business has been pretty positive in the different regional markets,” Lima said.
To be sure, the picture is not all bright, he said. Brazil, normally the major economic player in Latin America, is a big disappointment.
“The market in Brazil has been affected by corruption issues and the impeachment of their president,” he said. “Their economy is slowing down, and it's really affected car sales. Brazil is such a powerhouse that its problems have dragged down the economies of neighboring countries, such as Paraguay and Uruguay.”
On the other hand, Mexico is doing very well, with tire sales up 10 percent this year over last, Lima said. The countries near it—Guatemala, Honduras, El Salvador, etc.—are seeing improvements in their economies and tire sales thanks to Mexico, he said.
Venezuela, with the fall in oil prices and the implosion of its government, is in total collapse, according to Lima.
“There are some government tire sales, perhaps some consumer sales, but very little,” he said.
On the other hand, countries that are close to Venezuela, such as Colombia, Ecuador and Peru, are seeing strong sales, according to Lima. Peru in particular he described as “a shining star.”
“The situation in Venezuela is unique to Venezuela, and it won't affect other countries,” he said.
In the far south of Latin America, Chile is “always good,” Lima said. But the really encouraging news, he said, is in Argentina, where the economy is bouncing back after the inauguration of a new president.
“There is a good restart of business in Argentina, and the market is opening up,” he said.
Western tire companies that have factories in Latin America are making a lot of money, according to Lima. Meanwhile, there is a push in Latin America to follow the U.S. in levying duties against tires imported from China and other Asian countries, he said.
“Colombia and Brazil already have antidumping duties, and other countries are looking at antidumping duties,” he said. “I don't think it's a good thing, because duties distort markets.”
Price pressures are dictating many of the current trends in Latin American tire markets, Lima said. Goodyear and other tire makers are looking to bring in price-point tires and build low-cost plants in various regions of Latin America.
High-performance tires play a small part in Latin American markets, except for luxury sport-utility vehicles, he said.
China and other Asian countries are the main importers of tires into Latin America, and will remain so, according to Lima.
One strong current trend is for truck fleets to purchase low-cost tires from China and elsewhere for use on trailers, Lima said.
Latin American retreaders are very concerned about this trend, although retreaders in countries that forbid the importation of retreadable casings are not as badly affected, he said.
Overall, the signs for Latin American tire markets are very encouraging, according to Lima. The Latin American & Caribbean Tyre Expo, scheduled for Panama City July 13-15, has more than 200 tire makers and more than 1,500 tire dealers registered so far, and that makes him happy for many reasons.
Among other things, Latin American tire buyers have become very sophisticated, and millions of people are seeing improvement in their lives, Lima said. “This is a wonderful thing,” he said. “In the U.S., the economy has definitely improved, but Latin America came out of its recession much better than I anticipated.”