Russian market is changing

By David Shaw, ERJ editor

Athens--Last year, said Jaron Wiedmaiaer, head of Continental's Russian operations, Conti sold 1 million passenger car tyres into Russia. He said 45 percent of the market revolves around one size: 170-70 R13. This is the biggest selling size in Russia, as it fits the Lada car. The next biggest seller is 195-65 R16, which takes 8 percent of the market. Below that, he said, no size takes more than 1 or 2 percent of the market, "Forget it" he commented.

Wiedmaier estimated that the current market in Russia is 75 percent domestic production and 25 percent imports, but as Russia accedes to the WTO, the ratio will change. Currently, each tyre attracts a minimum Euro 6.2 in import and sales tax, he said, adding that this will decline to less than 5 percent by 2010. Small percentages like that can be accommodated, he added, comparing them with logistics costs.

Retail outlets grow fast

He also said the market is shifting from mainly wholesalers to retailers. Currently 75 percent of the market goes through wholesalers, with just 25 percent of tyres sold through retail outlets, but this too is changing, said Wiedmaiaer. This is partly as the wholesalers go for retail outlets and partly as consumers have a little more money to spend.

In the past, said Wiedmaier, a Russian would buy his tyres and fit them himself. Now, however, he is relying more and more on his retailer to do that, said Wiedmaier.

Also, the standard of retail outlet is improving quickly. Even a couple of years ago, he said, Western standard retail outlets were limited to Moscow and St Petersburg, but now they are springing up in Yekaterinburg, Rostoff, and even Irkutsk, he said.

Currently, these outlets are independent, and are likely to remain so, but the entrepreneurial owners want to forge links with Western suppliers to improve their image among Russian customers.

Winter tyres

Russians are big consumers of "Winter" tyres, said Wiedmaier. He noted however that the Russian manufacturers make all-season tyres and sell them as winter tyres. By contrast, said Wiedmaier, Conti and Nokian have strong sales of true winter tyres in the Russian region. Out of 1 million Conti tyres sold, said Wiedmaier, about 60 percent are winter tyres. He said the Gislaved brand is strong in Russia.