NATIONAL Tyre Services Limited (NTSL) will be doubling down products from China, which are at least 50% cheaper than those obtained from their usual suppliers in South Africa.
NTSL experienced better returns since they started sourcing products from China, boasting a 14% increase in sales in the first five months of its financial year (April to August 2017) compared to the same period last year.
NTSL managing director Kennedy Mandevani told NewsDay last week that he was unable to give figures as they were in their closed period.
“As the hard pressed consumer out there is looking for cheaper products, tyres and discounted products, we are now forced to bring the low priced Chinese products with low margin as opposed to our premium products, so our business mix is now in favour of a low margin product. When people down trading I think quality is the last thing on their minds so they buy purely on price and not quality,” he said.
“We believe that some of the products on the market are actually low priced, yes, but in terms of cost per kilometre it is actually expensive that is the way we look at it. In other words, if you get two tyres, one from China and one from South Africa, one is less in terms of cost but it will give you less mileage compared to the more expensive one. So if you look at cost per kilometre you will find that the premium tyres are actually cheaper.”
Mandevani said they tried selling the concept of cost per mileage, so that they could continue bringing in premium products but the market was more interested in the price rather than quality.
NSTL used to bring in premium products from South Africa which were more expensive, but were of better quality, but they noticed that spending patterns of their clients were more inclined to products that had a cheaper price tag.
This coupled with the fact the smuggled tyres now have a 40% market share has forced the company to also bring in cheaper products at the expense of quality.–newsday