The economy of Peru relies heavily on the mining industry and medium & heavy commercial vehicles, wherein OTR tires find heavy use, majorly for mining, industrial, construction, mining, and agricultural sectors. Since 2017, Peru has been witnessing various mining activities under the public-private partnership, which has boosted the demand for heavy equipment and, in turn, for OTR tires.
The Peru Off-The-Road (OTR) Tire Market is projected to grow at a CAGR of 9.95% during the forecast period, i.e., 2021-26. Due to the closure of Lima Caucho in 2020, which was the sole producer of OTR tires in Peru, the country entirely shifted toward importing OTR tires. However, the increase in construction & mining activities has notably contributed to the market growth.
|Study Period||Historical Data: 2016-19|
|Base Year: 2020|
|Forecast Period: 2021-26|
|Key Companies Profiled||Bridgestone, Continental, Michelin, Goodyear, Pirelli, Yokohama, BKT, Mitas Tyres, etc.|
|Unit Denominations||USD Million/Billion|
Moreover, the increasing vehicle fleet size and rapidly expanding infrastructure & construction sectors in the country are also driving the market. Moreover, the growing agriculture & maritime commerce across the country is positively influencing the demand for earthmoving & agricultural equipment and, in turn, for OTR tires, i.e., another prominent aspect projected to augment the overall market growth in the coming years.
However, owing to the halt in various investments on account of corruption cases related to construction firms and heavy rains powered by El Niño conditions, the market witnessed a decline in its growth in 2017. In addition, the advent of Covid-19 in 2020 further delayed construction activities & manufacturing of heavy vehicles in the country and, in turn, negatively impacted the demand for OTR tires.
Impact of Covid-19 on the Peru Off-The-Road (OTR) Tire Market
Peru was among the hardest-hit countries by Coronavirus in 2020, mainly due to the suspension of various construction & mining activities owing to the countrywide state of emergency declared in March. As a result, it significantly impacted the country's OTR Vehicle Tire Market. Moreover, the major copper mines Las Bambas & Antamina got adversely affected since they are located in the lockdown-affected regions of Apurimac & Ancash, respectively. Also, being an import-driven country with no in-house production for OTR Vehicle tires, certain restrictions imposed on the trading between the countries negatively affected the smooth flow of OTR tires import in Peru.
Based on the Type of Equipment:
Of them all, Earthmoving Equipment are projected to attain the largest share of the Peru Off-The-Road (OTR) Tire Market through 2026, primarily due to the excellent contribution of construction & mining activities to Peru’s economy. Besides, the mounting mineral exports & expanding mining land requiring earthmoving equipment are other crucial aspects driving the demand for OTR tires for those types of equipment.
Moreover, the surging copper production in the country is also contributing to the burgeoning sales of earthmoving equipment for mine exploration & processing and, in turn, is propelling the demand for OTR tires.
On the other hand, the growing number of maritime & cargo activities in Peru has surged the demand for new ports in the country. Various new port projects are under consideration to minimize the costs of crucial exports. Such activities are projected to augment the demand for material handling equipment, i.e., forklifts, in the country over the coming years and, consequently, for OTR tires.
In addition, an emerging market of rental & used material handling equipment also seems to be positively influencing the demand for OTR tires in Peru in the future. Hence, owing to these aspects, the coming years are all set to create significant growth opportunities for the market with the rising demand for material handling equipment.
Based on Demand Type:
The absence of OTR tire manufacturers (OEMs) in the country is the prime reason behind the dominance of aftermarket tires in the market with numerous distributors offering replacement services. The rapid advances in construction & mining equipment, including automation, have resulted in fleet operators more frequently using those equipment, which, in turn, has reduced the tire replacement duration and surged the demand for aftermarket tires across Peru. Moreover, since there are no plans that OEMs would establish their manufacturing plants in the country soon, the aftermarket segment shall continue dominating the Peru Off-The-Road (OTR) Tire Market in the coming years.
Key Driver: Economic Dependence on the Mining Sector
The mining industry has been an essential pillar of Peru's economic development and is the top export sector with 10% of the country's GDP & 60% of its exports. It attributes to the country consisting of a wealth of mineral resources, is the world's second-largest producer of copper & silver, and Latin America's largest gold producer.
The demand for OTR tires is anticipated to rise significantly with the surging Peruvian economic reliance on the mining sector and the rapidly increasing number of mining projects. In 2020, the Energy & Mines Ministry declared that the country had 48 under development mining projects, of which 7 were in their first years of construction, including the Mina Justa copper project owned by Grupo Breca, and the rest are likely to begin in the coming five years, which, in turn, shall drive the Peru Off-The-Road (OTR) Tire Market during 2021-26.
Growth Challenge: Significantly Expanding Re-treading Industry
Retreading is a re-manufacturing process for tires involving tread replacement on worn tires. The material spending in this process is nearly 20% less than manufacturing a new OTR tire. Hence, such significantly growing operations in Peru could hinder the demand for new OTR tires. Moreover, there has been significant growth in the number of leading companies in the country providing retreading services, which is another prominent aspect that might pose a challenge for the market growth during the forecast period.
Key Questions Answered in the Market Research Report:
Frequently Asked Questions
A. The Peru Off-The-Road (OTR) Tire Market is expecting around 9.95% CAGR during 2021-26.
A. The surging economic reliance of Peru on its mining industry and the rapidly increasing number of mining projects in the country are the prime aspects projected to drive the Peru Off-The-Road (OTR) Tire Market during 2021-26. On the other hand, the significantly growing number of tire retreading operations in Peru might restrain the market growth in the coming years.
A. Earthmoving Equipment is anticipated to emerge as an area of remunerative opportunities for the leading players in the Peru Off-The-Road (OTR) Tire Market through 2026.