• NTS is countering its ZWG 121 million FY2025 loss by importing affordable, meticulously engineered tyre brands to ensure seamless stock supply
• The government’s anti-smuggling regulation, effective November 2024, offers NTS an opportunity to recover lost market share by curbing the influx of cheap
• NTS should expand mobile fitment services in rural areas, launch safety awareness campaigns, and introduce tiered pricing for retreaded tyres

Harare- National Tyre Services (NTS), Zimbabwe's leading tyre distribution and retail company, remains optimistic about its future prospects despite posting a substantial full-year loss of ZWG 121 million for the period ended 31  March 2025, a sharp reversal from the ZWG 67 million profit recorded in FY2024.

This downturn was primarily driven by a 25% decline in sales volumes, attributed to the escalating informalisation of the economy, which has intensified unfair competition for formal operators like NTS.

Revenue plummeted to ZWG 143 million from ZWG 191 million the previous year, resulting in a 41% drop in gross profit to ZWG 45.9 million and a widening of the operating loss to ZWG 43 million from ZWG 19 million.

The influx of cheap, smuggled tyres has particularly eroded market share, as informal traders undercut prices by evading duties and regulations, further compounded by broader economic challenges such as power shortages and erratic rainfall affecting agricultural and transport sectors that rely heavily on NTS's products.

In this competitive landscape, NTS faces direct rivalry from established players like Zimplow Holdings, a diversified industrials group with a footprint in agricultural equipment and mining supplies, including tyre-related accessories through subsidiaries such as Trentyre.

Zimplow, which delisted from the Zimbabwe Stock Exchange in 2023 amid restructuring, has navigated the informalisation and smuggling pressures by pivoting toward export-oriented sales up 36% in implements and retooling for smallholder farmer mechanisation, achieving 23% growth in hoes and spares despite a 16% dip in local demand.

Other local competitors, including emerging fitment centres like TyreZim and Tyre Club, focus on specialised services such as heavy-duty repairs, alignments, and balancing for mining and agricultural vehicles, leveraging national distribution networks with 12 outlets to counter informal threats through reliable after-sales support and partnerships with brands like Dunlop and Yokohama, which NTS also distributes exclusively.

These players are adapting by emphasising value-added services and compliance with standards like the Consignment-Based Conformity Assessment (CBCA) program, though they decry porous borders and high compliance costs that favour smugglers.

The Zimbabwean government's response to these challenges, particularly through Statutory Instrument 7 of 2025 (Customs and Excise (Designated Deemed Smuggled Goods) Regulations), marks a significant policy shift aimed at curbing smuggling by presuming 19 categories of goods, including tyres, motor spares, clothing, and foodstuffs as illicit unless importers provide verifiable proof of duty payment.

Enforced by the Zimbabwe Revenue Authority (Zimra) in collaboration with the police, Reserve Bank, and Consumer Protection Commission, this measure has already led to the seizure of US$2.4 million in contraband since late 2024, targeting cross-border transporters and informal markets.

For NTS, SI 7 presents a pivotal opportunity to level the playing field, potentially boosting formal sales by reducing the 25% volume erosion from smuggled tyres, which often enter via Beitbridge and sell at 20-30% below market rates due to evaded taxes.

The policy aligns with the Transitional Zimbabwe Industrial Reconstruction and Growth Plan (ZIRGP) 2024-2025, which prioritises local production and anti-counterfeit enforcement, though its success hinges on consistent border surveillance and addressing root causes like corruption and dollarisation that fuel informal trade.

Regionally and internationally, major tyre players are gaining traction in Zimbabwe through strategic imports and localised distribution, capitalising on the import-driven market where domestic manufacturing is limited to Apollo Tyres' single plant.

Bridgestone, Continental, and Goodyear enter via partnerships with local agents, focusing on premium segments for commercial vehicles amid infrastructure upgrades that could drive off-the-road (OTR) tyre demand by 6% annually through 2028. Apollo Tyres, for instance, has solidified its position post-2018 acquisition of Dunlop South Africa, using it as a gateway for affordable bias-ply tyres suited to Zimbabwe's poor roads, while Yokohama solely through NTS targets niche heavy-duty needs.

Chinese low-cost entrants like those from Toyo and emerging radial producers are flooding informal channels but face SI 7 barriers, prompting a shift toward formal joint ventures to comply with CBCA standards.

To mirror these successes, NTS can deepen supplier alliances for engineered, budget-friendly brands, expand retreading capacity in Harare and Chiredzi which showed resilience amid the sales slump and invest in digital tracking for supply chains to ensure seamless stock amid power volatility.

To tackle informalisation independently, NTS should pursue a multi-pronged approach beyond policy reliance, including aggressive localisation of services like mobile fitment units in rural mining and farming hubs to outpace informal vendors, who often lack quality assurances and pose safety risks with substandard products.

Community outreach programs educating on the dangers of smuggled tyres such as higher accident rates from poor treads could build consumer loyalty, while tiered pricing for retreaded options (resilient in FY2025) appeals to cost-sensitive informal buyers, gradually formalising them.

Collaborating with Zimplow-like peers for shared advocacy on border reforms and offering informal traders incentives like bulk discounts or training for formal integration would further mitigate the sector's 50% informal dominance, fostering sustainable growth.

With stable power from anticipated Kariba inflows and SI 7's momentum, NTS's revamped supply chain importing competitive brands positions it to rebound, targeting profitability through diversified revenue and resilient operations in a market projected to expand with agricultural recovery.

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