The European tyre market is expected to witness a variable increase in tyre sales by early 2014. The focus will be on new and retreaded tyres and expected sales will depend on how the car industry fares in 2014.
The Tyre Market – Ups and Downs
The European tyre market faltered considerably from 2012 to late 2013 as a result of a shaky economy and poor car sales. During that tough time, almost every car manufacturer shut down a part of their manufacturing plants and downsized their workforce. This affected the European tyre market considerably.
Europe particularly struggled to make ends meet with a shaky Euro that seemed to fluctuate more in comparison with other international currencies. Sales dropped to almost 11.85mn units, down 1.7% in 2012- 2013, which was considered the lowest level in the market (lowest sales since1995)
However, as the economy recovered, the tyre industry did manage to revive considerably. Car sales have improved in Europe since the last quarter of 2013 and economic recovery, along with tyre industry recovery, is expected to start and continue into late 2014. Industry analysts are carefully watching the automobile industry on how it will work out to benefit the tyre industry in 2014.
Expected Tyre Sale Projections
One of the major factors that contributed to recovery is the buoyant automobile market. Global sales volumes of almost every car manufacturer increased by late 2013; and these sales have directly boosted tyre manufacturing and development. Companies like Toyota Motor Corp and General Motors Company in particular posted a significant 2% to 3% increase in sales. The entire auto sector posted an impressive 18.5% increase as compared to sales in 2012. Car sales have increased in Britain but sales are slow in most of the rest of Europe.
Tyre manufacturers have reported a concomitant increase in demand for tyres due to the increase in car manufacturing. To deal with the increasing demand, car manufacturers have increased production of mid-range and premium brands. Industry analyst TechSci Research stated that the market would show a dramatic increase in sales, reaching up to 115 million units by early 2017.
The company also predicted that tyre sales stats would increase dramatically from 2013 to late 2018 with a compound annual growth rate of about 11.6%. This could be a noteworthy improvement when you consider that 2010 showed total global tyre sales of US $151.8 billion, with the European tyre market contributing about US $100 billion to the overall amount.
It’s Not All Good News Though!
Even though sales have increased, the European tyre market has faced severe competition in the form of Chinese and Far East tyre brands. These imports have turned out to be compliant with all European tyre standards and of excellent quality, while being priced at a much lower rate. On top of that, European drivers have also shown preference for all-season tyres, as compared to seasonal tyres, to deal with varying seasons.
Chinese and Far East manufacturers have also set up manufacturing plants in Europe to manufacture and supply new OE and replacement tyres to car manufacturers directly. This would not only increase competition, but also drive down tyre rates in the near future.
Reflecting on these factors, it shows that the European tyre market is incredibly fluid at present. Although sales are picking up, stiff competition and fluctuating sales could mean a shaky market well into late 2014. The potential for profit is there but not right at present.
Source: Tyre Blog
Published: 24 Feb 2014