In spite of the ongoing political upheaval which has been plaguing the Thailand since the beginning of the year, the replacement car tyre market managed to turn in an impressive double digit growth in volume sales in the first quarter of 2014 against the same quarter last year.
Latest retail audit findings by global market research firm GfK revealed that car owners in the country purchased around 1.66 million units of replacement car tyres during the first three months of the year. This represents an additional 294,000 units sold compared to last year, lending to a spike in market value of the sector by over 8%.
“It is worth highlighting that the first quarter of 2013 generated the lowest sales of all four quarters that year,” commented Craig Griffin, Managing Director for GfK in Thailand. “Quarter one last year was the start of the consistent upsurge of the local replacement car tire market in volume terms for the rest of the quarters thereafter, thanks to the heightened level of promotional efforts by retailers to boost sales.”
GfK data reflected a steady downtrend in the average pricing of replacement car tyres since the third quarter of last year, where it stood at USD119 and gradually fell to the low of USD106 reported in the first quarter of 2014—a significant drop by almost 11%. The markdown in prices is seen across all the individual major players in the local market, where latest quarter findings reported prices to be in the range of USD69 to USD119.
“Manufacturers recognise the importance of proactively stimulating the market in order to continue driving sales in the midst of the political instability which dampens consumers’ willingness to spend,” said Griffin. “The rise in promotional activities was also one of the after-effects of the first-car policy introduced in 2012 where, since car tyre manufacturers started shifting their marketing efforts from OEM back to the replacement market.”
Foreign brands dominate Thailand’s replacement car tyre market with the top three brands continuing to expand further to contribute to over two-thirds of the overall market revenue and slightly lower (64%) in terms of total sales volume.
“Competition in the market is likely to intensify further with the smaller brands stepping up their expansion efforts by increasing penetration among retailers,” said Griffin. “On the whole, with the expected cessation of the political turmoil by mid-year, improving sentiments will no doubt be beneficial to the replacement car tyre market to help drive it to a level higher than 2013,” he concluded.