Trends to watch in the APAC tyre cords and tyre textiles industry

By Global Market Insights

Tyre cord and tyre fabric products represent some of the critical materials used in the auto component sector. The automotive ecosystem in Asia Pacific has undergone monumental growth within the last decade, recording strong vehicle sales year after year. In 2020, China, Japan, and India were among the top five countries with the most passenger car¹and commercial vehicle sales², according to Global Economy.

Heightened demand for high-performance passenger and commercial vehicles and the resulting uptick in auto production will fuel the tyre cords and tyre fabrics industry size in the near future. The replacement of existing tyres with new, improved ones will give rise to an array of new opportunities for manufacturers.

Currently, reliable and long-lasting tyres that help improve the vehicle fuel-efficiency are in demand. Not only are consumers looking to install high-performance tyres into their cars, but commercial fleet owners also investing in new tyre designs to increase the efficiency of heavy-duty vehicles in order to minimise their carbon footprint. Ongoing government efforts and regulations to improve passenger safety will further drive up the tyre demand in APAC countries.

The fast-growing trend of electric vehicles will provide Asia Pacific tyre and rubber industries significant momentum over the next few years. EV adoption shows no signs of stopping anytime soon. In the month of August 2021 alone, American EV maker Tesla³ sold more than 44,000 China-made electric cars in the country, as per the China Passenger Car Association (CPCA).

Conventional tyres on EVs can wear out nearly 30% faster⁴ due to the extra weight carried by an electric car. To meet the performance requirement of EVs, manufacturers are laying emphasis on designing tyres with high wear-and-tear resistance.

Based on the factors outlined above, it is projected that the global tyre cords and tyre fabrics industry⁵size could be worth over US$7 billion by 2026. The Asia Pacific region is expected to dominate the market on account of exponentially surging vehicle production and sales, as well as a strong aftermarket.

Following are some of the major ongoing trends in APAC’s passenger and commercial vehicle sectors that will influence tyre demand in the near future.

Robust opportunities across APAC’s booming passenger vehicle sector

The passenger vehicle segment remains the major driver of APAC’s booming auto sector. Several factors including the rise in purchasing powers and growing preference for personal mobility are responsible for the regional car production boom. Data published by Global Economy shows that passenger vehicle sales⁶ in China, Japan, India, and South Korea reached over 28 million during 2020, albeit the effects of the COVID 19 crisis.

The share of electric passenger cars in the market has been expanding steadily. Bloomberg Energy Finance⁷predicts that more than half of all new cars sold in 2040 will be electric or hybrid electric cars.

While new vehicle sales continue to climb, the adoption of used vehicles is also on the rise. In anticipation of this demand, tyre and rubber product manufacturers are expanding their production capacities. For instance:

Chinese tyremakerSailun⁸ announced an investment of over US$335 million in June 2021 to expand tyre production at its factory in Cambodia. With this investment, the company aims to increase the annual capacity of radial passenger vehicle tyres by more than double to ⁹ million per year.

In April, South Korea’s Kolon Industries9, Inc. increased its tyre production capacity in Vietnam to nearly 36,000 tons per year, up from 16,800 tons. This expansion takes Kolon’s total annual capacity in Korea, Vietnam, and China to around 103,200 tons.

India’s Apollo Tyres¹⁰ recently announced an expansion to take its manufacturing capacity to over 15,000 passenger car tyres a day by the year 2022. The company also said it will deploy new manufacturing technologies that would enable it to target premium OEM and aftermarket customers in the country.

Given the rise in urban population and the growing public inclination towards personal mobility, passenger vehicle production will only increase over the next few years. Japanese carmaker Toyota¹¹, for instance, disclosed plans to roll out 15 new battery-electric vehicle (BEV) models by 2025. The rise in auto production will naturally benefit the tyre cords and tyre fabrics industry in Asia Pacific.

Demand for efficient tyres among commercial vehicle fleet owners

Among all regions, Asia Pacific has experienced one of the fastest growths in urbanisation, industrial development, and commercial expansion. As a result, the use of light-, medium-, and heavy-duty vehicles has increased as well. In 2020, three of APAC’s largest economies – China, Japan, and India – combinedly witnessed more than 6 million commercial vehicle sales¹², as per Global Economy.

As commercial vehicle owners look to expand their fleets, they are increasingly looking for manufacturers and service providers who can help them maximise their tyre performance and efficiency, improve safety, and make preventive maintenance easier. The commercial vehicles segment is slated to capture a fair share of the tyre cords and tyre fabrics market in Asia Pacific.

Tyre makers are undertaking efforts to expand production to meet the emerging demand from the commercial vehicle sector. For example:

Continenta^l13said in December last year that it plans to gradually ramp up truck tyre production capacity at its Indian site over a period of 18 months. The company expects the expansion to boost its export volumes in APAC and augment its profitability.

Japan’s Yokohama Rubber¹⁴ ,which produces tyres and tyre components for light-duty vehicles and passenger cars, announced an expansion at its facility in Thailand. According to the company, this expansion is aimed at strengthening its supply chain in the ASEAN region.

Over coming years, the rise in industrial production, infrastructure development, and logistics activities is anticipated to create favorable opportunities for the tyre cords and tyre fabrics companies in the APAC region. Ongoing shift of focus among automakers as well as fleet owners towards electrification will further expand the demand for high-performance, durable, and wear-and-tear resistant tyres, bolstering the production of critical rubber components.

Challenges for tyre manufacturers amid global COVID-19 pandemic

Although Asia Pacific tyre cord and tyre fabrics industry has been booming over the past few years, the COVID-19 pandemic and resulting impacts have taken their toll on the industry. With strict containment measures and movement restrictions in place, the amount of driving for both personal and commercial purposes declined drastically. Also, the majority of vehicle owners were seen delaying visits for tyre repairs, maintenance, or replacement, leading to a weakened tyre demand.

Besides the decline in demand, tight government restrictions to curb the spread of the virus also forced numerous manufacturers to shut down production or operate at a reduced capacity. The year 2020 witnessed more than 120 tyre makers ¹⁵in Asia Pacific including names like Continental, Bridgestone, and others temporarily suspend production to some extent. With COVID-19 still far from over, manufacturers may experience several additional challenges in the near future.

The revival of the global economy, however, along with accelerated efforts across industries could help the tyre cords market gets back on track in the future. Electrification of both passenger and commercial vehicles and continuous advances in tyre technology can transform the industry look in the forthcoming years.

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