Some of the top issues affecting the global tire industry today include:
- Price changes
- New mobility models
- Developments in China’s tire industry
- Management of change
Pricing and financial performance
Our pricing analysis looks at the volatile history over the last 12 crazy months, tracking the drivers of price changes; the impact in China, Europe and elsewhere, explaining why wholesale prices went wild, but there was relatively little impact on the retail scene.
Those price changes at raw materials level and sell-out level affected tire industry profitability in a big way. Our analysis explains what happened and why it happened
We offer a ranking of the top tire makers, the only ranking in the world to accurately record data from stock market filings of Chinese companies including Triangle, Double Coin and others as well as the better-known international companies.
Then we look at the half-year results of the tire industry and compare and contrast how the different companies performed. We show just how badly margins were hit in the last six months, due to increased input costs that were not matched by tire selling prices. Using deep insights, we make predictions for the next six months.
Changing world of tires
Everyone who has half an eye on this industry knows that the business is changing. We’re seeing people come in who are experts in marketing and logistics but know nothing about tires. Some of the old-timers think that’s a bad thing. We strongly disagree. This industry will change. Is changing. We need people who can manage that change. Our newest publication takes a long, hard look at change. We dive deep into the technologies and processes that are being affected by the move to data and service business models, and we look at why the tire industry is so resistant to change and the tasks facing management as they seek to push their companies into the 21st century.
The United States, Brazil, Russia, the EC and India have all carried out investigations into alleged dumping in their respective markets of TBR tires from China.
China won in the US, but lost in Brazil and Russia. We think China will also face tariffs from the EC and from India. The question is will that affect the industries in those regions?
As the best-known commentator on China’s tire industry, David Shaw examines the different arguments and offers his opinion on whether there really is dumping or not and how those complaints came to the fore – based on arguments from tire sales people; retreaders; competing new tire makers and others.
It’s a complex situation. Some claim that it is a well-known fact that Chinese tires are being dumped. That’s a widely-held opinion, but we try to take it apart to look at the competitive environment and how the tire wholesalers and traders drive prices down, as well as the competitive pressures on China’s tire makers.
China’s tire makers
Following on from the discussions of tariffs, we look at what is really going on in China’s tire industry. We offer rankings, assessments and analysis of the top companies. In particular, we look at their investments in China and overseas and also we look at how the over-capacity in China’s tire industry will be restructured.
The pieces are coming into place to drive consolidation in 2018. China has signalled to many industries – including tires – that the country’s industrial base needs to change. National and Provincial governments are building pressure on the worst offenders.
That pressure has already resulted in restructuring in China’s carbon black business and in China’s rubber chemicals business. In carbon black, forced closures and restructuring in the lower tiers of carbon black business have led to a global tightness in carbon black supply – and inevitably higher prices.
We extrapolate that situation to address the tire industry in China. It’s a developing picture, so we’ll be updating that in our regular publications, but in this document, we provide a snapshot, together with our best predictions of change in China.
The on-going saga of Kumho Tire’s creditors struggling to offload the shares they were awarded as part of Kumho’s restructuring a decade ago has been, frankly, one of the worst public disagreements I’ve seen in this industry in around 30 years of commentating.
The power plays between the banks and chairman of Kumho Industrial, Park Sam-koo have not been pretty.
Qingdao DoubleStar got caught in the cross-fire between these two powerful groups and has largely stood on the sidelines as the Koreans have duked it out among themselves.
Unfortunately, the ensuing uncertainty has driven customers away from Kumho and sapped confidence among its managers. As management attention has been focused elsewhere, Kumho has suffered the most among all tire makers from the turmoil in the raw materials sector and reported huge losses in the last two quarters. In this annual report, we give our opinion on the debates and the arguments, but ultimately, we think it will be good for Kumho Tire and also for Double Star if the deal falls through – as we believe it will.
ETRMA and its agenda
Last month, we sat down with the ETRMA and talked about the agenda for the tire industry including rubber crumb in artificial turf; tire-road wear particles and how they affect the environment, Global tire regulations and many other hot topics.
It’s a fascinating read about the issues facing the global tire industry and how tire makers are seeking to manage potentially damaging situations.
We also note that the EU is preparing for an update to the EU tire label and have a deep analysis on how this is likely to progress and if it might affect other regions that are bringing in similar labels.
Sustainable natural rubber
It is an unfortunate fact that certain parties in S E Asia and elsewhere have been cutting down high carbon-stock forests (virgin rainforests too) and re-planting the area with rubber trees.
That is not acceptable. For a couple of years, this issue has been on the global agenda and the industry has been working out ways to manage the situation. Earlier this year GM weighed in with an initiative to remove all rubber grown from such trees from its vehicles, and specifically from the tires used on its vehicles. That has triggered a lot of discussion and action by tire makers.
Meeting GM’s targets presents the rubber industry with a problem: How to identify where each bale of rubber originated. Our new report has a long analysis of how the industry is responding, and working together to ensure no more high-carbon trees are killed to make way for rubber. It’s not all positive. There is still a long way to go, but we can see a way forward.
However, in this case, the main tire makers will have to work with Civil Society; with the vehicle makers and with the NR processors and wholesalers. It will have to be a true industry effort and each of us has a part to play. Our analysis starts to build an agenda for action.
We have compiled a list of all the on-going investments around the tire industry. After a hiatus in 2015 and into 2016, China is once more the top of the pile for announced investment projects. Meanwhile, Continental’s vigorous investments in China, the United States and elsewhere places it ahead of Michelin in terms of its total committed budget for on-going expansions.
We track 250 tire industry projects around the world, including over 75 in China worth around USD14,000mn. No other resource in the world tracks those projects.
This 54-page, information-rich report, titled Global Tire Industry in 2017 is available only from Tire Industry Research.