NEW YORK (Commodity Online): The demand from the developing markets especially from Asian regions will provide the boost to global tyre market in the coming years. By 2017, the global market for tyres from original equipment manufacturer (OEM ) may touch 1.8 million units which in turn indicating a sharp growth in automobile industry, according to research report titled “Tyres: A Global Strategic Business Report” of Global Industry Analysts, Inc.
With this growth, the natural rubber, steel, fibre sector would be benefited.The increase in tyres production is due to increase in production of Automobiles which uses these key raw materials for production.
The economic stimulus packages doled out by various governments to infuse vigor into automotive manufacturing brought out remarkable increase in number of new cars and trucks produced since 2010, thereby boosting the demand for tyres in the automotive OEM segment.
Increase in automotive manufacturing to address the huge pent-up demand for new vehicles immediately after recession, and the tremendous growth in automotive production volumes in developing markets such as China, India and Korea have also boosted demand for tyres in the automotive OEM segment. Improvement in commercial activity and freight movement also lent traction to the demand for tyres in heavy truck and aircraft tyre segments respectively.
The consumer preference towards high-performance tyres instead of the standard factory fixtures, have also boosted demand for tyres in the automotive replacement market. The market over the next few years will receive the strongest growth impetus from developing markets such as Asia-Pacific, Latin America and Middle East, thanks to increase in automotive manufacturing, and new construction and mining projects underway in these regions.
Currently, the demand from the automotive OEM segment especially came under the yoke of recession, as the economic crisis, which was at its peak during 2008 and 2009, resulted in considerable drop in new vehicle sales during the period, causing a flow-on effect on automotive production also affect the global tyres production.
Market distortions, during this period, were largely manifested in the form of decline in consumer purchasing power, restricted access to credit, high level of unemployment, reduction in household wealth, volatile fuel prices, weak consumer confidence and the resultant postponement of new vehicle purchases. Hit by declining sales and mounting financial burden, major auto companies in the industry announced large-scale production cutbacks in a number of facilities.
The credit crunch and financing shortfalls also drove some companies into bankruptcy. Plant closures, capacity idling, scaling back of operating capacity therefore, reduced opportunities for tyres, especially in the OEM market. Off the road vehicles tyres also took a hurting blow as a result of the collapse of the construction and mining industries.
While the OEM market took the blow on the chin, the aftermarket was relatively cushioned, primarily because auto parts and components like tyres, fan belts, exhaust pipes and brake pads are less discretionary spends, and replacement of worn parts is a necessity if the vehicle needs to be kept running. This is put to perspective by the fact that while volume of tyre sales to the OEM segment plunged by a massive 12.7% globally, while replacement tyre sales declined only by about 1.85% in 2009.
Additionally, reduced spends on new cars resulted in higher spends on maintaining old cars. With people spending more time repairing and servicing their existing vehicles rather than purchase new cars, the aftermarket witnessed relatively lower levels of decline in comparison to the OEM automotive market. The recorded decline was however the result of reduced average number of vehicle miles traveled which reduced the need for replacement of tyres.
The market staged a remarkable recovery in 2010, primarily led by post recession resurgence in growth fundamentals such as recovery in GDP growth, increase in employment rates and income levels, easing of lending restrictions, improvement in consumer discretionary incomes and buyer confidence, and the resultant increases in new car purchases, automotive production and average vehicle miles traveled.
As stated by the new market research report ontyres, Asia-Pacific is the fastest growing regional market for tyres in the world, with volume sales from the region in OEM and replacement markets waxing at a CAGR of 7.2% and 5.2% respectively over the analysis period.
Growth in the Asia-Pacific market is especially driven by India, China, and Korea, thanks to the huge demand for two-wheelers and new cars, including luxury cars in these countries, and subsequent increase in automotive production.
Major players in the global marketplace include Bridgestone Corporation, Maxxis International, Continental AG, Cooper tyre & Rubber Company, Falken tyre Corporation, Goodyear tyre & Rubber.
