03 Oct 2019
Mature automotive tire market growth will not exceed 3%, says GlobalData
Although the tire market has been growing at a modest rate year-on-year, the industry has not been particularly profitable. Due to its political sensitivity and maturity, annual growth is not expected to exceed around 3%, says GlobalData, a leading data and analytics company.
David Leggett, Automotive Analyst at GlobalData, comments: “The tire sector is essentially a commodity industry. Although it has high-tech products, the majority of these are vulnerable to price competition from low-cost manufacturers. An obvious reaction has been the development of brands, but an examination of the accounts of companies in the industry shows that there are some distinct advantages in size.”
In many analyses, the big three manufacturers are demonstrated to have a clear advantage over their smaller competitors and it is this in-built disadvantage that has encouraged the mid-sized companies to look for alternative courses. The last 30 years have seen a dramatic concentration in the number of major players in the tires market.
Leggett continued: “Five of the ten largest companies in 1981 have now been taken over by competitors, and this trend is continuing with smaller companies forming alliances or being bought out by larger competitors. As a result, the three largest companies – Bridgestone in Japan, Goodyear in the US and Michelin in France – now dominate the world market with a share of just over 60.”
Bridgestone, Goodyear and Michelin are the only truly multinational companies, with manufacturing facilities and sales networks in most of the world regions. Other significant competitors include Continental, Cooper Tire, Pirelli, Toyo, Yokohama, Kumho, Hankook and various regional manufacturers.
Leggett concluded: “Even though these largest companies have a turnover in excess of US$20bn, they remain largely specialist tire manufacturers. Many smaller companies also concentrate almost exclusively on tires, but medium-sized establishments are diversifying away from tire manufacturing. For example, Pirelli has always had extensive interests in cable manufacturing while Continental has expanded through acquisitions in a variety of automotive components.”