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© 2004 All content copyright Aroq Ltd. All rights reserved.
Tyres: trends, companies, market forecasts to 2006 2nd Edition SAMPLE
2004 edition
by Matthew Beecham
January 2004
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© 2004 All content copyright Aroq Ltd. All rights reserved.
Table of contents
Single-user licence editionCopyright statement
Table of contents
List of tables
List of figures
Acknowledgements
just-auto.com’s research portfolioIncredible ROI for your budget – single and multi-user licences
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Market summary
Chapter 1 IntroductionRound, black and boring
Report coverage
Chapter 2 Market trendsMarket players - Bridgestone
Continental
Cooper Tire
Goodyear
Hankook Tires
Kumho
Michelin
Pirelli
Sumitomo
Toyo Tires
Yokohama
Market shares
World
Europe
North America
Asia-Pacific
Market size
Market forecast
Merger, acquisition and joint venture activity
Plant investments
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Chapter 3 Technical trendsTREAD Act
Tyre pressure monitoring
Run-flat tyres
Eco-friendly tyres
Smart tyres
Manufacturing trends
Chapter 4 ManufacturersBridgestone
Continental
Cooper Tire & Rubber
Goodyear
Hankook Tires
Kumho
Michelin
Pirelli
Sumitomo
Toyo Tire & Rubber Co Ltd
Yokohama Rubber
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List of tables
Table 1 Global market shares for tyres, 19xx – 20xx (% of market value)
Table 2 European replacement market: Distribution channels as a percentage of units sold
Table 3 World market for OE tyres by geographical region, 2002 (Millions of tyres)
Table 4 Asian OE market: OE market growth by geographical area, 20xx - 20xx (% growth /
decline)
Table 5 Asian replacement market: Replacement tyre market growth by geographical area,
20xx – 20xx (% growth / decline)
Table 6 The European and North American replacement markets by segment, 2002 (%)
Table 7 World light vehicle tyre sales, 20xx – 20xx (million units)
Table 8 World medium and heavy duty truck tyre sales, 20xx – 20xx (million units)
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List of figures
Figure 1 Something to sing about:
Figure 2 The Flag Ships of Dunlop Motorbike tyres: From left: Sportmax D208, Sportmax
D220 ST, Trialmax Radial D607 and Arrowmax GT 501
Figure 3 Global market shares for tyres, 2001 (% of market value)
Figure 4 Sales comparison of Bridgestone, Michelin and Goodyear, 19xx – 20xx (US$
millions)
Figure 5 European market shares for OE and replacement tyres for passenger cars, 20xx (%
of volume)
Figure 6 European market shares for OE and replacement tyres for commercial vehicles,
20xx (% of volume)
Figure 7 European market shares for replacement tyres for all vehicles, 20xx (% of volume)
Figure 8 North American market shares for OE and replacement tyres for passenger cars,
20xx (% of volume)
Figure 9 North American market shares for OE and replacement tyres for commercial
vehicles, 20xx (% of volume)
Figure 10 North American market shares for OE tyres for all vehicles, 20xx (% of volume)
Figure 11 North American market shares for replacement tyres for all vehicles, 20xx (% of
volume)
Figure 12 United States distribution channels for replacement tyres (Distribution channels as a
percentage of units sold)
Figure 13 Chinese tyre market shares, 20xx
Figure 14 World tyre market by product line, 20xx (% of volume)
Figure 15 World tyre market by product line, 20xx (% of value) Error! Bookmark not defined.
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Figure 16 World market for OE tyres by geographical region, 20xx (% of volume)
Figure 17 The world tyre market: sales by geographical region, 20xx (% of volume)
Figure 18 Asian OE tyre sales by geographical area
Figure 19 Asian replacement tyre sales by geographical area, 20xx (% of volume)
Figure 20 Raw materials used in tyre production
Figure 21 Cutaway of Michelin's PAX tyre for the Audi A6
Figure 22 Dunlop DSST:
Figure 23 The world’s first tyre using extracts of corn
Figure 24 Yokohama's tyres for the Aston Martin Vanquish
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Acknowledgements
The publishers would like to give Special thanks to Bridgestone; Goodyear;
Michelin; Dunlop and Sumitomo for their assistance in compiling this report.
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Market summary Page 1
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Market summary
The last xx years have seen a dramatic concentration in the number of major
players in the tyre market - five of the ten largest companies in 19xx have now
been taken over by competitors. This concentration is continuing through in a
less dramatic manner, with smaller companies forming alliances or being
bought out by larger competitors. As a result, the three largest companies -
Bridgestone (based in Japan), Goodyear (based in the US) and Michelin
(based in France) - now dominate the world market with a share of about 60%.
These 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.
Even though the largest companies have a turnover well in excess of $10
billion, they remain largely specialist tyre manufacturers. Almost all of
Michelin's sales are attributable to tyre manufacture, as is over xx% of
Bridgestone's and Goodyear's. Many of the smaller companies also
concentrate almost exclusively on tyres. However, the medium-sized
companies are diversifying away from tyre manufacturing. Pirelli has always
had extensive interests in cable manufacturing, Continental has now acquired
a large business in automotive brakes and Cooper has also diversified by
buying a manufacturer of automotive components.
As a matter of policy, most vehicle makers dual-source for every model and
spread their total purchase of tyres over three or four manufacturers. The type
of tyre specified by the vehicles makers differs markedly from one region to the
next due to the different vehicle mix sold in each market and the different
driving habits.
The last decade has seen a growing market for tyres but despite this, the
industry has not been particularly profitable. It is essentially a commodity
industry and although it has high-tech products, the majority of its products are
vulnerable to price competition from low-cost manufacturers. An obvious
reaction has been the development of brands, but an examination of the
Market summary Page 2
© 2004 All content copyright Aroq Ltd. All rights reserved.
accounts of companies in the industry show that there are some distinct
advantages in size.
Although the big three manufacturers have a majority of the OE global market,
they do not dominate it in Europe, as Continental and Pirelli also have
significant shares. Here, the market is very stable, and shares do not change
much because of the long-term contracts in place with equity chains and
independent dealers. The major brands marketed in the European
replacement tyre market include Michelin (including Kleber and BF Goodrich),
Continental (including Uniroyal, Semperit and Gislaved), Bridgestone
(including Firestone) and Goodyear (including Dunlop).
Although Goodyear ranks third in the world, it is the largest company in the
North American OE and replacement tyre market with a xx% share, followed
by Michelin (with a xx% share) and Bridgestone/Firestone (with a xx% share).
In the North American replacement tyre market, there are three broad groups
of brand in the North American market and the major manufacturers are
normally associated with all three. Flag brands are the main advertised brands
used by each company and these are the ones that receive the marketing
support. The same companies make associate brands, but they receive far
less support and are sold at a lower price through the normal distribution
channels.
The world tyre market is essentially a replacement market in terms of volume
(xx%) and value (xx%). Although only one-quarter of road tyres are specified
and bought by the vehicle makers, this segment of the market is significant as
it drives technical development and has a major influence over the aftermarket.
The tyre market’s value is split evenly between Europe, xx%, North America,
xx% and Asia, xx%. High-performance tyres represent xx% of the world
market in volume but 25% of the industry’s margin. xx% of this market is in
Europe, where it is growing by xx% a year.
The Bridgestone/Firestone recall in the summer of 20xx heightened consumer
awareness for tyre road worthiness and safety, stimulating demand for high
performance tyres including run-flats. The Transportation Recall
Enhancement, Accountability and Documentation Act (or aptly named TREAD
Act), which was signed into law in November 20xx by then-President Bill
Clinton, called on the National Highway Traffic Safety Administration (NHTSA)
Market summary Page 3
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to modernise the xx-year-old tyre safety standard and mandate tyre pressure
monitors. The Act demands reforms on a range of tyre-related areas, including
tyre pressure monitoring, tyre labelling, tyre testing standards, early warning
reporting systems, safety recalls in foreign countries and sale or lease of
recalled tyres. For example, tyre labelling requires manufacturers to mark up
certain details on both sides (not one as previously required) of the tyre, such
as tyre inflation pressure, maximum load rating and tyre identification number.
But US tyre manufacturers are reported to unhappy with the TREAD Act,
claiming that the law shifts responsibility for looking after tyres from the
consumer to the manufacturer, unlike in the UK for example, where random
tyre checks on cars put the responsibility clearly with car owners. The industry
is also critical of the recent NHTSA decision on tyre pressure monitoring
systems. Both systems allowed under the current law allow the tyres to fall to
as much as xx-xx% below recommended pressure before triggering an alarm,
encouraging the motoring public to habitually drive on under-inflated tyres
without checking them, argues the industry. Tyre makes are also unhappy with
the EWRS (Early Warning Report System) that will collect information from
tyre and car manufacturers and their customers to create a major database of
field reports, customer complaints, and damage claims relating to tyres. The
NHTSA is also proposing to make this information widely available in the
future, exposing the industry to further embarrassing and potentially costly
scrutiny. Proposed changes to the way tyre information and labelling is carried
out will also cost manufacturers extra money, and, claims the industry, will
slow down the manufacturing process. The result of all this is that customers
will see higher tyre prices and fewer warranty adjustments in the future, and
will blame an industry which already has a very good safety record.
The US government’s campaign for safer tyres is also believed to have
triggered interest in so-called run-flat tyres. A recent survey by JD Power
showed that xx out of xx consumers put run-flat near the top of their wish list for
their next car. In the event of a flat tyre, the vehicle can travel at speeds of up
to xx mph for up to xxx miles (depending on the vehicle), giving the driver
plenty of leeway to reach a repair centre. The advantages are obvious to the
driver and there are significant advantages for the manufacturer, as in theory it
obviates the need for a spare wheel, thus saving both space and weight.
However, the cost is usually high, as they normally require a special wheel
design and, perhaps most important of all, the frequency of punctures is
declining.
Market summary Page 4
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In Europe, Michelin has supplied its PAX run-flat tyre system to the Renault
Scenic and two concept cars, the Renault Ellypse and Citroen C-Airdream. In
November 20xx, Michelin began fitting the system, as an option, to the new
Audi A8. Michelin also supplies its PAX system for the new Rolls Royce
Phantom. BMW and Mini also offer run-flat tyres on some models either as
standard or optional fitment. In the US, Goodyear pioneered run-flat tyres,
developing them the Chevrolet Corvette, Plymouth Prowler since the 19xxs.
Michelin believe that there is huge potential for the development of run-flat
technology, predicting the market ‘could reach xx million systems by 20xx’.
Bridgestone produced around xxx,000 run-flat systems in 20xx, up from just
xx,000 in 20xx. Bridgestone forecast it will produce some xx million units by
20xx. Sumitomo Rubber Industries also anticipates a meteoric market,
producing some xxx,000 systems in 20xx, up from xx,000 in 20xx.
Chapter 1 Introduction Page 5
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Chapter 1 Introduction
Round, black and boring
Most people rarely give tyres a second thought, but the tyre is actually a highly
complex product packed with advanced material engineering. And the industry
itself is far from boring. It is an economically important one. The three largest
companies - Bridgestone (based in Japan), Goodyear (based in the US) and
Michelin (based in France) - collectively generate annual sales revenues of
around $xx billion, employing xxx,000 people worldwide. And its structure is
ever changing, too. The last xx years have seen a dramatic concentration in
the number of major players in the market - five of the ten largest companies in
19xx have now been taken over by competitors. This concentration is
continuing through in a less dramatic manner, with smaller companies forming
alliances or being bought out by larger competitors. As a result, the Big Three
tyre makers now dominate the world market with a share of about xx%. These
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.
Above all, it is a politically sensitive industry because of its size, its
environmental impact and its multinational ownership. France has passed a
new law to promote used tyre recycling that will force all tyre producers and
importers to pay for the costs of collecting, transporting and recycling car and
light-truck tyres from the beginning of 20xx. A year later, the same law will
apply to truck tyres as well. Seven major tyre makers have already formed an
association, Aliapur, to co-ordinate the collective recycling efforts. They
estimate that the per-tyre cost will be from €xxx to €xxx, depending on size.
France wants to get rid of an estimated backlog of xxx,000 tonnes of
discarded tyres. Some xxx,000 tyres are discarded annually but only half are
recycled and the rest go into landfills or are just stored or dumped. French
garages have welcomed the move, as they will not have to pay for recycling as
their counterparts in Sweden do. The EU does not yet have a tyre recycling
directive, but tyre manufacturers are getting ready for the day when it does.
Chapter 1 Introduction Page 6
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It is also a mature industry. As a result, we cannot expect annual growth to
exceed around x%, though the sheer size of the Big Three allows them to find
economies of scale that the smaller players cannot reach. As a result,
companies like Pirelli and Continental have chosen to diversify; Pirelli in cables
and telecoms, Continental in braking and chassis systems. However, a mature
industry can often be remarkably volatile when the companies within it jostle
for position. It is difficult to grow market share in a mature market.
Consequently, increases in productivity and new capital investment both build
up the available capacity. As a result, pricing becomes more competitive and
the companies face the prospect of static or even declining revenues. The
individual firm’s response is often to buy growth by acquiring a competitor, and
once one company does this, the others tend to follow, as they cannot afford to
be left behind.
Report coverage
In this second edition reviewing the key market drivers for tyres, Chapter two
sets out market trends, prospects for the major tyre makers as well as
determines some market shares for OE and replacement tyres in Europe,
North America, some parts of Asia and globally. It will also provide you with the
market size and forecasts through 2006. A round-up of merger, acquisition and
joint venture activity and capital investments is also included.
Chapter three reviews recent technical advances in tyres, including run-flat
and eco-friendly products.
Chapter four provides brief profiles of the major tyre makers, namely,
Bridgestone, Continental, Cooper, Goodyear, Hankook Tires, Kumho,
Michelin, Pirelli, Sumitomo, Toyo and Yokohama.
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