Tire markets performance 'negative' overall in Q1 - report

Clermont-Ferrand, France – New figures released by French tire maker Michelin suggest that in the first quarter of 2015 that tire markets performed negatively, with some bright spots.

A tire market review by Michelin shows that passenger-car and light-truck markets performed better overall than truck tire markets.

The European passenger car OE markets posted a growth of 2 percent overall – despite mixed behaviours in Eastern and Western Europe.

According to Michelin, the Western Europe market posted a 4 percent growth, led by higher new vehicle registrations. In Eastern Europe in a difficult economic and monetary environment resulted in a 19 percent drop.

Similar to Europe, the North American market expanded by 2 percent despite, Michelin said, severe winter weather conditions that held back sales in February.

China posted a “favourable” growth of 8 percent in the first quarter, according to the market review. In the Southeast Asia market, Japan and South Korea contracted by 9 percent in total.

The negative trend in Japan was due to buying ahead of the 1 April 2014 increase in VAT, which created a high basis of comparison in first-quarter 2014.

In South America, the market fell by 13 percent in the first quarter, reflecting the region's unstable economic environment and the difficulties experienced by the local auto industry, said Michelin.

In the replacement segment, the European market narrowed by one percent overall compared with the very strong prior-year period. Demand rose by 2% in Western Europe, with declines in the United Kingdom and Germany and a strong recovery in Turkey. Demand fell by 15 percent in Eastern Europe due to the political and economic situation in Russia and Ukraine.

The North American replacement segment demand slowed by 6 percent, reflecting “the knock-on effect” of mass entry-level tire imports by US dealers in 2014, according to the report.  Demand in Canada and Mexico was more favourable.

In Asia (excluding India), demand contracted by 2 percent overall while China’s total sales were up 5 percent, reflecting the population's demand for mobility.

Truck tire demand also showed drastic decline both in the OE and replacement markets with Europe remaining stable in the OE sector and South America showing a 37 percent drop. This was due to truck-maker production stoppages and a sharp decline in truck registration.

North America and the Middle East posted positive growth in both segments while Asia contracted by 17 percent. China’s OE market was down by 24 percent, reflecting a lower manufacturing output.

Michelin also said in its report that the market for mining tires contracted compared with first-quarter 2014, as mining companies continued to reduce their tire inventories.

Global OE demand for agricultural tires reflected continued “severe weakness” in mature markets. The replacement market contracted in both Europe and North America, due to lower farming revenues.

By contrast, the motorcycle tire market and Aviation tire demand expanded in the period under study.