CV tire majors gain as Chinese wane

Birmingham, UK – Chinese imports are losing ground in truck and bus tire markets within the UK and mainland Europe, officials of leading tire makers said at the Commercial Vehicle Show 2017, held 25-27 April in Birmingham.

As explained by exhibitors including Giti, Hankook and Michelin, the reversal follows a series of price increases and availability issues around Chinese tires – products that have gained significant market share over recent years on the basis of low cost.

Setting the scene, Tony McHugh, sales and marketing director, truck & bus, Giti Tire, based in Northwich, UK, reported that there had been price realignments by many tire manufacturers over the last six months.

Citing feedback from both customers and dealers, the Giti executive, said: “Chinese [tires] in particular have gone up by around 20%. They are pushing their prices up because they have to and, obviously, operators are now looking again.”

Giti is among those benefiting from these developments, McHugh saying: “We have certainly seen an upturn in business in quarter one. The price difference now with Giti as a brand has closed, as it has with other brands as well.”

Mark Grace, marketing manager, Hankook Tyres UK Ltd, reported availability issues and prices increases, particularly affecting Chinese tires at the bottom end of the market.

Not all of the price rises have filtered through yet, noted Grace, suggesting that availability had been further impacted by a recent US decision not to impose tariffs on Chinese truck & bus tires.

“They have certainly advised of large price increases and we will see them coming through,” he said. “Reading between the lines, these tires have become harder to come by because of pricing, and people are now having to look for alternative products.”

According to the Hankook manager, the commercial vehicle tire market is growing at about 6% in the UK and 4% in Europe, driven principally by price and availability.

“The UK market is definitely seeing signs of improvement year-on-year,” said Grace adding that Hankook has been no 1 in the UK commercial vehicle tire market in terms of sales since 2014.

For Chris Smith, marketing director, truck & bus, Michelin Tyre PLC, based in Stoke-on-Trent, UK, the current shift away from low-cost tires is part of a longer term trend going back to the economic crisis of 2008.

Back then, he said, “some people made short-term decisions for cash-flow reasons, but have since realised that cheaper tires maybe do not last very long or are not so good on fuel economy.

“Many of these buyers have started to migrate back towards the premium products because they realise that in the longer term that is a more cost-effective option.”

However, Smith noted that Chinese tires still take a significant share of CV tire sales in the UK following very strong growth over the past five years.

“In 2015, [Chinese market share] died back a bit and then we saw quite a lot of growth in 2016. So [they] represent about 25% of our market now,” he estimated.

The Michelin executive went on to say that the premium tire sector had been “relatively stable over the past couple of years [and] delivered growth of about 2 points or so.”

Asked about growth in the CV tire market this year, Smith said It was still early to say, particularly as currency was having such a big impact.

“Trade-flow between the UK and mainland Europe is very heavily dependent on where the Euro sits,” he explained. This can mean opportunities for tires to come into the UK and, if the change is in the opposite direction, for tires to go out the other way.”

ERJ will report further on news and views from CV show exhibitors including Apollo, Giti, Goodyear, Hankook and Michelin in the ERJ Daily Newsletter and the May/June issue of European Rubber Journal magazine.