ERJ Survey: Readers bullish about prospects for Chinese tire sector

London - Despite the pressures facing the Chinese tire manufacturing sector, 41 percent of respondents to an ERJ on-line reader survey reported that demand for tire equipment, technology or services had increased over the past 12 months.

This better-than-expected assessment compared to 36 percent who said business had declined, while 23 percent said it had remain in or around prior-year levels.

Moreover, 60 percent of readers relying to the survey said they expected the Chinese tire market to grow over the next 24 months, while 28 percent expected the market to stay the same. Only 12 percent of the replies expected business in China to decline.

The general optimism stemmed from confidence in the fundamentals of the Chinese tire market. As one respondent commented the economy is still characterised by increasing personal incomes, wealth and higher standards of living and expectations – trends that are driving growing vehicle ownership and hence OE and replacement tire sales.

Another reader suggested that: “The Chinese economy relies on cheap workforce and raw material and always pursues an aggressive international expansion strategy. The country's international tire market is not an exception and makes use of those elements for its growth.

“In addition to that, the local Chinese market is massive with transport necessary for the country's development targets, as well as its increasing use of passenger cars.”

Asked to identify the main barriers to growth in the Chinese tire market, the most frequent reply related to tariffs on tire exports to the US and elsewhere, followed by the ongoing slowdown in domestic market and economy.

An emerging concern was the increasing likelihood of mergers & acquisitions leading to consolidation in the sector, as typified by the comment: “Consolidation among Chinese tire manufacturers is going into deeper-degree within next five years.”

Full report to appear in the China Tire Report, a supplement in the July/August issue of ERJ magazine - out soon