At this time of year as we venture into yet another trading year in the European tire industry, thoughts naturally turn toward anticipated sales performance for 2014. Having taken a comprehensive look at what the analysts are predicting amidst streams of reports that flow like confetti, the simple answer is that in Europe the next 12 months seem to be clouded in equal amounts of uncertainty and optimism.
Over the past year Europe has appeared to struggle with the value rate of the euro currency against other global currencies, and it would be fair to say that the tire and automotive markets have seen some difficult periods in the last couple of years. However, flying in the face of such gloom is the fact that the vehicle sales market has remained buoyant in almost every European country, therefore ensuring that tire manufacturers have enjoyed encouraging original equipment sales -- especially in the second half of 2013.
When it comes to replacement sales, the picture can be viewed altogether differently as not only is Europe virtually saturated with different competitive brands but also both mid-range and premium brands have suffered at the expense of the budget segment. To make matters worse the budget market is being increasingly confronted with more and more Chinese and Far East brands -- some good and some not so good!
It is also interesting to note that all-season tires are becoming increasingly popular with European drivers. These are viewed as a cost-saving option enabling drivers to run the same tires throughout the year as opposed to switching between summer and winter patterns.
As previously mentioned, replacement tire market predictions for 2014 and beyond are conflicting with different reports indicating varying sales figures. For example, TechSci Research states that the European tire market sector will reach in excess of 115 million units by 2017 with the UK expected to enjoy the most growth momentum.
Returning to the all-season tire market for a moment, it is also intriguing that market analysts specialists TechNavio considers that during the five-year period between 2013 and 2018 this new market will grow at a compound annual growth rate (CAGR) of 11.6%. However, let us not forget that the overall performance rate of all-season tires is lower when compared with winter tires, which I believe could prove a sticking point to these long-term growth predictions.
In 2010 worldwide tire sales totalled U.S. $151.8 billion of which U.S. $100 billion was attributed to Europe (according to TechNavio) with imports totalling over 195 million units and exports totalling 64 million units.
To be honest, it has been hard to track down reliable statistics for the coming 12 months. However, at least one major European tire manufacturer has gone on record to state that in 2013 there had been an encouraging 3% recovery rate in sales and an additional rise by 4% is predicted in 2014. Which adds further fuel to my opinion that the next year is certainly going to be an interesting and possibly eventful period in the European tire market.
From what I can see, the global tire markets view Europe as a trading continent in transition at the moment which is probably influenced by the constant media focus on the euro which appears to still be recovering (slowly) from a recent recession. To combat this statement you only have to talk with tire producers, wholesalers and retailers across Europe – which I have done -- and you will find a much more optimistic attitude toward the immediate future.
This positive opinion is very much fuelled by the recent developments that have taken place around the European continent which includes the opening of new OE and replacement tire plants by leading major producers which we are led to believe is by demand.
At the same time I was recently invited to the opening of a totally new tire production facility concept incorporating both truck tire production and tire recycling procedures in Germany which I will be covering in the February edition of MTD.
Reflecting on all the information I have been able to discover, it would be a brave man (not me!) to predict exactly how the sales market will fare in Europe in 2014.
John Stone has been working within the global tire industry for the past 20 years. In 2004 he launched his own company, Sapphire Media Services, as a business media consultant with clients around the globe. Stone also writes for tire and automotive-related publications in Europe, South Africa and Asia.
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