Tiremakers and tire dealers alike are searching for signs of what’s to come for the rest of 2020. Continental AG sees signs of improvement globally, and specifically in North America.
The demand for replacement tires is improving. It’s not out of negative territory, but in North America Continental expects replacement passenger and light truck tire demand to be down in the 5% to 10% range in the third quarter. Same thing for commercial vehicle tires. (In the second quarter PLT was down 30%, and commercial was off by about 14%.)
The picture for original equipment tires looks better, too. North America’s vehicle production was hit the hardest in the second quarter - but Europe’s passenger car and light truck vehicle production wasn’t much better. In North America, PLT vehicle production was down 69%, and commercial vehicle production was down 66%. The commercial truck segment is still struggling, and production of those vehicles is still estimated to be down 45% to 55% in the third quarter. Car and light truck vehicle production is rebounding, and should be off in the 5% to 15% range.
As for the future, Continental says vehicle production is not expected to return to 2017 levels “until after 2025 at the earliest.”
That means the company’s cost savings efforts will continue. Continental expects to cut several hundred million euros, and expects the impact to last until 2022.
Tire sales
Continental’s tire sales were down 33.4% in the second quarter (1.9 billion euros compared to almost 2.9 billion euros in 2019.) For the first half of 2020 tire sales dropped 22.9% (about 4.4 billion euros compared to 5.7 billion euros in the first half of 2019.)
The company has 1,547 fewer employees in its global tire operations at the end of the first half of 2020 than it did in 2019 - 56,266 workers compared to 57,813.
Manufacturing
Continental, which produces much more than just tires, says more than 40% of its 249 production facilities across the globe ceased production for anywhere from a few days to several weeks. Production has resumed, but the company says the cutback “continues to affect in particular locations in Europe as well as in North and South America.”
