Recovery for the main line of the year, trillion market boom

1. Tire is a trillion-level market, and China's tire enterprises have high growth elasticity

1.1. Tire is a trillion-level market, and the development space of tire enterprises is broad

According to different downstream applications, tires can be divided into half steel tires and all steel tires; According to the classification of the market, it can be divided into matching market and replacement market. Tyres can be classified by structure, market and use. According to the different structure, tires can be divided into bias tires and radial tires, of which radial tires include half steel tires and full steel tires. Radial tires have better performance than bias tires in terms of structure, performance, wear resistance and puncture resistance, driving distance and economic benefits, so they are the mainstream road vehicle tire structure, and the meridian rate of a country's tires is also considered to be an important indicator to measure the level of tire manufacturing. Generally speaking, half steel tires are mostly used in passenger cars, SUVs, commercial vehicles and other passenger vehicles, while all steel tires are mostly used in heavy trucks, long-distance passenger vehicles, construction machinery vehicles and so on. Off-highway tires, referred to as OTR, mainly include agricultural tires, engineering tires and other tires such as aviation tires, mainly used in large farms, open-air and underground mining mines, port terminals, construction or other special fields.

The global tire market is one trillion level, and the development space of tire enterprises is broad. 2012-2016 global tire sales stable in the range of 1.55 billion to 1.65 billion, 2017-2022 tire sales a step up, fluctuating between 1.68 billion to 1.76 billion (except 2020), 2022 global tire market sales of 1.751 billion, Sales exceeded 186.8 billion US dollars, and the tire market space was huge, providing broad development space for high-quality tire companies.

In terms of the stock market, tires are consumables, and their consumption is positively correlated with the number of vehicles, and the huge automobile market provides demand support for them. Tires are consumables, the owner needs to replace according to its wear degree and use time, according to the data of the China Rubber Industry Association, the matching tires of each car are 5, the replacement cycle is 3.3 years, each car needs to replace 1.5 tires per year; The number of matching tires for trucks and buses is larger, and the average replacement cycle is shorter. The tires facing the stock automobile market are replacement tires, and the replacement market usually shows stronger elasticity of demand growth and resilience against demand decline due to its consumption rigidity. From 2012 to 2021, the global car ownership has increased from 1.115 billion to 1.531 billion, and the huge car market provides demand support for replacement tires.

In terms of incremental demand, new car sales provide incremental demand, electric vehicles will increase tire consumption, and the tire market is expected to continue to expand. The tires equipped with new cars when they leave the factory are matching tires, and new car sales will provide increased demand for tires outside the stock market. In addition, according to the type of car, the development of electric vehicles will speed up or increase tire consumption. Generally speaking, tire wear is mainly caused by the friction between the tire and the ground, and the increase in the weight of the body directly affects the loss of the tire. As fuel vehicles weigh between 1.5 and 1.8 tonnes, as opposed to more than 2.0 tonnes for electric vehicles, tire wear rates increase by 20% for every 500kg increase, according to independent UK test group Emission Analytics. At the same time, as the weight of the car increases, the frequency of tire bulges will also increase. In addition, in the process of travel, electric vehicles have significant cost saving advantages over fuel vehicles. Considering the relatively high acquisition cost of electric vehicles compared with fuel vehicles, residents may achieve greater benefits by improving the utilization rate of electric vehicles, and thus have a stronger willingness to use cars. Assuming that the fuel vehicle and pure tram fuel/power consumption is 8.5L/ 100km, 11Kwh/ 100km, assuming that the oil price/electricity price is 7.8 yuan/liter and 1.4 yuan/KWH, the oil cost of 10,000 kilometers is 6630 yuan, and the electricity cost of 10,000 kilometers is 1650 yuan, about three times the difference. The consumption of electric vehicles is lower than that of fuel vehicles, which may stimulate residents' willingness to drive, thereby increasing tire consumption.

1.2. Chinese enterprises currently occupy a relatively low share in the top market, which is expected to release high growth elasticity

The head effect and brand effect of the global tire market are significant, and the CR3 of the global tire manufacturers in 2022 is 38.94%, and the head enterprises occupy most of the market share, and the brand effect can increase customer stickiness and maintain a relatively stable and high market share for a long time. According to "Tire Business" data, the market share of medium volume tire manufacturers in 2022 is 22.89%, while 38.17% of the market share is divided by other tire companies with an average market share of less than 2%, and the global tire market shows a significant head effect. Michelin, Bridgestone, Goodyear and other leading enterprises were founded in the late 19th century and the early 20th century, with the golden period of the global automobile industry and grew into a global tire giant, after a hundred years of accumulation, its technical strength, production capacity, brand awareness, marketing layout, research and development investment and other aspects of the establishment of competitive advantages. In contrast, most of China's major tire listed companies were established between 1990 and 2010, starting relatively late, and world-class tire giants have not yet been born. As the number one auto tire production and exporter for many years in a row, in 2022, only four tire companies in China (Zhongce Rubber, Zhengxin tires, Linglong tires and racing tires) entered the global top 20 in sales, and their combined market share was only 8.13%, which is difficult to match.