The tire industry at the end of the year again raised the price tide: leading enterprises led the rise, small and medium-sized enterprises "stomach and back"

Liang Junfeng is a tire agent in Qingdao. His company sells more than a dozen domestic and foreign tire brands. "Since the second half of last year, we have frequently received price increase letters from tire companies, and we have received more than a dozen in the last month." Liang Junfeng told the 21st Century Business Herald reporter.

In fact, since last year, price increases have become one of the key words of the tire industry. Under the pressure of rising raw material prices, the tire industry set off another round of price increases. At the end of the year, a new wave of price increases in the industry followed.

The 21st Century Business Herald reporter found that recently, Youdao, Gitong, new, Kumho, Goodyear and other tire industry leaders have issued price increase notices, affected by the continued rise in raw material prices, these companies have decided to adjust product prices again since January 2022. In the context of continuous price increases, the upstream and downstream tire industry chain is under greater pressure.

Price increase letters issued intensively

Yang Lin is a long-distance truck driver in Changsha, Hunan province. He often travels between Changsha and Guangzhou and Shenzhen. Due to the generally long distance, tires need to be replaced almost every few months. "Since the second half of 2021, it is obvious that the price of tires is rising, and the same brand of tires, about 800 yuan in the first half, now needs at least 1,000 yuan."

Indeed, since the second half of last year, the tire industry has carried out at least three rounds of price increases, and just ushered in the New Year, the industry price surge again.

Recently, Youdao, Gitong, New, Kumho, Goodyear and other major tire leaders have joined the price increase army, decided to adjust the product price again from January 2022, the increase is generally between 3% and 6%. Driven by leading enterprises, the price rise of the tire industry inevitably opened again, and small and medium-sized enterprises have also followed up the price increase.

"Since the second half of 2021, price increase letters of various brands in the market have been frequently released, and the price of our company's tire products has increased by 8% to 9%, which is indeed a rare situation." Double money Group (Anhui) Hui Hui Tire Co., LTD. Market channel manager Wang Yunwei told the 21st Century Business Herald reporter.

Industry insiders said that since the second half of last year, the price of tires has not only continued to rise, but also the number of price increases has not been for many years. The reason for the price increase, on the one hand, rubber, steel, carbon black, chemical accessories and other tire raw materials prices continue to be high, on the other hand, industrial electricity, natural gas and other energy prices rose, pushing up the manufacturing cost of tires.

Raw material prices have risen wildly, making the procurement costs of tire companies soar directly. Some tire companies said that in the third quarter of 2021, the comprehensive procurement cost of five main raw materials, such as natural rubber, synthetic rubber, carbon black, steel cord and cord fabric, increased by more than 20% over the same period last year.

Data show that in 2021, the monthly cost of all steel tire raw materials is one to 40% higher than the same period, and the average price of tire raw materials in 2021 rose 26% year-on-year, while the average price of all steel tires rose less than 10% year-on-year.

"In 2021, raw materials at their peak can rise by 30%, and now they have fallen back some, but generally speaking, price increases have been rare in the past 20 years." Zhao Guang, chairman of Chaoyang Huaxing Wanda Tire Co., LTD., said helplessly.

In addition, since last year, coupled with the continuous rise in shipping costs, transportation capacity continues to be tight, and the price increase of the tire industry has also formed a push. Some tire companies said that the reason why the performance is under pressure is mainly due to the continuous rise in raw material prices and product sales prices can not rise simultaneously, international transportation capacity constraints tire exports, export sea freight sharply increased and other factors.

Talking about the price increase of the company's tire products, Wang Yunwei told the 21st Century Business Herald reporter, "On the one hand, the cost of raw materials is rising, on the other hand, the oil price is at a high level, resulting in high transportation, warehousing and other costs, so it has to rise."

Grab the "air outlet" of new energy vehicles

In 2021, for tire companies, especially small and medium-sized enterprises, on the one hand, they are facing the sound of "rising" raw materials, and on the other hand, market demand is shrinking. It can be said that tire companies are facing the dilemma of "back and forth".

The person in charge of a small tire company told the 21st Century Business Herald that the product prices of tire companies have risen, but the time of transmission to the terminal market will be delayed. "From last year's market situation, due to the first half of the dealer's stock did not digest, the price surge arrived, dealers purchase enthusiasm became low, the market can not synchronize price increases."

The person in charge said that under normal circumstances, tire companies raise prices by 5%, the terminal only dares to rise by 2%, and if the tire factory cuts prices by 5%, the terminal often goes down by about 7%. "The current situation is that the price of some tire factories has risen by 5%, but because of the shrinking demand in the terminal market, the transmission chain of price increases is not very smooth."

Linglong Tire previously said that in 2021, affected by the rise in raw material prices, the company has raised prices several times, but the chip shortage and the price of steel and other materials used in automobiles have risen, and the company's supporting end prices can not be fully transmitted.

It can be said that in the whole price increase cycle, tire companies are under greater pressure than the terminal market, and slow price increases are difficult to offset the impact of costs. The poor performance of the terminal market is so that they do not dare to sharply increase prices, and ultimately can only rely on compressed profit margins to digest the operating pressure.

Zhao Guang told the 21st Century Business Herald reporter, "Small and medium-sized tire companies are now being squeezed by both upstream and downstream, and are in a very difficult situation." Upstream raw material prices have been rising, downstream demand is relatively poor, our current survival has been relatively difficult, the entire 2021 is in a state of loss."

Talking about the market situation this year, Wang Yunwei said frankly, "As far as the current market situation is concerned, raw materials and oil prices are fluctuating at high levels, so the raw material procurement cost of enterprises is still relatively high, and the pressure on enterprises is still great this year."

In the face of operating pressure, many tire companies are also actively seeking the road of transformation and upgrading, through technology research and development and product innovation to achieve breakthrough. In the view of the industry, in recent years, under the promotion of favorable policies, the explosive growth of domestic new energy vehicles, and the demand for new energy special tires has become high, which is a major positive for many tire companies.

The 21st Century Business Herald reporter found that domestic tire companies have increased research and development investment in response to the demand for new energy vehicles or special vehicles, and produced new categories of tires with higher profit margins, which has also become a new "tuyere" in the tire industry.

Qingdao Double Star previously said that at present, the company has established a cooperative relationship with major domestic new energy vehicle manufacturers, and is gradually realizing the tire matching of major new energy vehicle brands. Guizhou Tire also said that new energy vehicles put forward higher requirements for the wear resistance and energy saving of tires. The new products newly developed by the company are in line with this development trend of new energy vehicles and can meet the use needs of new energy vehicles.

In addition, under the dual-carbon strategic goal, more and more stringent environmental policies are also testing tire companies, companies must tap the potential to reduce energy consumption and achieve low-carbon development. "We believe that in addition to challenges and tests, there are also some new opportunities in the industry, and we hope we can seize this round of opportunities." Zhao Guang said.