Tire industry: rise in innovation and breakthrough

According to the statistics of China Tire Business network, the share of foreign brands in China's tire market far exceeds that of Chinese brands. According to marklines data caliber, in the passenger car tire market, the market share of foreign brands is as high as 70%.

Brand rating authority Chnbrand released the brand ranking and analysis report of the 2021 China Customer Tire Satisfaction Index. Among them, Michelin has retained the first place for five consecutive years; The German Horse was second for the second year in a row; Bridgestone moved up to No. 3 and Goodyear, which was No. 3 last year, slipped to No. 4. Among the top 10 domestic tires, there are only two brands, Double Star and Triangle.

The main reason why domestic consumers prefer to choose foreign tire brands is the trust of foreign brands, the difference in comfort (in terms of silence and vibration filtration), the difference in sports performance and other factors.

"Compared with foreign giants, domestic enterprises have high production efficiency and obvious advantages in terms of cost performance." From the quality point of view, in recent years, domestic tire head enterprises through technology research and development, equipment update, experience accumulation, basically have the level of foreign giants." A tire industry analyst said that domestic tires lack brand awareness, lack of sales channels and lack of patented technology. In the passenger car market, it is necessary to further impress consumers through brand + cost-effective advantages, especially in the brand, domestic enterprises also need a long-term cultivation process.

The price of big-name tires is quite transparent, and the profit margin is constantly compressed. The procurement freedom of domestic tires is relatively high, and the gross profit is relatively high. In order to increase market share, domestic tire companies invest more resources than foreign big names in channel construction, and support dealers and auto repair shops will be more, domestic brands are further expanding, which will become the general trend of the tire market.

Differentiation of competitive pattern

In China, the number of tire factories tested by the statistical department has dropped from more than 500 in the past to about 230 in 2020. According to the data of the China Tire and Rubber Industry Association, the 42 member units' tire production in 2020 accounted for about 77% of China's tire production, the top ten accounted for about 53% of China's tire production, and the top ten profits accounted for about 97.29% of the 42 units' profits of the association. With the increasing concentration of the tire industry, the elimination of low-end production capacity is also getting faster and faster.

The reason why there is a significant competitive differentiation pattern in China's tire industry is that a number of leading enterprises have prospectively laid out overseas production capacity, enjoyed the advantage of trade barriers in overseas markets compared with the domestic market, so as to continue high growth, and invested in research and development to enhance product quality and accelerate differentiation at the same time of high growth.

At present, China's tire industry has relatively excess production capacity and serious homogenization of low-end products. Eliminate the backward production capacity of the tire industry, from the national to the local government level are actively acting. Since the Ministry of Industry and Information Technology issued the tire industry policy in 2010, a number of policy documents have made provisions for the adjustment of the industrial structure of the tire industry, the improvement of industry concentration, and the elimination of backward production capacity. In April this year, Shandong Province introduced the policy of eliminating backward production capacity, and the policy continued to increase, and recently released the "Three resolute" action plan for the implementation of the Province (2021-2022), which highlighted the tire industry that by 2022, All steel radial tires with an annual capacity of less than 1.2 million (except for engineering, aviation and wide section tubels), and half steel radial tires with an annual capacity of less than 5 million (except for tires with air protection, high-end products of racing tires, and ultra-low section tires) are integrated and withdrawn, and the production capacity of the withdrawal can be reduced and replaced, and the overdue direct shutdown and exit. Eliminate the rubber mixing machine that cannot achieve closed automatic feeding, and eliminate the vulcanization equipment in the radial tire industry that cannot achieve the nitrogen flushing process. According to the policy announcement, the "resolutely eliminate a batch" task list totaled 18 enterprises, with a total of 31.17 million tire production capacity.

With the elimination of backward production capacity, disorderly competition is expected to improve, and the market share of the head enterprises in the tire industry is expected to achieve a leapfrog increase.