Tire industry: rise in innovation and breakthrough

China as a tire manufacturing country, since 2006, the output has been ranked first in the world, the total output of tires accounted for 35% of the global total production capacity, exports accounted for about 40% of the global total output.

Since the beginning of this year, China's tire market started well, after experiencing the double test of industry reshuffle and epidemic, China's tire industry showed "polarization", the advantages of leading enterprises are more prominent, in the international and high-end market competition, but also more confident.

Tire industry pattern changes

Data show that last year, the global total tire sales of 1.577 billion, down 11.7%. Among them, the supporting market and replacement market achieved 399 million and 1.178 billion, respectively, down 14.7% and 10.6% year-on-year.

The COVID-19 outbreak last year had a profound impact on the global tire industry. On the one hand, total global tire sales have declined; On the other hand, the global tire industry pattern has been differentiated, the performance of global tire giants has declined sharply, Bridgestone, Goodyear performance loss; On the other hand, China's tire head enterprises have bucked the trend and reached a new high. Linglong Tire's net profit exceeded 2.2 billion yuan for the first time, an increase of 33.13%; Senqilin achieved a net profit of 980 million yuan, an increase of 32.38%; Guizhou tire net profit growth is more than 7 times.

In fact, this kind of divergence has already begun to emerge, and the epidemic has only played a "catalyst" role. The core reasons for this situation can be attributed to two aspects: on the one hand, compared with overseas brands, domestic tire brands have obvious advantages in labor costs and transportation costs, products have a more significant cost performance, with domestic tire leading enterprises to go out to build factories, the share of overseas replacement market enterprises is squeezed, and the global market share continues to rise. On the other hand, the trend of large-size tire consumption has intensified, especially in the passenger car market, with the transformation of product structure and rising prices, promoting the continuous improvement of gross profit margin.

At present, domestic and foreign tire demand continues to pick up, domestic brands accelerate to erode the market share of overseas giants, China's tire industry is ushering in structural opportunities, and the share of domestic enterprises is expected to continue to expand.

High export growth drives domestic demand

From the export data, this year, China's new energy vehicle export data increased month after month. Tyre exit figures are correspondingly brighter. According to the National Bureau of Statistics, from January to May this year, the cumulative output of rubber tires in the country was 380 million, an increase of 35.1% over the same period last year.

Zhang Yansheng, a researcher at Xinda Securities, believes that the increase in the global market share of Chinese tire companies is mainly due to two factors: on the one hand, the rapid development of China's automobile market; Another important factor is mainly benefiting from the share of commercial vehicle tire products in the global tire market. The main area of Chinese tires is in the truck and bus tire (TBR) market, accounting for more than 70% of the global market share.

It is reported that according to the use of tires can be divided into two categories, one is passenger car tires, the second is commercial vehicle tires, commercial vehicle tires including truck and bus tires (TBR), construction machinery tires (OTR) and aviation tires.

With the arrival of "gold nine silver ten", the start of tire enterprises is expected to increase. In addition, with the gradual control of the global epidemic, the increase in travel demand in Europe and the United States, the demand for tires is expected to gradually increase. Exports still have room to improve.

High export growth drives domestic demand. From the perspective of domestic sales demand, with China's per capita GDP exceeding $10,000, consumers' demand for tires is gradually refined, and tire performance requirements are gradually improved. China's leading tire enterprises are equipped with more sufficient funds and strong research and development strength. In recent years, product performance has been greatly improved, so it can quickly reflect the terminal demand for tire consumption upgrading. And compared with international brands to highlight the cost advantage.

In the process of rapid development, although the overall scale and brand influence of China's tire industry are still relatively weak, independent brand tires have gradually achieved production capacity from small to large, and are forging ahead toward the goal of large to strong, and brand recognition and influence are rising.

Domestic tires are not popular

For the car, the tire is one of its important components, the car's handling, power, safety, driving stability and other aspects of the performance will be affected by the tire.

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.

Domestic tires are catching up

At present, the global tire enterprises are mainly distributed in 46 countries and regions in the world, and the world tire industry has formed a highly intensive industrial group dominated by large multinational enterprises. Collectivization, diversification and differentiation have become a major feature of the development of the world tire industry. The three largest tire producers in China, the United States and Japan account for 30%, 12% and 7% of the world, respectively, and South Korea, Germany and France account for 2%-5%.

China's tire manufacturing industry has only a short history of several decades, and compared with many foreign big brands, the start time is late and the accumulation time is short. Therefore, for a long time in the past, domestic tires have been the followers of foreign tires. Forced by the technical advantages of foreign products and marketing, domestic tires can only catch up and strive not to be left behind.

Today, some high-quality tire enterprises continue to accumulate technology and capital in the export dividend period, and the current production process and product performance have reached the matching standards of vehicle enterprises. As the car market enters a mature period, the profit pressure of vehicle enterprises is highlighted, and high-quality domestic tires continue to expand the supporting market share by means of cost-effective. In the medium and long term, penetration of the supporting market is conducive to enterprises to deeply cultivate their replacement market, and then enjoy the high brand premium and stable demand of the replacement market, which is expected to open up long-term growth space.

According to the "Rubber industry" issued by the China Rubber Industry Association "14th Five-Year" development planning guidelines "pointed out that by the end of the" 14th Five-Year ", that is, the annual output planning goal of China's tires in 2025 is that the tire meridian rate reaches 96%, the all-steel tubeleless rate reaches 70%, and the passenger car radial tire flattening rate reaches 30% (55-45 series). The meridionization rate of agricultural tires increased from 2.5% at the end of the "13th Five-Year Plan" to about 15%, the meridionization rate of giant engineering tires reached 100%, the localization rate of aviation tires reached 15%, and the industrialization of aviation radial tires was realized. The marketization rate of green tires rose to more than 70%, reaching the world-class level.

With the increasing requirements for tire performance in automobile modernization, tires are developing in the direction of high technical content and refined products. Due to the increasing popularity of economic and environmentally friendly vehicles, energy-saving and low-noise tires have become the mainstream of the development of automobile tires, anti-skid, low rolling resistance, high-performance and multi-functional tires in the proportion of tires is increasing, many tire structural design and formula need to be improved, adjusted to adapt to market changes and low-carbon environmental requirements. This puts forward higher technical requirements for tire manufacturing.

China's tire investment enthusiasm continues to remain high, leading the global tire investment market last year. According to incomplete statistics, the investment amount of global tire enterprises in 2020 is more than 23 billion yuan, of which China's tire industry has invested more than 15 billion yuan.

In recent years, the tire industry has gradually migrated to high-quality, high-performance, green and environmentally friendly tires. Tire enterprises must provide raw material guarantee for the development of green tires by accelerating the development and application of new materials; Strengthen the industrialization demonstration and promotion of energy-saving processes, accelerate the use of advanced production methods of intelligent manufacturing, and improve product quality and consistency control capabilities; Develop high performance semi-steel radial tire products such as green radial tires, air shortage protection tires, self-healing tires, and graphene tires to lead the tire consumption trend. Leading technology enterprises can further develop special tires such as aviation tires and racing tires, and use their technological precipitation to promote the overall technological progress and shape the image of internationally renowned brands.

The research Institute released the report on the in-depth development of China's tire Industry in 2021-2025 and the "Fourteenth Five-Year Plan" Enterprise Investment Strategic Planning, which shows that the global tire market demand has reached 1.8 billion, and the market size has exceeded the trillion level. Among them, the domestic market demand is about 376 million, and the market space is about 250 billion. Because tires are consumable parts, their replacement demand has spawned a large replacement market. Benefiting from the growth of car ownership, the future tire market demand is expected to continue to release.

At the same time, because the current automobile industry is accelerating into the era of comprehensive electrification, China as the main battlefield, there is the potential for overtaking curves (industrial supporting and market potential) and strategic needs, which means that domestic tire leaders will face a new round of growth opportunities in the supporting market.

Tire industry analysts believe that the tire industry is a good track, domestic tire leading enterprises have high production efficiency and significant cost performance, which will help enterprises to achieve corner overtaking in the competition, and continue to improve the global market share, the future is expected to appear 1-2 global tire leading enterprises.

Innovative research and development, intelligent industrial upgrading is the only way for the future development of China's tire enterprises. In the increasingly fierce competition in China's tire industry, only by mastering the key core technologies can we get rid of homogenized competition, and occupy the advantage in the change and master the initiative for development. Aiming at market demand, taking the initiative to innovate, manufacturing domestic tires with higher standards and stricter requirements, and digging deeply into the value of corporate brand culture, we have every reason to believe that Chinese tires will win a larger market and help people move forward toward a better life.