Tire industry research framework and investment perspective

Midstream tire manufacturing

Tire products can be divided into bias tires and radial tires according to different structures, the most important difference between the two is the different form of tire cord fitting. Radial tires can be divided into all steel tires and half steel tires according to the different structure of the tire body, the main difference between the two is that the body and the belt layer of all steel tires are made of steel cord, which is generally used for load and construction machinery vehicles; The body of the semi-steel tire is made of rayon or other fibers, and the belt layer is made of steel cord, which is generally used for cars and some light trucks.

Tire downstream market

The downstream demand for tires mainly depends on the increase and ownership of global cars, corresponding to the downstream supporting market and replacement market of tires. The supporting market is the tire market for the new car production of the main engine factory, and the replacement market refers to the tire market sold by the after-sale end of the car for the daily replacement of the car.

Tire industry development and change

Competition pattern: The competitiveness of China's leading enterprises continues to increase

According to the current world tire ranking, although most of China's tire companies are still in the third and fourth echelons, the strength of the head tire companies is gradually improving, and the income volume of some enterprises ranks among the top in the world. Due to the accelerated expansion of Chinese tire companies, the market share of international giants is gradually being squeezed, and the market share of CR3 in 2021 is 35.7%, a decrease of 2.6 percentage points year-on-year. CR10's market share was 60.6%, down 4.5 percentage points year-on-year.

China has become the world's tire manufacturing center, and the structure is also changing, backward production capacity is gradually phased out, and the head enterprises are steadily expanding, and their competitiveness is gradually enhanced. The global market share of domestic Chinese-invested tire companies CR3 (Zhongce Rubber, Linglong tires, racing tires) has steadily climbed since the 1990s, and the overall share still has greater room for improvement. The market share of middle-tier enterprises has fallen since its peak in 2015, due to the lack of core competitiveness of some enterprises and more restructuring. It can be seen that the polarization of the tire industry is more serious, and the strong are stronger.

Development characteristics: The market space of all steel tires is gradually saturated, and it is greatly affected by macro-economy

For all steel tire products, the domestic technology is leading the world, whether it is supporting tire market or replacement tire market, we have a certain advantage, but because the terminal application of all steel tire market is commercial vehicles and engineering vehicles, closely related to macroeconomic development, market demand growth has slowed down in recent years, and the market space is gradually saturated. There are two main reasons for the gradual saturation of the all-steel tire market: 1) At the demand level, the growth rate of domestic fixed asset investment has slowed down year by year, resulting in a decline in the growth rate of the commercial vehicle transport market, which prevents the expansion of the all-steel tire market; 2) At the technical level, the progress of all-steel tire technology has gradually reduced the loss per unit mile of tires, greatly reducing the replacement frequency of all-steel tires.

Development characteristics: semi-steel tire brand barriers are high, supporting and replacement are promising

In the semi-steel tire market, brand barriers are very high, mainly in two aspects: 1) high-end car companies mainly supporting foreign brands; 2) Car companies in various countries are used to supporting their own brands of tires. Because domestic tires in the international position is not dominant, so high-end car companies supporting the preferred foreign brands, after decades of cooperation, has formed a good relationship between each other, other brands want to enter the market will need to pass a long certification time. In addition, due to cultural differences, car companies in various countries will consider their own tire brands first in the choice of matching tires.

There are two different development paths for semi-steel tires in the matching tire and replacement tire market: one is committed to expanding the matching tire market, through cooperation with the Oems, increasing the supporting research and development of various brands of models, in order to expand brand awareness and drive the sales of replacement tires; The other is committed to expanding the replacement tire market, by expanding sales channels or improving brand positioning, in the replacement tire market to create awareness.

Development trend: The proportion of large-size tires is gradually increasing

With the support of tourism and leisure demand for the development of the automobile market, and the gradual spread of the aesthetic mentality of great beauty, the proportion of SUV and MPV models in automobile sales continues to increase. Since 2016, the proportion of domestic SUV and MPV new car sales has increased and stabilized at about 35%, and the proportion of SUV and MPV in the new car sales structure in the United States is also gradually expanding. Limited by the tire flat life of 4-5 years, it is expected that the large-size tires represented by SUVs will enter the replacement outbreak period, coupled with the boost of the domestic car modification market, the large-size tire replacement market is expected to break out great potential.