Chinese enterprises from big to strong, the domestic forward market size will exceed 500 billion yuan

(1) Passenger cars: The steady rise in car ownership will drive the expansion of the replacement market

The size of the replacement market depends on vehicle ownership and replacement cycle. In terms of car ownership, China's car ownership ranks first in the world, with 319 million cars by the end of 2022. In terms of replacement cycle, it is usually required to replace 5 years or 60,000-80,000 kilometers. According to Linglong Tire prospectus, the average number of tires replaced per car per year is 1.5 / year, that is, the replacement coefficient is 1.5, based on the current national car ownership of 319 million in 2022, the domestic car tire replacement market size is as high as 479 million.

(2) Commercial vehicles: The replacement market performed well, and infrastructure investment supported growth

Demand for commercial vehicles peaked and fell in the short term. In 2021, China's commercial vehicle production reached 4.674 million units, down 10.7% year-on-year, ending the previous rapid growth trend, and commercial vehicle production and sales declined further in 2022, and the industry is in the trough stage of the adjustment cycle.

(3) Non-road tires: Oblique off-road tires are still growing demand

Demand for construction machinery tires continues to grow. With the vigorous development of the port transportation industry at home and abroad, the rise and expansion of the mining industry, the popularization of modern manufacturing logistics mechanization and automation, and the developing countries along the Belt and Road and South America vigorously promote infrastructure construction, which has strongly promoted the continuous growth of the demand for special tires in the engineering industry; According to relevant data, the global off-highway tire market in 2021 is 8.7 billion US dollars, and will grow at a compound growth rate of 5% to 11 billion US dollars in 2021-2026, and the market space is broad.

Agricultural mechanization drives up demand for agricultural tires. Benefiting from the continuous increase in agricultural machinery and equipment and the increasing demand for agricultural replacement tires, the demand for agricultural tires continues to rise. 2019 data from the Ministry of Agriculture and Rural Affairs show that China's agricultural mechanization rate is 69%, while developed countries are generally more than 90%, of which the United States, Japan and South Korea are more than 99%. With the improvement of China's agricultural mechanization rate, the domestic demand for agricultural tires will further increase.

(4) Supporting market: The increase in the supporting market is driven by the penetration of new energy and domestic substitution

Demand for passenger vehicles recovered, and the penetration rate of new energy sources further increased. China's new energy vehicle industry is developing rapidly, from the monthly output and sales of less than 100,000 in the past three years to the monthly output and sales of 762,000 and 714,000 in October 2022, respectively, and the penetration rate has risen from less than 5% to about 30%. Under the background of the recovery of downstream demand and the volume of new energy, the market space for tires as a core auto parts is huge.

Domestic tire brand matching rate increased. Compared with the alternative market, the supporting market has higher requirements, stable supply demand, and stronger brand recognition. At the same time, users' pursuit of "original" helps cultivate the brand share of the alternative market in advance. With the rapid development of China's new energy vehicle market, Chinese tire brands are expected to achieve penetration of the supporting market with the help of the new energy track.