Ten years of global tire taps review and prospect

A 10-year review of the global tire market, 2022 under pressure to recover

(1) Tire demand is generally stable, and global tire demand continues to recover in 2022

With the economic recovery, the global tire industry continued to pick up after the epidemic. According to Michelin statistics, from 2013 to 2017, global tire sales increased year by year, reaching a peak of 1.808 billion in 2017, mainly because with the economic development and the improvement of people's living standards, the global car ownership continued to increase. Subsequently, due to the sluggish market for semi-steel tires, global tire sales declined slightly in 2018 and 2019. In 2020, under the impact of the epidemic, global tire sales fell by 12.0% year-on-year. Then, with the easing of the epidemic situation and the gradual recovery of the global economy, sales began to pick up, and sales in 2021 achieved a year-on-year growth of 10.8%. By 2022, the global auto tire market sales volume will be 1.751 billion, an increase of 0.14%. The main reason for the slowdown in growth rate is that the production and operation of some tire companies in 2022 were affected by adverse factors such as the Russia-Ukraine conflict, the epidemic, semiconductor shortage and rising prices of raw materials, energy and logistics. The rebound in tire market demand in the second half of 2022 led to an improvement in annual demand. In the first half of 2022, the global tire market sales volume was 848 million, down 1.5% year-on-year; In the second half of the year, the number was 903 million, an increase of 1.74% year-on-year and 6.43% quarter-on-quarter. The main reason is that the phased impact of the Russia-Ukraine conflict in the second half of the year gradually faded, the shortage of semiconductors has been alleviated, the replacement demand for overseas all-steel tires is strong, and the recovery of domestic passenger car production and sales has driven the recovery of the semi-steel tire supporting market, and the global tire market demand has significantly improved compared with the first half of the year, promoting a slight increase in market demand throughout the year.

In terms of products, in 2022, the global half steel tire matching is strong and the replacement is weak, and the full steel tire replacement is strong and the matching is weak.

1) Semi-steel tire supporting market: According to Michelin statistics, the sales volume of semi-steel tire supporting market increased year by year from 2013 to 2017, reaching a peak of 455 million in 2017, mainly due to the continuous growth of passenger car sales in China. According to the first commercial vehicle network data, from 2013 to 2017, China's broad passenger car sales increased from 17.176 million to 24.262 million, with a compound annual growth rate of 9.02%. In the following three years, due to the weak new car market and the impact of the epidemic, global sales of semi-steel tires continued to decline until 2021. In 2022, the sales volume of the global semi-steel tire supporting market was 386 million, an increase of 6.63% year-on-year, which is the main force driving global tire consumption.

2) Semi-steel tire replacement market: The semi-steel tire replacement market is mainly related to car ownership and other factors, and the overall demand is relatively stable. Historically, since 2006, except for 2008, 2009, 2020 and 2022, the semi-steel tire replacement market has basically maintained steady growth. The decline in 2008-2009 was mainly due to the impact of the financial crisis, the significant decline in 2020 due to the pandemic, and the recovery and surpassing the pre-pandemic 2019 level in 2021 to reach a record high. In 2022, the replacement sales of semi-steel tires were 1.154 billion, down 1.11% year-on-year, mainly due to the impact of events such as the Russia-Ukraine conflict in 2022, the epidemic, and high oil prices.

3) All steel tire supporting market: Supported by the growth of global commercial vehicle sales, the sales CAGR of the all-steel tire supporting market from 2012 to 2017 was 11.98%, and the sales of the all-steel tire supporting market was maintained at about 50 million pieces since 2017. In 2022, the sales of the all-steel tire supporting market was 42 million pieces, down 18.69% year-on-year, with the largest decline. We believe that the downturn in China's heavy truck and freight market has had a significant impact on it, with China's heavy truck sales in 2022 down 51.8% year-on-year.

4) All-steel tire replacement market: From 2013 to 2016, the sales volume of all-steel tire replacement market showed fluctuating growth, and the sales volume remained at about 170 million pieces since 2016. Due to the recovery of the logistics industry, the total amount of global trade in goods in 2022 is about 25 trillion US dollars, an increase of about 10% from 2021, hitting a record high, leading to a small growth in the all-steel tire replacement market, with sales of 169 million pieces in 2022, an increase of 0.72%.

According to Michelin statistics, the total sales volume of the semi-steel tire market in 2022 was 1.54 billion, an increase of 0.72%. In the semi-steel tire matching market, the development momentum of developing countries is strong, and the decline in the event of the epidemic is also more serious, and in 2022, Europe is the only region to decline. Specifically:

(1) Indo-Africa Middle East region: the semi-steel tire supporting market in the Indo-Africa Middle East region maintained positive growth from 2015 to 2018, and the growth momentum was better than other regions. We believe that the auto industry in developing countries is still in the stage of rapid development, with greater space for development, and in the face of the epidemic, the decline is more obvious due to the weaker anti-risk ability. In 2021 and 2022, the recovery of semi-steel tire sales in the Indo-African Middle East region is also the most obvious, with sales increasing by 25% and 20% respectively.

(2) European region: From 2015 to 2017, the sales volume of semi-steel tire supporting market in Europe increased year by year, and began to decline after reaching a high of 104 million pieces in 2017, mainly due to the uncertainty of the political environment brought about by Brexit and the introduction of the new emission test of WLPT. In 2020-2022, it will fall to about 70 million due to the impact of the epidemic and the Russia-Ukraine conflict. In 2022, in the case of growth in other regions, the European semi-steel tire matching market tire sales fell 2.6% year-on-year, mainly due to the impact of the shortage of parts in the first half of 2022, the annual sales could not reverse the decline, and the number of new car registrations in Europe in 2022 fell 4.1% year-on-year.

(3) China: Under the influence of many factors such as the advance consumption brought about by the preferential purchase tax policy, the decline in macroeconomic growth rate and the Sino-US trade dispute, China's automobile production and sales in 2018 ended the continuous growth of 27 years, which is one of the important reasons for the decline in the global sales of semi-steel tires since the peak in 2017. The epidemic situation in 2022 has improved, and the growth of car purchase preferential policies and electric vehicle sales has made the growth trend of tire supporting demand good, and the supporting demand for the whole year in 2022 has increased by 6.96% year-on-year.

(4) North America: North American semi-steel tire supporting sales reached a peak in 2016, and 2017-2020 supporting sales declined year by year. In addition to the impact of the epidemic, according to the statistics of Flush and OICA, passenger car sales in the United States declined in 2015-2018, affecting the sales of semi-steel tires in North America. In 2022, benefiting from the improvement of supply chain issues, demand remained stable throughout the year, achieving a year-on-year growth of 9.52%.

In the semi-steel tire replacement market, the demand before the epidemic was relatively stable, and the replacement sales of semi-steel tires in 2022 were 1.154 billion, down 1.11% year-on-year, and sales fell in the two major markets of North America and Asia. Specifically: (1) Asia: After 2015, the consumption of semi-steel tire replacement market in Asia mainly fluctuated within the range of 260-280 million, mainly affected by car ownership and macroeconomic growth. In 2022, due to the epidemic disturbance, China's semi-steel tire replacement sales fell 13.3% year-on-year, dragging Asia's semi-steel tire replacement sales down 4.3% year-on-year; (2) North America: From 2015 to 2019, the replacement sales of semi-steel tires in North America maintained steady growth, and in 2022, the combined impact of high oil prices and inflation and other factors decreased by 3.7% year-on-year; (3) South America: South American semi-steel tire replacement sales are affected by local macroeconomic conditions, such as the 8% year-on-year decline in sales in 2018 mainly due to the economic recession in Argentina (semi-steel tire replacement sales decreased by 18% year-on-year) and the impact of political and economic instability in Brazil (semi-steel tire replacement sales decreased by 15% year-on-year). In 2022, the economic recovery of major South American countries is good, Colombia, Ecuador, Argentina economic growth rate of more than 5%, half steel tire replacement sales rose the most, an increase of 11.6%.