From tradition to modernity: challenges, opportunities and future of the tire industry

In Macquarie University's Business-to-Business Marketing Strategy course, I worked with Tania Cooper , Mahek Modi , and Darshan Kaimal to delve into the current state of the tire manufacturing industry. As we explored the industry, we discovered challenges in technology standardization and market competition, as well as new opportunities brought by the electric vehicle market. Through this collaboration, we not only sorted out the key drivers of the industry but also thought together about how to respond to future changes.

1. Technology standardization, emerging market brands, and consumers have driven the commoditization of tires over the past few decades. First, the standardization of tire technology has led to increased similarity between different brands, and the tire products, quality, and performance on the market have tended to be unified. Second, emerging market brands enter the market every year, leading to price wars with existing brands and further driving the industry towards commoditization. Third, consumer demand for tires is relatively stable, but there is also a need to reduce costs. Therefore, consumers increasingly prioritize price rather than brand differences.

2. Introduction of new performance

The shift to electric vehicles (EVs) has had a significant impact on tire manufacturers, as it need to meet the new performance requirements of EVs. Electric vehicles require tires with excellent grip, lower rolling resistance and greater durability. The addition of electric vehicles to the market has forced tire manufacturers to innovate and develop tires specifically tailored for electric vehicles in a short period of time.

3. Is it a potential or a challenge?

Although the rise of electric vehicles has brought new opportunities and potential markets, designing tires that meet these needs faces huge technical challenges. In addition, the electric vehicle market is still in its early stages, and it is uncertain whether the future demand pattern will necessarily grow. Therefore, it will take time to observe the market and demand, and it is not recommended to follow the trend of investment and deployment strategy.

4. Recommendations

The electric vehicle market will continue to develop in the future. In order to avoid the re-commoditization of tires, manufacturers should focus on product differentiation through continuous innovation and high-quality products. For example, investing in the research and development of advanced tire technologies, such as enhanced durability, reduced noise and improved energy efficiency. Strategies can also be improved, such as working with electric vehicle manufacturers to build brand loyalty and provide value-added services such as real-time tire monitoring.