Ten events that will affect the tire business in 2022

In a blink of an eye, 2021 is about to end. In the past year, many major events have occurred in the tire industry. Today we will take a look at the top ten hot events in the tire industry this year.

1. Raw materials have fluctuated and increased for a year, and tire companies’ profits have plummeted, and price increases have been continuously issued.

Among the major events that happened this year, the price increase of tires is closely related to every tire person. Affected by inflation, rising raw materials, and double-limit policies this year, tire prices have risen in several rounds. The most important factor is that raw material prices have fluctuated upwards throughout the year. (CCTV report: It has increased by 10%, and tire prices will increase until next year)

This year's price hikes are mainly concentrated in March after the Spring Festival and September-November. Affected by the price increase of raw materials, the net profit of tire companies has generally plummeted.

Comment: Not only domestic, but global tire companies have been affected by raw materials for several rounds of price increases. In addition, some companies have announced price increases until January and February next year. Therefore, in the upcoming 2022, tire price increases may continue, which will also become one of the key events affecting the tire industry in 2022.

2. Anti-dumping duties are determined, tire companies continue to build factories at home and abroad

In the middle of this year, the International Trade Commission (ITC) issued a final ruling to impose anti-dumping duties on tires from South Korea, Taiwan, and Thailand. This is a big punch for national tire companies that set up factories in Thailand.

However, domestic tire companies have not given up the pace of expansion. For example, Linglong Tire invested about 11.3 billion to build a factory in two months. In June and August, it announced the construction of China's sixth and seventh production bases in Tongchuan, Shaanxi and Hefei, Anhui.

At the same time, there are other companies that choose to build factories in other countries. Sailun Tire and General Motors will build a plant in Cambodia; Senkirin announced that it will self-raise about 3.745 billion yuan to invest in Spain to build a project with an annual output of 12 million high-performance cars and light truck radial tires.

Comment: National tire companies are in the golden age of corner overtaking, and their brand influence is getting higher and higher. However, if they want to further increase their influence, they must first scale up. Therefore, the expansion speed of tire companies will only increase in the next few years more quickly.

3. Goodyear Cooper "marriage", Taifeng Rubber changes ownership

The biggest incident between tire companies this year is the "Marriage of Goodyear and Cooper" between the two American tire giants. The benefits of Goodyear's acquisition of Cooper were quickly reflected in Goodyear's operating results.

Data show that Goodyear’s sales in the third quarter were 4.9 billion U.S. dollars (approximately 31.35 billion yuan), an increase of 42% over 2020. If Cooper’s business is not included, its sales growth would be 16%. (Soaring 43%! Goodyear's third place in the world has stabilized!)

In addition, another M&A case that has attracted attention is Taifeng Tire and Nangang Tire. The war between the two companies has finally stopped. Taifeng’s operating leadership has officially changed hands and Nangang has taken over!

Comment: It is not uncommon to become the world's giant tire company through mergers and acquisitions, but the scale of each company has been formed, and the company will not be easily acquired when there is no business crisis in the company itself. Therefore, acquisitions between giants may increase. The less, but the acquisition of small businesses by giants may become the norm.

4. The skyrocketing ocean freight rates dragged down exports, and the "chip panic" caused a loss of 12.7 billion yuan in the tire market

This year, no one expected that rising ocean freight prices would become a hot topic. Affected by the epidemic, container costs have doubled by 15 times. For example, the price of a 20-foot standard container from China's east coast port to the west coast of the United States is usually US$1,000, but this year it reached a peak of US$15,000. The direct consequence of the increase in ocean freight is the decline in China's tire exports.

Exports are in a hurry, but for tire companies, there is another nightmare, which is the lack of cores. At the beginning of the year, the number of car companies that stopped production due to chip shortages has reached about 20, and more than 40 factories have stopped or reduced production. According to statistics, the tire market lost US$2 billion, or about 12.7 billion yuan, due to the lack of chips.

Comment: The difficulty of finding a container and the "chip panic" are temporary major problems brought about by changes in the general environment. These external problems may weaken in the next 2-3 years. But this also warns tire companies that even if there is no problem with their own operations, the overall environment has a fatal impact on the healthy growth of an enterprise, and tire companies must establish a sense of crisis.

5. Tire giants are accelerating "changes" and focusing on future travel

In the past two years, the global tire industry has accelerated changes, competition has intensified, and electric vehicles have replaced fuel-fueled vehicles. All have brought new challenges to tire companies. Therefore, this year many tire giants have formulated "reform" corporate development plans and accelerated their implementation.

For example, Michelin wants to open up new markets and find new profit growth points; Bridgestone greatly eliminated the chicken ribs project to build its core tire business and close 10 factories in 2021; Trelleborg has set 200 acquisition targets; Nexans Began to invest in the field of "flying travel".

Comment: A company that can stand in the competition for decades or even a century must be more forward-looking and capable than other companies in the same industry, or more and more companies will focus on the future of travel, including research on green Tires, smart tires, etc.

6. The Shandong government eliminates outdated production capacity and intensifies, while cultivating giants

Since the beginning of this year, many places represented by the Shandong government have begun to accelerate the elimination of outdated production capacity. For example, Shandong Tire’s 14th Five-Year Plan defined “low-end production capacity” and required a total of 18 companies to eliminate production capacity. Among them, there are 8 all-steel tire companies, with a total production capacity of 5.56 million; 10 semi-steel tire companies, with a total production capacity of 25.61 million.

While eliminating outdated production capacity, the Shandong government is also increasing its efforts to cultivate high-end tire production capacity. For example, Chen Weisong, deputy secretary of the Guangrao County Party Committee and county magistrate, once said that within three years, three to five companies will enter the top 30 of the top 75 tires in the world.

Comment: China's tire industry has passed the blind outbreak period, and it will switch to a period of high-quality development. In the next 2-3 years, more and more tire companies or tire dealers will close down. In the global top 75 rankings, Chinese tire companies will also move from "big but not strong" to "strong".

7. New energy tires and self-repairing tires usher in new development opportunities

As the new energy vehicle market has shifted from policy-driven to market-driven, and consumer demand is strong, more and more companies have focused their attention on new energy tires and self-repairing tires this year.

For example, this year Michelin officially launched self-healing tires in the Chinese market, and invested 10 million euros to expand the production lines of Acoustic silent technology tires and Selfseal self-healing tires; Continental also repositioned its brand as an “expert for original equipment for high-end new energy vehicles” "; GM also launched a new energy anti-tire tire.

Comment: Obviously there are new opportunities for new energy vehicle tires and self-repairing tires, because with the continuous maturity of technology and the vigorous promotion of enterprises, self-repairing safety tires will be more and more favored by people and businesses, and more and more on the market Self-repairing tires will be used in the assembly of mid- to high-end models, and the problem of new energy vehicles not being equipped with tires can also be solved.

8. Tire companies under the "dual carbon" must be green and environmentally friendly, and the "dual limit" will bring business difficulties to the company

On July 16, the national carbon emission trading market officially opened, which means that China’s rubber tire industry must accelerate its efforts towards "green and environmental protection", and tire companies must implement the entire industrial chain of raw materials, manufacturing, and recycling. "Carbon neutral".

At the same time, in order to achieve the goal of "carbon peak", before the heating season in the second half of this year, the implementation of electricity and production restrictions in many places across the country has a great impact on the tire industry, greatly reducing the operating rate and increasing tire prices. Tire companies have also issued a "Notice of Electricity Limitations Affecting Production", describing the dilemma that the power limit policy has brought to tire companies.

Comment: Although power and production restrictions have a certain impact on the operating rate of companies and tire prices, it is not the main reason. The main reason for the recovery of tire companies is market demand. The leading factor in tire prices is raw materials, so companies will soon get rid of "Double limits" are affected, but under the "carbon peak" and "carbon neutral" goals, the "double limits" may be implemented in the next few years.

9. more and more tire companies join the sales channel reform team

In the past two years, more and more tire companies have joined the transformation team of tire sales channels. The traditional tire sales channels need to go through the process from factory to dealer to store, but now tire manufacturers tend to "de-intermediate". Explore ways to reform channels.

This year, companies such as Zhongce, Linglong, Sailun, Senkylin, and Magis have carried out digital channels and new retail reforms. For example, Linglong started New Retail 2.0 around the marketing theme of "product + service + value"; Magis officially launched the new retail APP version 4.0, hoping to shorten the distance between the factory and the retailer while also shortening the distance between the factory and the retailer. The distance between end users.

Comment: This year the trend of de-intermediation has become more pronounced. Competition in the tire industry has intensified. The transformation of tire manufacturers’ sales channels is also imperative. Although the transformation of tire channels involves factories, dealers, and stores, the key lies in tire manufacturers. Therefore, tire dealers must also be prepared to change to service providers.

10. "Cat", "Tiger" and "Dog" accelerate their expansion, reaching more than 6,200

After the rise of e-commerce platforms, tire shops are getting sad day by day, and they continue to expand this year. It is reported that there are currently more than 3,500 Tuhu（Tiger） workshops, more than 1,500 vehicles on Tmall(Cat), more than 1,200 JD.com (Dog), and more than 6,200 Maohugou.

Comment: Under the squeeze of e-commerce platforms, profits are becoming more and more transparent, tire shops are becoming more and more difficult, tire shops urgently need to find a breakthrough. Or you can change your mindset to create online celebrity stores to acquire customers from the Internet and provide quality services; or you can choose to rely on a big tree and join the chain stores of tire companies such as Zhongceyun Store and Jiajiele; or you can join other large auto services Chain stores.