In 2020, the epidemic had a profound impact on the global tire industry.
On the one hand, the total global tire sales have declined; on the other hand, the global tire industry has differentiated, with some international giants experiencing significant declines in performance, while leading Chinese tire companies have achieved growth against the trend, with some companies achieving record high performance.
Data show that the total global tire sales in 2020 were 1.577 billion units, a year-on-year decrease of 11.7%.
Among them, the supporting market and replacement market achieved 399 million and 1.178 billion respectively, down 14.7% and 10.6% respectively year-on-year.
A private equity person who follows the tire industry said, “An important factor in the sharp decline of the global tire industry in 2020 is the epidemic. The epidemic has suppressed demand, disrupted planning, and many companies have postponed or even canceled orders, which has had a huge impact on all participants in the industry chain.” Due to the epidemic, in March last year alone, global tire giants Bridgestone, Michelin, Goodyear, Continental, and Cooper announced the temporary closure of dozens of factories in the Americas and Europe.
Western Securities research report shows that in the first half of 2020, global automobile tire sales were only 671 million, a year-on-year decrease of 23.5%, of which the supporting market and replacement market shrank by 31.7% and 20.4% respectively.
Entering the second half of the year, as the overseas epidemic has been controlled to a certain extent, the global tire market demand has picked up.
In the second half of 2020, global automobile tire sales rebounded to 906 million units, a month-on-month increase of 35%.
It is worth noting that the performance of global tire companies will diverge significantly in 2020.
On the one hand, the performance of global tire giants has declined sharply. Bridgestone and Goodyear have suffered losses. Although Michelin is profitable, its net profit has dropped by more than 60% year-on-year. On the other hand, China’s leading tire companies have bucked the trend and hit new highs.
For example, the 2020 annual report recently disclosed by Linglong Tire shows that the company’s revenue and profits both hit new highs last year.
Among them, net profit was 2.22 billion yuan, a year-on-year increase of more than 30%.
Sen Qilin achieved a net profit of 980 million yuan, a year-on-year increase of 32.38%.
Guizhou Tire’s net profit increased by more than 7 times year-on-year.
Some tire industry analysts believe that “the epidemic had a greater impact on the performance of foreign tire giants last year. The ship was turned around and the epidemic broke out. Affected by this, foreign tire giants were under-operated, but the costs were high, which greatly devoured the profits of overseas giants. In contrast, domestically, the epidemic was effectively controlled last year, and tire companies resumed work and production earlier, which is more important than foreign ones.
Significant advantages.
In addition, due to insufficient operating rates abroad, the price of tire raw material rubber was at a low level in the first half of last year, which further reduced the production costs of domestic companies, which also helped companies further improve their performance.”
While effectively preventing and controlling the epidemic, domestic tire companies represented by Linglong Tire are also working hard to strengthen their core competitiveness and help companies “overtake”.
In July 2020, the 2020 ranking of the top 34 global tire companies released by the British “tyrepress” magazine showed that Linglong Tire jumped from 17th to 14th.
According to relevant personnel of Linglong Tire, in 2020, the company will further accelerate its global layout and upgrade its “5 + 3” to “6 + 6” strategy.
Among them, the company held a launching ceremony at the Changchun factory in April 2020 and earmarked an additional 1.991 billion yuan for the construction of the Jingmen project. It also accelerated the construction of the Serbian project.
The analyst also said that globalization can not only help companies provide downstream customers nearby, enhance their competitiveness, but also effectively avoid potential trade barriers.
At the technical level, Linglong Tire continues to strengthen the research and development of new materials, new technologies, and new formulas, and uses technological innovation to gain development momentum.
It is understood that the company has improved the low rolling resistance structural design system for passenger cars and commercial vehicles, achieving continuous reduction in rolling resistance and reaching EU label A level.
In terms of marketing, Linglong Tire has also launched a “new retail” strategy.
As of the end of 2020, the company’s new retail system has more than 20,000 registered stores.
With the help of the new retail strategy, the company’s overall sales volume in the domestic retail market in 2020 increased by approximately 43%, with a year-on-year growth rate of approximately 50% since the implementation of new retail in March.
The analyst believes that compared with foreign giants, domestic companies have higher production efficiency and have obvious advantages in terms of cost performance.
From a quality perspective, in recent years, domestic leading tire companies have basically reached a level comparable to foreign giants through technology research and development, equipment updates, and experience accumulation.
However, in terms of brand, domestic companies still need a cultivation process.
However, through hard work, domestic companies have continued to expand their global market share, and overtaking in corners is certain.
In the medium to long term, domestic tire companies will surely become global industry leaders.
