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AUTOMOTIVE TYRE INDUSTRY: RESTRATEGIZING DURING PANDEMIC

 Tyre manufacturing and its distribution or service shops around the globe have adjusted to a new way of business with safety precautions in the worksite and less foot traffic as efforts to stop the COVID-19 virus spread.

In other words, the tyre industry is now characterized as a volatile one, being closely linked to the production of automobiles but also other factors such as raw materials, their availability, and their unstable prices. The companies currently present in the industry have financial and production challenges, but they struggle with the strong wave of new competitors from Asia, respectively China. This field's importance is outlined by this industry's objectives, the latest generation of technologies used, and the realization of the production processes of the car tyres. Thus, the new technology and innovation play an essential role in the entire automotive industry forcing the companies to rethink business models.

 Read More :- https://www.pukkapartners.com/insight/automotive-tyre-industry-restrategizing-during-pandemic

Global Trends Impacting the Automotive Tyre Sector

The rapidly changing global economic scenario has created unprecedented times. The main trends that could define the landscape for the automotive tyre sector include –

  1. Global supply chain disruption – Shifting global trade patterns, pushed by geopolitical shifts and COVID-19, has dramatically impacted the tyre industry. The operating margins are expected to drop by over 2% points between 2017 & 2019, while margins for automotive OEMs fell by 1.2%.
  2. With some green shoots – Global light vehicle sales, Cautious demand outlook were down by 4% between 2017 & 2019. The 2020 automotive tyre sector outlook remains cautious, with over a 20% fall expected in annual sales. The trajectory of automotive sales in the Indian market is similar. It has been seen that the sales in April and May 2020 were around 90% lower than the previous year. As the countries open up, these figures have improved the sales and demand emerging in the economical car, two-wheeler, and tractor segments. However, automotive experts are still cautious on FY 2021 sales worldwide, with COVID-19 positive cases rising rapidly across the globe. Such factors and statistics directly impact the demand and consumption of tyres in the global market.
  3. A resilient aftermarket – As more people postpone buying new vehicles and use limited public transportation in the current pandemic scenario, repairs or sales of current and used vehicles could provide a window of opportunity for the automotive and automotive tyre market.

In conclusion

There are some common threats for all the companies that produce car tyres and contribute actively to the industry's growth at the global level. However, the most important ones have been observed for the raw material prices that are in a continuous expansion, for the strong competitors coming from Asian countries, and as well as for the medical factors that can affect the industry by closing the factories (e.g., COVID-19 virus).

The global tyre industry is permanently developing, with noticeable growth in recent years. The predictions for the tyre industry are that it will increase in the next years, having as determinants the automotive industry's evolution and building new cars and opening new markets in the Asian countries, such as China. There are a need and demand for manufacturing new electric vehicles in the global automotive industry that will increase this industry, coming demand for automotive tyres from originally equipped manufacturing (OEM).

 

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