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Summary: Anticipated increase in vehicle sales coupled with expanding vehicle fleet size is expected to drive global tyre market through 2022

Global tyre market witnessed a marginal growth over the past five years, predominantly due to prevailing effects of Eurozone Crisis and slump in the crude oil prices which impacted the global automobile industry. These factors cumulatively resulted in weak demand for tyres across Europe, Africa and Middle-East, which restricted the growth of global tyre market during the period.

Already a flourishing market, tyre sales in the Middle East are poised for growth, driven by the high GDP of Middle Eastern countries, rising population and government investments in road infrastructure. Expanding vehicle fleet, improving economic condition, rising purchasing power and growing construction industry will boost the GCC tyre market through 2022. Moreover, short replacement period of tyres due to extreme weather conditions is expected to further push demand for tyres during the forecast period.

Apart from the increasing penetration of flagship tyre brands such as Bridgestone, Michelin, Goodyear, Continental, Yokohama, Kumho, etc., the global tyre market is witnessing increasing inflow

of Chinese tyre brands across all major geographies. Demand for Chinese tyres has been growing across the globe over the last five years, majorly due to lower prices of Chinese tyres compared to flagship tyre brands. Additionally, increasing per capita income and anticipated increase in new vehicle launches are few of the other factors expected to drive global tyre demand over the next five years.

According to the TechSci Research report, Global Tyre Market Forecast & Opportunities, 2022, the global tyre market is forecast to surpass $319bn by 2022 on account of anticipated rise in vehicle sales and expanding vehicle fleet, especially in Asia-Pacific region, during the forecast period.

During the last couple of years, the global tyre market was also dominated by Asia-Pacific region. The region accounts for more than 60 per cent of the tyre manufacturing plants due to ample rubber production, low labor cost and favorable government policies. It is forecast that Asia-Pacific would continue its dominance in the global tyre market over the next five years, owing to anticipated increase in

the regions vehicle production, sales and vehicle fleet.

Passenger car tyre segment accounts for majority of the tyre sales and the trend is forecast to prevail through 2022 across Americas, Europe, APAC and MEA. In 2016, Bridgestone grabbed the largest share in the global tyre market, followed by Michelin, Goodyear, Continental, Hankook, Pirelli, Kumho and Sumitomo.

With forecasters predicting a doubling of vehicle miles traveled globally to 20 trillion by 2030, experts expects an exciting future for the tyre industry. The demand for tyres will only increase.

Mind-boggling change

In addition, its likely that electrically powered vehicles will gain favour and eventually make the combustion engine obsolete. Powering this will be the growth of autonomous vehicles and ride-sharing fleets with increased connectivity among the various entities. Its an exciting albeit scary future, certainly one that would be vastly different than the tyre and automotive industry we know today.

The question for independent tyre dealers is how to prepare for what sounds like mind-boggling change, especially when its uncertain at what pace such change will occur.

So the good news is theres plenty of time to prepare your dealership, and your thinking, to be part of this evolutionary mobility ecosystem, one that could feature fleets of electric and autonomous vehicles interconnected with manufacturers, consumers, suppliers, service providers and even with each other. Complicating this is the fact there still will be, most likely, millions of vehicles on the roads that arent so connected and remain personally owned by consumers.

Its a confusing scenario, to say the least, but implied in this comment is a caveat that its best to start thinking today of how to take advantage of what might be coming in the future before it gets here.

Keep in mind, too, that tyres, whether they come on fleet vehicles or are owned by individuals, have to be installed and balanced in a service operation. That should give tyre dealers comfort as they look ahead and prepare for a new world.

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Publication:Oman Economic Review (OER)
Date:Mar 28, 2018
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