Friday, August 13, 2010

A Market On Tires: Global Tire Industry Outlook

The automobile industry is one of the dominating sectors because many economic activities rely on and are linked to automobile production. If you include suppliers, car services, garages or retailers, a total of about 5 million employees depend on the success of the automobile industry. With changing technologies, production concepts, strategies and products, the automobile industry is often an initiator of innovations in other related industries as well.

As the world tries to come out of economic recession, the first sector to witness positive movement has been the Automobile sector and since its linked to related sectors like tire industry, plastics industry and metal processing, all the sub sectors are slowly witnessing a silent revival. As more and more people look at buying automobiles slowly, the tire industry is also set to attain a positive movement from the pits, where it has been for most of last year. The recession had people reducing spending across the board, which meant that they had been putting of those new tires on hold until things start to look a little better on the economic front. Now as the economy is moving out of the red slowly, tire sales are witnessing a welcome revival even better than the Automobile companies and a lot of second hand car owners have also been investing in the new set of tires instead of buying a new automobile altogether.

Tire shipments in 2010 are projected to increase by approximately 3 % or approximately 7 million units to 267 million units, according to the Rubber Manufacturers Association. Total shipments experienced an 8 % drop in 2009 to 259.7 million units. The increase in tire shipments reflects the onset of the economic rebound, an increase in vehicle miles traveled and a slight up tick in auto sales. As a result, this rebound is projected to extend into 2011, reaching approximately 275 million units as the economic recovery gathers momentum.

  • Tire companies were first in the early on 20th century, and grown in partnership together with the automobile business. In the present day, above 1 billion tyres are created annually, in over 400 tire factories, with the three top tire makers commanding a 60% total marketplace share.
  • The US tire manufacturing industry alone consists of about 100 companies with combined annual revenue of about $15 billion. The industry is highly concentrated and the top four companies generate more than 75 % of revenue. Major companies include Goodyear, Bridgestone, Michelin, and Cooper.
  • Tire manufacturing has become extremely technical and forward-thinking as manufacturers look to push the boundaries of what can be achieved through new technologies. Whether it’s improvements in fuel economy, handling performance or safety, technological developments in the tire world are making a big difference
  • As the world fights strong economic recession, people are more prone to buy and use older cars rather than buying new ones. No matter if the vehicle is old or new, the need for tire remains a constant and with number of second hand vehicle sales increasing and as compared to new vehicles, the worldwide consumption of tires is estimated to be more than automobiles.
  • With developing nations churning the growth engines of the world, commercial vehicles (vans, utility and light trucks) are much in demand in both developed and developing nations; such vehicles require both more and larger tires than passenger cars.

Correlation Of Tires And Rubber: In the history and the application of various materials, few have made as large an impact globally as natural and synthetic rubber. The source of the material stretches from plantations in Malaysia and Indonesia to factories on all continents. The making of rubber into tires and nontire goods involves a series of sophisticated manufacturing processes. The finished products are then distributed through thousands of warehouses and dealers in large cities and small villages, practically in every country.

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