Michelin demand data highlights serious demand challenges in mature markets
As part of its third quarter/nine month financial results, global tyre manufacturer Michelin also published its latest tyre demand details, which give a view on how markets are performing in different segments in various parts of the world. The figures are broken down by region and segment and are then split by OE and replacement market demand.
OE demand down in Europe, but improving elsewhere
According to Michelin original equipment tyre demand in Europe ended the first nine months down 5 per cent despite sustained strong growth in Russia and the rest of Eastern Europe (up 14 per cent overall).
The North American market reportedly showed significant signs of improvement as buyers replaced aging models, driving a 19 per cent increase over the period.
In Asia (excluding India), demand reportedly rose by 14 per cent overall, led by gains in the leading markets. The Chinese market expanded by 8 per cent, in line with passenger car sales, while Japanese demand rebounded compared with a prioryear period that was severely impacted by the tsunami. Southeast Asian markets continued to recover from the floods in Thailand, with a 20 per cent increase.
Michelin reports that South American markets ended the period down 1 per cent overall, but with a sharp 9 per cent upturn in the third quarter. This was particularly the case in Brazil, where new government stimulus measures are said to have driven a 27 per cent gain in September.
Replacement demand down 10 per cent in Europe
The fact that Michelin has reported a 10 per cent decline in passenger car tyre replacement market demand reportedly reflects the “persistently gloomy economic environment as well as the massive drawdowns of dealer summer tyre inventory.” At the same time winter tyre demand is said to be contracting, as expected after a warm 20112012 winter and assuming normal weather conditions in 20122013. And furthermore, due to dealer inventory strategies, sellout sales have tended to exceed sellin sales since the beginning of the year.
Demand in North America declined by 4 per cent, in a mixed environment shaped by sustained high fuel prices and average miles traveled. Dealers drew down inventory ahead of the phaseout of exceptional customs duties on tyres made in China.
Markets in Asia (excluding India) were stable overall. Demand continued to increase in China (by 4 per cent), albeit at a slower pace than in the first nine months of 2011. It declined in Japan (by 4 per cent), in a highly exportdriven economy penalized by the weak euro and economic uncertainly.
The South American market was unchanged overall, up 1 per cent on the strong demand reported in first nine months of 2011, and varied widely by country. The market edged up 2 per cent in Brazil and increased in Argentina, but fell off sharply in Colombia.
Truck OE tyre demand down in Europe and Asia, -14% in China
Michelin reports that the European market ended the period down a relatively limited 3 per cent, with demand flat quarter after quarter. In North America, the market rose by 9 per cent over the entire nine months, but is said to have been weakening since August.
In Asia (excluding India), demand retreated by 8 per cent overall, with a 14 per cent falloff in China in line with new truck registrations, impacted by the somewhat cooling economy. Markets remained active in Southeast Asia, surging 37 per cent, while in Japan, the original equipment segment rebounded by a strong 24 per cent as the market recovers from the tsunami.
Demand in South America dropped 31 per cent in response to Brazil’s application of EURO V emissions standards.
European replacement sales down 19 per cent
Perhaps the most shocking figure that Michelin reported is that European replacement market demand is said to have retreated by 19 per cent over the first nine months of the year, while freight haulage has yet to return to 2008 levels. What’s more, dealers sharply drew down inventory in the face of the prevailing economic uncertainty.
Things are quite different on the other side of the Atlantic. In North America, freight volumes are still outpacing 2010 and 2011 levels. The replacement market was down 3 per cent, impacted by the growth in OE sales, the availability of casings for retreading and the purchases by large accounts in 2011 ahead of price increases.
In Asia (excluding India), markets declined by 9 per cent overall. Demand in China reportedly softened by 9 per cent, reflecting the slowdown in economic growth and decline in kilometres travelled. In the ASEAN countries, freight haulage remained as active and demand expanded by 2 per cent over the period. However, the Japanese market slid 23 per cent, moving back in line with its longterm trends after the wide swings in demand caused by the natural disasters.
Demand declined by 4 per cent in Brazil, where stricter customs inspections reduced imports. In the rest of the region, market growth in Venezuela, Peru and Colombia offset the decline in Argentina caused by import barriers.