A maturing industry
For a long time people have referred to the European tyre market in general and the UK tyre market in particular as mature markets. This kind of maturity is generally taken to mean low growth markets that are already well developed. Here markets are significant in size and 1 to 2 per cent growth per annum is normal.
However, a number of recent market research reports give us the opportunity to reconsider this assumption on two grounds – firstly, with technology developing as it is, quantitative growth should be considered in a wider context; and secondly there is the qualitative question.
First, quantitative “maturity”. Smithers’ “The Future of Global Truck Tires to 2027” research reports that the value of this sector will reach $107.6 billion in 2017. With year-on-year growth forecast at 3.5 per cent across the next decade, this figure is set to reach $152.4 billion in 2027. After adjusting for price and raw material fluctuations, gains in tyre manufacturing productivity and then consumer potential of greater value adding features, volume consumption of all truck tyres is expected to increase at a rate of 3.2 per cent per year from 2017–2027. The point is that these global figures show that the truck sector as a whole is doing better than mature market stereotypes, which begs the question why?
The global automotive brake systems market is expected to be worth US$31.11 billion by 2025, according to another study, this time by Grand View Research, Inc. This growth is said to be being driven by rising vehicle production and sales and growing disposable income. Of course, brakes aren’t tyres, but they are driven by the same engine – vehicle production – and therefore parallel trends are worth considering. With this in mind, it is worth drawing another key quote out of the Grand View data – “Asia Pacific is projected to account for 53.6 per cent of the total market share by 2025, owing to increasing vehicle production and popularity of vehicle safety features.” In other words, the scales of global production power are tipping towards the already strong Asia Pacific region. This helps us begin to understand why the global market figures are ahead of the so-called mature market growth estimates.
According to Osram and Continental, who recently announced that they would combine their respective lighting and automotive programming prowess in a joint venture in 2018, market studies indicate that by as early as 2025 more than half of new cars worldwide could be fitted with semiconductor-based lighting solutions. In other words, taken together, these three statistics-based reports show that the market is growing, especially in the Asia-Pacific and especially in terms of technological development. Indeed, the subject of rapidly-advancing automotive technology is one that the tyre industry rapidly needs to engage with as electric and driverless vehicles plus on-board computing mean that the vehicle marketplace could be almost unrecognisable during the next 10 years or so.
The qualitative question
To the event’s credit, the recent NTDA Tyre Industry Conference (see UK section for coverage) opened up discussion on this issue – which brings us nicely to the second point: qualitative growth and maturity. For the last two years the role of women – who are stereotypically known by their absence in the tyre sector – was highlighted at the NTDA event. Last year, the importance of women was brought out by dual day-conference keynote and after-dinner evening speakers. This year Foxy Lady Drivers Club managing director, Steph Savill revealed some interesting details in a session entitled: “Why don’t women drivers enjoy visiting garages?”
Considering these points were raised in the wider context of an NTDA “Manifesto for Change”, the resonance could not be avoided. The climax the NTDA’s presentation of the first ever Tyre Fitter of the Year to woman, with another lady making it through to the final round too. Not bad for a male-dominated industry? Indeed. But the harsh reality is that even the male-dominated moniker is an assumption that isn’t equally true everywhere you go. For example, in China there are already a number of high-powered senior executives in the country’s leading tyre-makers. And therefore the mature markets are arguably less mature in this respect than at least one of their emerging market counterparts.