PASSENGER CAR TIRE MARKET IN EUROPE

Passenger car sales fell in Europe’s significant business sectors in February, as a debilitating worldwide economy, higher vehicle taxes and the COVID-19 flare-up burdened purchasers’ hunger for new vehicles.

In February 2020, new vehicle registrations dropped 7.2% to 1.067 million vehicles in the European Union, Britain and the European Free Trade Association (EFTA) nations, measurements by the European Auto Industry Association (ACEA) appeared.

Deals succumbed to the second successive month in EU’s significant business sectors, with Italy dropping 8.8%, Germany 10.8%, France 2.7% and Spain 6% in February.

Volkswagen’s deals were down 4.4% in February, while Renault and PSA Group posted a drop of 14.3% and 8.5%, separately. BMW kept on being among the couple of automakers announcing an expansion in European deals a month ago, rising 2.1%, while interest for rival Daimler fell 11.9%.

The drop comes as Europe is wrestling with the COVID-19 pandemic and Italy turning into the most exceedingly awful hit nation outside of China.

PASSENGER CAR TIRE MARKET DYNAMICS

In Europe, hatchbacks are popular and comprise ~28% of new car sales every year. Many base variants of such popular hatchbacks (VW Polo, VW Golf, Toyota Yaris, Fiat 500) have 14- and 15-inch tires going up to 17- and 18-inch tires on higher trims/ sports variants.

Unlike the US where 225-mm & 235 mm section tires are most common, in Europe 205- and 215-mm section tires can be found on many vehicles.

FOCUS ON ONLINE SALES IN PASSENGER CAR TIRE MARKET IN EUROPE

Tire maker Goodyear has entered the online business space in Europe.

It has dispatched online deals of the tires in Germany as the pilot market on the landmass. Steadily, the organization will dispatch this program in more business sectors across Europe.

Goodyear is offering the German shoppers the choice to buy tires and timetable establishment on its site. It asserts the web-based business will offer a consistent shopping experience and will empower gradual development for the neighbourhood retail accomplices.

Cooper Tire Europe is satisfied to affirm that terms have been concurred with Fintyre for the select conveyance of light vehicle tires to the Italian market. Under the arrangement, Cooper will supply passenger car, SUV and van tires through Fintyre. By uniting with Fintyre, Cooper will upgrade its inventory network in this key European market

COVID IMPACT ON EUROPE PASSENGER CAR TIRE MARKET

COVID-19 hit the car and tire industries heavily in spring 2020, as restrictions entered into force impacting the movement and buying behaviour of consumers. Even though some signs of improving demand could be seen during the second half of the year, the entire year was overshadowed by uncertainty. The cause of the drop in sales of the passenger car market in Europe was the global decline in automotive production.

Under these exceptional conditions, the companies focused on safeguarding the health and safety of their employees and ensured the continuity of their business. The major players quickly reacted to changes in the market by adjusting their production, cutting costs, and reducing investments. Special attention was paid to cash flow through active working capital management. These tactical measures were effective and enabled good results toward the end of the year. 

Nokian tyres in its report states that the Covid-19 restrictions impacted their sales   in Russia (impact approximately EUR 50 million), and the low factory utilization rate in all locations.

PASSENGER CAR TIRE MARKET SIZE AND FORECAST

The passenger car tire market in Europe is estimated at $XX Billion in 2020, growing at –% CAGR till 2026.

Europe tire market can be segregated based on vehicle type, online vs offline, radial vs bias, and demand category. Based on radial vs bias, the tire market is dominated by the radial tire segment with a market share of 91.53% in 2020 and the trend is likely to continue through 2025. Radial tires offer several benefits over bias tires, such as better mileage, lesser fuel consumption and better road grip. Thus, consumers in the country mostly prefer radial tires.

RECENT PRODUCT DEVELOPMENT PASSENGER CAR TIRE MARKET IN EUROPE

• Stated to provide up to 25% more mileage Michelin has announced the launch of two new pre-mold retreads to expand the manufacturer’s portfolio of tire retread technologies. The retread will provide maximum tread-to-shoulder adhesion in high scrub application. 
• MICHELIN’s new Uptis (Unique Puncture-Proof Tire System) is an airless mobility solution for passenger vehicles, which eliminates the dangerous risk of flat tires and blowouts that result from punctures or road hazards. 
• ContiSeal: It is a technology developed by Continental designed to seal a damaged tire tread. In case of penetration by foreign objects such as nails, there is no need for immediate roadside tire changes, and holes remain sealed even if the puncturing object becomes dislodged.
• Goodyear has developed a non-pneumatic tire (NPT) and wheel assembly to support urban autonomous vehicle transportation with the Jacksonville Transportation Authority (JTA).
• Continental selects Simulation specialists Ansible Motion’s latest driver-in-the-loop (DiL) simulator and the Delta S3, to aid its engineers in consistently and repeatedly testing tires across an array of virtual terrains, locations, scenarios and seasons. 
• Nokian Tyres’ latest and technologically most advanced summer tires are Nokian Wetproof, Nokian Wetproof SUV, Nokian Powerproof, and Nokian Powerproof SUV, which have all been developed to accommodate increasingly variable summer weather conditions, where great temperature variations can rapidly change the driving conditions. The right set of high-quality tires can help the drivers quickly adapt to these changes. 
• The Greener Manufacturing Show 2021 to take place this November in Cologne . The event is Europe’s single largest environmental exhibition focused solely on the manufacturing industry and offers the opportunity for sustainability-focused companies to source the latest technologies and solutions to limit and eliminate the use of toxic chemicals, reduce the impact of their industrial and manufacturing processes on the environment and global climate change, and find new partners to help achieve sustainability targets. 

COMPETITIVE LANDSCAPE

The major players operating in the Europe tire market include Compagnie Générale des Établissements Michelin, Goodyear Dunlop Tires Europe B.V., Continental Aktiengesellschaft, Bridgestone Europe NV/SA, Pirelli & C. S.p.A., Nokian Tyres Plc, Yokohama Europe GmbH, Hankook Reifen Deutschland GmbH, Apollo Vredestein B.V., and Cooper Tire & Rubber Company Europe Limited. Major companies are developing advanced technologies in order to stay competitive in the market. Other competitive strategies include mergers & acquisitions.

Michelin witnessed a 15% drop in annual sales in 2020. To counter this, the company has moved few of its plants closer to the high-volume customers, by increasing the production in plants like Indonesia and Mexico.

Goodyear tires expects raw material costs to increase from $125M to $175M as natural rubber and butadiene prices have already crossed pre-COVID levels. Carbon Black prices are gradually increasing in the global market. China’s consumer replacement volume continued to exceed the industry with approximately >10% growth witnessed in 2020.

In 2020, net sales of Passenger Car Tyres totaled EUR 871.3 million (1,123.8). Nokian tyres segment operating profit was EUR 177.8 million (308.5). 

• Continental tires performed well at the beginning of the year, particularly in China and North America. The ContiTech business profited after a recovery in global vehicle production, in the first quarter, especially in China, and from stable industrial business. It evaluated its consolidated sales of  the first three months of the year amounted to €10.3 billion (Q1 2020: €9.9 billion, +3.5 percent). 
• In February 2021, Goodyear Tire acquired Cooper Tire in a $2.8B deal; it is expected to double their presence in China in the light truck & SUV segment.
• Goodyear America’s revenue dropped ~17% to $12.3 Billion in 2020. OE business in Europe & America regions outperformed companies’ estimation in Q3 & Q4-2020. OTR (Off The Road) Tires’ demand remained low in 2020. Operating Margin for the year was -0.1%
• Michelin reported annual Revenue of $24.6 Billion in 2020 a drop of 15% Y-o-Y. Due to faster recovery in demand of products in Q3 & Q4 the inventories hit a new low worth around $ 482M. Overall in the Passenger Vehicle segment the sales dropped by ~13% and in the Commercial Vehicle/Trucks segment the sales saw a dip of 7% . 
• Nokian tyres Net financial expenses were EUR 14.0 million (income 20.3; includes a return of EUR 35.9 million related to the rulings on the tax disputes), including net interest expenses of EUR 8.6 million (income 29.4). Net financial expenses include an expense of EUR 5.4 million (9.1) due to exchange rate differences. Segment profit before tax was EUR 176.2 million (357.5; positively impacted by the returned punitive interest of EUR 34.4 million related to the tax disputes in the previous fiscal years). 
• Hankook Tire equips Volkswagen’s first all-electric SUV with Ventus S1 evo 3 ev tires . The tire’s reduced rolling resistance sustains the vehicle’s range, while the lightweight, yet particularly stable double-layer carcass construction confidently carries the vehicle weight of Volkswagen’s new, sporty all-rounder, and supports its dynamic characteristics. A prototype of the Hankook Ventus S1 evo 3 ev has already been fitted on the VW study ID. Crozz, the design of which the new ID.4 is based on.
• Hankook Tire wins Red Dot Design Award for its innovative project work HPS-Cell The tire of HPS-Cell is an airless tire featuring unit-cell structure. It uses sensor technology to not only identify tire treads and road conditions in real time, but also respond to wear-out risks and change tread patterns according to the road condition utilizing variable wheels and optimized infrastructure. 
• The Goodyear Tire & Rubber Company and the Cooper Tire & Rubber Company have entered a definitive transaction agreement that will see Goodyear acquire Cooper for a total of US$2.5bn.
• Sumitomo Rubber Industries is to invest R$1.064bn (US$200m) to increase tire production capacity at its factory in Brazil. With this investment, the factory will increase its production capacity for passenger car and light truck tires from the current 18,000 per day to 23,000 per day by April 2024. 
• Cooper Tire & Rubber Company reported first quarter 2021 net income of $22 million, or diluted earnings per share of $0.43, compared with a net loss of $12 million, or diluted loss per share of $0.23, for the same period last year.

COMPANY PROFILES

• Michelin
• Continental
• Goodyear Tires
• Hankook 
• Bridgestone 
• Yokohama 
• Kumho
• Pirelli
• Dunlop
• Sumitomo Rubber Industries
• MRF Tires