Trucking Along Nicely

Although demand for road freight transport in Europe is predicted to increase substantially by 2020, the road ahead looks difficult for many established transport companies. Spiralling fuel prices, increased competition following enlargement of the EU and stricter environmental and safety legislation are squeezing margins. As a result price and overall economy are as important as ever for truck tyre consumers. Tyres & Accessories collated all the recent UK market data and asked what effect this ‘cost culture’ is having on the UK market.

The last couple of years have seen the UK truck tyre replacement market, one of the most mature and complex in Europe, remain relatively stable at around 1.3 million units. There was a slight dip in sales between the end of 2004 and 2005, but this looks likely to level off by the end of 2006. Industry observers put the dip in tyre sales down to one of two things: increased sales of imported tyres that do not figure on official statistics like those generated by the Europool; and market pressures caused by new legislation and a lower spending economy. However, while the total size has remained relatively comparable this year, the exact make-up of the market is considerably more fluid. In only the last 12 months or so there have been significant developments in all three of the premium, mid-range and economy segments, with different players asserting their leadership in each.

The premium segment still dominates the UK market, with cost conscious fleet operators appearing to believe that they are “too poor to buy cheap.” As a result premium truck brands (Bridgestone, Michelin and Goodyear/Dunlop) still account for around 70 per cent of the market. Having said that, the market appears to be evolving into more of a two-horse race than the three-way split it has previously been. The most interesting development here is that Bridgestone and Michelin are now virtually neck and neck in terms of market share with around 25 per cent of the market each. This change is largely down to improved sales performance at Bridgestone where the words John McNaught told Tyres & Accessories just over a year ago are still the management’s overriding business development mantra: “sustainable growth.” This aside, the premium sector, like the market overall, remains relatively stable.

Mid-range movement

The real movement is taking place in the mid-range segment where a certain South Korean manufacturer has been aggressively taking market share from its competitors. Hankook executives clearly have their sights set on being a premium brand and believe that they have the product and staff necessary to achieve their goal. Firestone remains relatively strong, but managers admit that there is more potential from this brand than is currently being reflected in its sales figures. Pirelli remain players in this market, and only recent launched renewed efforts to promote its truck products in the UK market (see August T&A). Rounding off developments in the mid-range market segment, according to one competing manufacturer Yokohama truck tyres occupies a further 2 per cent of the total truck market.

Chinese imports

Then there’s the ubiquitous “other” segment. For the purposes of this overview, “other” covers all brands with less than 2 per cent of the market and includes all the Chinese manufacturers that have been causing such a stir in the Republic of Ireland. UK readers may already have heard about the effect Chinese products have had on the Republic’s truck tyre market. In case you haven’t, here is a quick précis.

Between the end of 2004 and 2005 the Europool figure for truck volumes in Eire fell some 16 per cent. True it’s a smaller market, with arguably different requirements, but this is clearly a significant amount. The reason? Chinese imports are accounting for a fair few of the sales that were previously counted in the Europool figures. Padraic Deane, editor of the Irish Tyre Trade Journal, said it this way: “The Irish truck tyre market research that we published last year is now out of date. Cheaper Chinese truck tyres have affected the market structure here with regard to who sells how many truck tyres to whom.”

The situation in Great Britain simply isn’t that dramatic. Tyre manufacturers may play it down, but the influence of Chinese produced products on this situation cannot be ignored. Of course there are no exact figures on how many of these products are sold in the UK, but one manufacturer told T&A that as many as 20,000 of these products could be sold annually. If that’s true, and there is no reason why it shouldn’t be, it means that Chinese imports now account for the best part of 2 per cent of the market. And if Giti Tire’s strategy is anything to go by Chinese manufacturers haven’t finished yet. Sales are largely made up of brands like Infinity and Double Coin, but many manufacturers have voiced their concerns about the quality of brands that are less well-known than these.