Truck Sales Slump Hitting Tyre-Makers

With manufacturers of trucks in Western Europe finding market conditions tough, tyre-makers with a large interest in the Truck segment have to contend with the decreased demand for OE-supply alongside the well-documented problems of increased raw material costs and the struggle to sell to the replacement market.

The replacement sector too, is hurt by fleets continually looking to make savings, for which cutting the cost of tyres is too often high on the agenda. Rather than allowing fleet-based customers to diminish their overheads through decreasing the rate at which they replace tyres, or buying cheaper alternatives, major European manufacturers – such as Michelin and Pirelli – are ramping up their efforts to attract business to their all-encompassing fleet servicing products, in addition to focusing in earnest on their operations in emerging truck markets, such as Brazil, where the replacement and, to a lesser extent, the OE markets are remaining strong.

Aside from the problems in Western Europe, the US market also seems set to remain in strife for the time being. A survey of Class 8 truck fleets in the United States – conducted by J.D. Power and Associates and reported in Tire Review – suggested that only 25 per cent “definitely will” buy or lease a new truck within the next 12 months, a figure that is down from 41 per cent, the figure posted in the 2006 survey. In the same document, 54 per cent – down from the 2006 figure of 63 per cent – of fleets said that they would be looking to expand.

Back in Europe, the market shares of the largest companies are seeing a period of fluctuation. T&A estimates put Bridgestone at the head of the market, with a slender lead over Michelin. Goodyear’s various brands have seen their share fall in H1 2008 to around half that of the big two, while Continental’s truck division appears to be making gains on its 2007 share.

The equation in both markets is similar: truck fleets, having to compensate for high fuel costs, look to target areas in which they feel money can be saved. Those hauliers that are unsuccessful go out of business, meaning that tyre suppliers miss out on payments; those that are successful can tend either to buy fewer trucks, meaning that OE orders for tyres from manufacturers dwindle, or find ways of reducing the money they spend on tyres. How they do this is currently an area of great interest to premium tyre manufacturers, and the fleet services they offer. While nothing new, herein lies the key to maintaining the sector during tough periods for logistics firms.

Fleet services

This month’s truck tyre roundup sees several stories related to the area of manufacturers pursuing to a greater extent the “fleet service” angle to increase business and the company’s profile. ATS Euromaster – the Michelin-affiliated fitter – has news of two new fleet contracts, while Pirelli strongly suggests that it is using its network of dealers through which to offer specialised services to truck fleets. In addition, the Chinese-owned GiTi Tire Europe – with its European base in the Netherlands – is busy promoting its GiTi Assist programme; something of a first for a Chinese company. The networks are being promoted as a fast, convenient and cost-effective way for fleet managers to run their tyre-based operations. Manufacturers will continue to use their servicing affiliates – whether they are company-owned like ATS-Euromaster or affiliated independents, as favoured by Bridgestone for example – to connect with the eventual users of their products.

Fuel efficiency technologies

Another approach to saving money for hauliers is in the tyre technology available to manufacturers. For example, at the 62nd IAA Commercial Vehicles in Hanover, Germany, held between September 23 and October 2, Continental intends to present a wide range of products and services for commercial vehicle manufacturers, fleet operators and special-purpose vehicle manufacturers. Last year’s takeover of Siemens VDO Automotive has further expanded the company’s product spectrum, specifically in the area of commercial and special-purpose vehicles. All in all, five of Continental’s six divisions will have new products and services on view at the IAA Commercial Vehicles 2008, not least the tyre products division.

Two new trailer tyres will be presented with claims to “greater fuel efficiency” and “higher performance“ – the HTR2, which was unveiled in Birmingham in April, and the HTL1, which will make its public debut at the IAA 2008. In terms of mileage performance, the HTR2 is – Conti believes – the absolute best of its kind. The HTR2’s five per cent improvement in rolling resistance translates into savings of around a litre of fuel per 100 kilometres. Designed for longer distances on the motorway, the HTL1 has been dimensioned for supercube trailers. In contrast to its predecessor, the HTL1 exhibits much better mileage performance and a marked improvement in rolling resistance.

Continental is also debuting newly developed tyre pressure monitoring systems designed specifically with commercial vehicles in mind. The Intelligent Tire System, with sensors integrated into the tyre, continuously oversees the respective pressure and temperature of the tyre and is thus able to catch a gradual loss of inflation pressure before it is too late. Drivers can conveniently check the inflation pressure of the individual tyres on the instrument panel or are automatically informed when a tyre’s inflation pressure is too low. The system thus helps limit tyre wear and fuel consumption while widening a vehicle’s margin of safety.

Emerging market strength

The largest European manufacturers are also seeking pieces of the pie in developing markets. A recent Morgan Stanley analyst report on Michelin showed data suggesting that the Brazilian replacement and OE markets are pointing upwards, as of July 2008. Pirelli has also announced that it will invest 100 million US dollars to boost truck tyre production by 50 per cent at its Yanzhou, China plant. Marco Tronchetti Provera said in Beijing back in July that the investment would increase truck tyre capacity to around a million units at the factory.

Thus truck tyre manufacturers are taking numerous measures to build in strength in the face of weakened US/Western Europe truck tyre markets.