6% Rise in August Registrations Could Help Korean Tyre Manufacturers

The latest SMMT figures reveal there was 6 per cent rise in new car registrations in August 2009, with the monthly total growing to 67,006 units. The second successive month of growth in new car registrations is widely attributed to the success of the government’s scrappage initiative, with August’s figures building on on a 2.4 per cent gain in July. As you might expect in light of the scrappage scheme, private purchases of small cars grew particularly strongly with this type of sale accounting for 35,694 (53.3 per cent) of August’s sales, compared to 23,717 (37.5 per cent). However, the recent growth disguises the fact that sales are still 15 per cent off the 78,800 total monthly market average between 1999 and 2008.

Ford and Vauxhall continued to dominate sales in August, however it is the surprise success of the Korean car manufacturers that has the potential to re-shape the UK car parc. And as these car manufacturers are almost exclusively supplied by Korean tyre makers, there is also likely to be a positive effect on Korean tyre sales in the UK.

In August Hyundai’s i10 was the surprise number three in overall registrations with 2431 new sales recorded, after the first placed Ford Focus (4336 registrations) and Ford Fiesta (2968 registrations). However, when you exclude business and fleet purchases, retail sales figures show Hyundai’s market share grew a whopping 323 per cent, meaning the i10 overtook the Vauxhall Corsa to become the third best seller in UK, by this measurement.

The figures, which would have seemed inconceivable a few months ago, show that Hyundai’s overall sales for the month rose 323 per cent compared to August last year to 3,737. It gives Hyundai a record overall market share of 5.6 per cent. The i10 was the company’s biggest seller by far with 2,431 finding homes in August. According to Hyundai, this outsold the second placed car by more than two to one. With all of the i10’s OE tyres divided between leading Korean manufacturers Hankook and Kumho (the very manufacturers that appear to be benefitting from the so-called de-segmentation phenomenon) and with the new ‘59’ registration numbers available from the beginning of September, and around 17 per cent of annual registrations made at this time because of the new number plate release, the next round of figures are expected to show similarly strong figures for the Korean car makers. This means that Hyundai’s sales figures this month are set to be even more impressive.

“We are well on the way to making September the best ever month for sales in the company’s history” said Tony Whitehorn Hyundai UK’s managing director. “Our dealers have taken on an average of 20 per cent more staff to cope with demand.”

“The scrappage incentive scheme is having a positive impact but with consumer and business confidence still fragile, there remain significant risks ahead. It is essential that these early signs of recovery are sustained into 2010,” said Paul Everitt, SMMT chief executive.

However, Hyundai’s strong i10 sales are not alone. Tyres & Accessories/tyrepress.com has it on good authority that 75 per cent of OE on the popular Kia Rio is supplied by Nexen. As a result the third largest Korean tyre maker – Kia’s success continues – could face a disproportionately large uplift in UK sales in the years to come.

However from the tyre market’s point of view, the boom in formerly lesser sold car marques could already mean significant changes in the tyre market. Sources told T&A/tyrepress.com that the Korean manufacturers are already shoring up stocks at main dealers in advance of future servicing requirements.