Bigger Tyre Manufacturers Losing Global Market Share: Deutsche Bank

A Deutsche Bank analysis of the global tyre market in 2008 has revealed that the global top 11 tyre manufacturer’s share of said market has fallen considerably in this decade, while the market capacity has swelled to twice its value (not allowing for inflation) at the turn of the millennium – US$140 billion compared to 69.78 billion in 2000. In addition, the Global Big Three (Bridgestone, Michelin and Goodyear) have seen their market share dwindle to 46.2 per cent. In the four previous recordings, taken by Deutsche Bank at five-year intervals, their share had not dipped below 52.1 per cent. Analysts attributed the downward trend to the fact that they have a below average share of the markets that are growing most rapidly, such as China. The news is affecting Goodyear most of all, since they have reportedly lost three times more market share than either Bridgestone or Michelin.

Meanwhile, in the rest of the top 11 worldwide manufacturers, the mid-sized Japanese (Sumitomo, Yokohama and Toyo) and European (Continental and Pirelli) companies have also lost some of their share, though the rate is not as steep. The analysts suggest that the companies are “too exposed to their domestic markets”. Growth in these markets, as well as North America, is slow to non-existent, representing 66 per cent of the market in terms of volume (25, 29 and 7 per cent respectively for Europe, North America and Japan) as opposed to 70 per cent in 2000 (29, 31 and 9 per cent in breakdown, as above).

Korean, Chinese and Indian manufacturers are growing fast outside the top 11, and Deutsche cites 12 companies – including five from China and three from India – with “revenues in excess of US$1 billion”. Hankook and Kumho – both in the top 11 – hold a share of 4.7 per cent between them (up consistently since 1991, when their share was 3 per cent). Cooper meanwhile has held steady at 2.1 per cent.

Outside the top 11, Asian companies in China, Singapore and Taiwan represent 12.3 per cent of the global market, a large rise on 2005’s figure of 7 per cent. Indian companies have grown more modestly – 3.2 per cent from a steady 2.3 per cent between 1995 and 2005 – while Russian companies are standing still since 2005, at 2 per cent.

The report suggests that we will see “further consolidation” over the next few years, with companies from mature markets needing expansion in emerging markets such as India and China; companies in emerging markets “need to consolidate to get the economies of scale”; and finally, smaller companies in China “will to tie up with those based in mature markets to get access to their technology to pass stricter new regulation”.

The report concludes, noting the beginnings of this period of consolidation in the last year and a half, such as Bridgestone and Toyo’s “cross shareholder structures”; Michelin’s increased stake in Hankook (from 6 to 10 per cent); and Apollo Tyres’ recent acquisition of Vredestein NV.