Report: July Sell-in Market ‘Stabilising’

European and worldwide tyre markets are finally stabilising, according to a report released today (3 September). Writing in response to the latest round of market figures issued by leading French tyre manufacturer, Michelin, market analysts at Morgan Stanley described their view of the current market conditions as “slightly better than our expectations.” Despite highlighting the fact that the data continues to show negative year-to-date growth rates in almost every market, the analysts focused on the fact that the pace of the decline “showed material improvements compared to year-to-date trends and it looks on track to exceed our volume forecast for the quarter.

The usually bearish analysts at Morgan Stanley optimistically reported that while European truck tyre OE sales fell 69 per cent in July, replacement sales were just a comparatively low 17 per cent – “the most mild year-on-year decline since October 2008.” However, this assertion flies in the face of an earlier report from Deutsche Bank which suggested the same figures represented some of the least improved figures are in the European truck replacement market; figures, which the bank described as, “very poor.”

Looking globally, the analysts described Chinese replacement market tyre sales as “improving,” with sales of replacement truck tyres in the replacement market down 7 per cent year-on-year. OE truck tyre sales were down 5 per cent in China in July. In Brazil sales of truck tyre OE sales decreased 37 per cent while replacement sales fell 17 per cent.

The analysts outlook is that improving year-on-year declines should turn to “outright growth in many key markets by year-end with growth accelerating into the first half of 2010.

Referring to Michelin itself, the analyts’ report notes that Michelin volumes in July declined 9 per cent compared the analysts’ earlier prediction of a 12 per cent volume decline in the third quarter.