Tyre volumes still declining

Tyre volumes are still declining around the world despite gains in the North American markets, which reportedly reflect improvements in demand but come from a low base. The news is derived from Michelin’s sell-in market data, which the global tyre giant publishes on a monthly basis.

According to the company, the European tyre market (which as far as Michelin’s numbers are concerned includes Turkey and Russia) has continued to show weak numbers for replacement markets in both light vehicles (down 6.8 per cent) and Trucks (down over a quarter, -25.8 per cent). As we have alluded to already, things were better in North America, with sales up 7.1 per cent for light vehicle tyres and nearly flat in truck tyres (-2.3 per cent). However May is general a strong month for tyre sales across the pond and this is to be expected considering the low base the figures are returning from.

All this means that analysts estimate that that aftermarket tyre sales growth could be down -11.2 per cent in Europe and -3.1 per cent in North America, while other markets like Brazil (up 3.2 per cent) continue to grow.

Reflecting on the figures, financial analysts explained there view that this demonstrates that there is some cause for short and medium term pessimism in the European market. According to an investor’s note published by Morgan Stanley, there have been no signs of recovery in European volumes and while a protracted phase of dealer de-stocking is said to be over weak consumer demand is something of a hindrance to dealers re restocking.

According to the market watchers, third quarter sell-in volumes are therefore likely to bee “especially weak”. Furthermore there are signs that pricing is not as strict as previously observed, especially at the low-end of the market. Morgan Stanley reports that this is as a result of being pushed down by the “selective discounting” of price leaders. However, the good news is that premium volumes and pricing are said to be “still holding up well” as a result of structurally growing demand and supply limitations.