GfK: Thai 1Q replacement tyre demand up 22%

Thai consumers spent nearly US$175 million in first three months of 2014

Despite the ongoing political upheaval which has been plaguing the Thais since the start of 2014, replacement car tyre sales grew by 22 per cent in terms of unit volume in the first quarter of 2014 compared with the same quarter last year. This equates to some US$175 million in first three months of 2014.

According to the latest retail audit findings reported by market research firm GfK, Thai car owners purchased around 1.66 million units during the first three months of the year. This represents an additional 294,000 units sold compared to last year, leading to a spike in market value of the sector by over 8 per cent.

“It is worth highlighting that the first quarter of 2013 generated the lowest sales of all four quarters that year,” commented Craig Griffin, managing director for GfK in Thailand. “Quarter one last year was the start of the consistent upsurge of the local replacement car tyre market in volume terms for the rest of the quarters thereafter, thanks to the heightened level of promotional efforts by retailers to boost sales.”

Price deflation evident

GfK data reflected a steady downtrend in the average pricing of replacement car tyres since the third quarter of last year, where it stood at $119 and gradually fell to the low of $106 reported in the first quarter of 2014—a significant drop by almost 11 per cent. The markdown in prices is seen across all the individual major players in the local market, where latest quarter findings reported prices to be in the range of $69 to $119.

“Manufacturers recognise the importance of proactively stimulating the market in order to continue driving sales in the midst of the political instability which dampens consumers’ willingness to spend,” said Griffin. “The rise in promotional activities was also one of the after-effects of the first-car policy introduced in 2012 where, since car tire manufacturers started shifting their marketing efforts from OEM back to the replacement market.”

Foreign brands dominate Thailand’s replacement car tyre market with the top three brands continuing to expand further to contribute to over two-thirds of the overall market revenue and slightly lower (64%) in terms of total sales volume.

“Competition in the market is likely to intensify further with the smaller brands stepping up their expansion efforts by increasing penetration among retailers,” said Griffin. “On the whole, with the expected cessation of the political turmoil by mid-year, improving sentiments will no doubt be beneficial to the replacement car tire market to help drive it to a level higher than 2013,” he concluded. cja