Global car tyre demand to contract 20-30 per cent in 2020 – GfK

On the morning of 10 June 2020, well-respected market analysts GfK hosted a webinar for north of 170 European tyre executives. Overall, the “Global Car Tyre Market Overview” presentation concluded that, while there are many variables and unknowns, retail tyre demand in 2020 market is likely to be down 20-30 per cent compared with 2019.

The 20-30 per cent range came with the qualification that it is likely to be on the conservative side and that, when you take various nations lockdowns into account, most markets have simply lost three months of the year to motoring inactivity, something that takes with it 25 per cent of 2020’s annual consumer tyre wear. Nevertheless, GfK’s conclusion is in line with the range of estimates put out by major tyremakers in April, even a little higher. Knowing what we know now, the earlier estimates appear conservative – something we should all consider when reflecting on current estimates.

However, while the overall trend is more or less the same across all markets, there are differences in the details. For example, while garages in the UK and Italy were allowed but not mandated to remain open, Spain enacted a complete lockdown including garages.

GfK’s webinar brought together analysts from around Europe and surrounding markets in order to build up its tyre demand picture. First up Timur Samerkhanov, retail director NCE, gave an update on the Global Automotive Industry. Next GfK Italy’s head of retail, Ivano Garavaglia offered a “Global Tyre Market Overview”. Then Gulnaz Rakhmatullina, Retail Engagement Manager NCE presented on Covid-19’s impact on retail behaviour.

One key conclusion of Timur Samerkhanov’s opening session was that car manufacturers are using the disruption – as many automotive parts suppliers are also too – to install new, sustainable and eco-friendly systems and technology. This is likely to bring with it increased emphasis on sustainability ecology throughout the market.
For his part, GfK Italy’s head of retail, Ivano Garavaglia offered a “Global Tyre Market Overview” which gave an outstanding insight into current global tyre retail trends. Key takeaways from this session were that value brands are performing well in spite of and perhaps because of the obvious market pressures as consumer confidence has been knocked and as consumers are waiting longer between tyre changes.

Apart from the aforementioned global overview, the fourth session was perhaps the most directly applicable to us. In this presentation James Ward, senior client insight manager GfK UK, shared details of “The Impact of Covid-19 on the Tyre Industry”.

James Ward’s presentation gave another very insightful analysis of what is happening in the UK and European markets right now. If you had to summarise it in a few words, you could encapsulate the details in the following points. Firstly, online tyre buying is increasing as a function of lockdown and the increased take-up of online shopping in general. And secondly, van tyre demand, which has been a growth area for at least the last couple of years, is also being buoyed by lockdown’s impact, online ordering and the ongoing growth of that particular sector.

Overall, as we have seen, the webinar concluded that tyre demand is likely to be down 20-30 per cent compared with 2019. But budget tyre market share is likely to increase, along with van tyre demand and the call for online tyre sales. Also, since consumer confidence is down, new car sales could tank. For those looking for some light at the end of the tunnel, continued pressure on new car registrations is actually a relatively positive outcome for the hard-hit tyre replacement market. The thinking is that tyre retailers could see increased sales as drivers opt to keep existing cars longer. Such an uptick is unlikely to redress the negative impact of three months lost car usage and therefore three months lost tyre wear. However, the point is that opportunities remain for those with the right tyre retail pitch and the right product mix.