Expansion – production has changed, but it is certainly ramping back up again

Last month, this column suggested that “acquisitions, consolidation and sustainability” were three words that will sum-up developments in the tyre business in 2022. Judging by what has taken place in the weeks since that text was published, the overall argument was pretty sound. However, in retrospect it also seems pretty clear that we could have, and perhaps should have, added in a fourth term – “expansion”.

Recent tyre retail moves illustrate that point. During the last month or so we have reported in detail about Halfords’ acquisition of National Tyres and Autocare. This month, in light of another set of very strong Halfords Group financials driven by the Autocentres business, we take another look at the ongoing strategies and notice two things: 1) the company’s target hasn’t yet been reached, which means the acquisitions haven’t stopped; and 2) such acquisitions are part of a wider strategy of creating automotive retail fusion towns (see pages 16 and 17 of the forthcoming February magazine for further details).

Ongoing changes in the tyre retail landscape, most of which are driven by buy-outs, obviously qualify as examples of acquisitions. And since they both enhance the purchasing company’s scale at the same time as diminishing the pool of competitors, such cases are also examples of market consolidation – our second keyword of 2022. “Sustainability”, 2022’s third keyword, is once again evident in the February magazine’s pages too. But “expansion” is the word that we missed.

Uptick in factory opening news

Seldom have we received so much new factory and/or factory expansion news at the start of a year. For example, this time last year we reported on one important factory opening and – at roughly the same time – a significant factory closure.

This year’s magazine however, contains the latest information on: Sentury’s investment in a new tyre manufacturing facility in Spain; Kumho’s Saudi tyre factory talks, which the Southern Korean company has confirmed are taking place following the signing of a joint-venture memorandum of understanding (MoU) with Saudi Arabia’s Black Arrow Tire Company (Blatco) in mid-January; details of the closure of Continental’s South Africa agricultural and industry tyre manufacturing plant (see pages 22 to 26) to give just a few examples. Around the same time, there’s Qingdao General Science and Technology’s continued investment in three-digit million Cambodia and Thailand-based tyre factories plus the opening of Seyoun Tire’s new factory in China – a move that represents that particular firm’s transition out of its bicycle and two-wheel tyre niche towards passenger car and truck tyre manufacturing. On the global retail side of things Point S is expanding in China and B-Quik reports that it broke through the 200-branch barrier during 2021 (see this month’s International section for further details). The way things are going, it would be no surprise if further announcements were made before we get this magazine to press. Indeed, Tyres & Accessories is aware of medium-to largescale acquisition talks emanating from one more top 20 tyremaker as well investment in another largescale factory that will no-doubt emerge during the days and weeks to come.

So what’s behind that current spate of investment and expansion stories. In short, the glocalisation of tyres. Sure, words like that range between cringeworthy and technobabble, but this particular portmanteau is a helpful way of illustrating how the tyre business is swinging back from a long-term push towards the globalisation towards a more local approach. In some cases, this is very local with production returning to a national level – something that is particular clear in the retreading and recycling sub-spaces. However, in others it more a question of re-regionalisation in response to tariffs and other trade barriers. The upshot is that having tyres closer to the destination market also has logistic and sustainability benefits that have really stepped up to the core in the last couple of year.

With all that in mind, this month’s magazine focuses on the essential car and motorcycle tyre markets. As well as covering all the latest news, information and product releases, these special features naturally examine questions of acquisition, consolidation and sustainability in their respective fields – as well, of course, as how those sectors are expanding.