Difficulties in Three Major Channels of Export, Replacement, and Assembly: How Can Tire Manufacturers Help Themselves?

1. The three major channels encountered difficulties, and tire company sales have decreased

Export, replacement, and assembly are the three main sales channels for tire manufacturers. At present, these three channels are facing some difficulties, which lead to the decline of tire sales.

In terms of export, the problem of overhigh ocean freight and insufficient containers still exists. The high freight costs deter tire distributors in many countries from purchasing Chinese tires.

The continued increase in foreign trade shipping costs will further affect the export orders of tire manufacturers.

As for the assembly market, it was mainly affected by the decline in production and sales of automobiles, especially commercial vehicles.

According to the data from the China Association of Automobile Manufacturers in July, tire companies sold about 72,000 heavy trucks in July, which is a 50% year-on-year decrease. It shows a significant decline trend. The decrease in vehicle sales will lead to a decrease in assembly sales.

According to statistics, after May 2021, sales of all-steel tires decreased by 30% to 40% during the same period.

In terms of the replacement market, it is very difficult to sell replacement tires due to the sluggish transportation industry.

According to research, tire distributors said the current domestic market is sluggish.

2. The tire company greatly plunged

Due to the continued decline in market sales and the strict environmental supervision since August, tire manufacturers have cut production to deal with the sales crisis.

The survey of relevant institutions shows that tire company-related equipment maintenance led to the suspended production, which caused a further decline in the overall start-up. In addition, stopped tire companies have not yet fully resumed, the tire company's operating rate in early September in this wave of production regulation will usher in another low dip.

According to the data, the current operating rate of all-steel tires has fallen to 41.2%, and that of semi-steel tires has fallen to 39.5%, both of which are near the lower limit of the annual operating range.

Currently, the global pandemic is still developing, and the tire supply chain will inevitably be affected by many aspects. Tire manufacturers choose to reduce products due to inventory pressure. Tire distributors also began to increase tractor tyres prices.

However, the market is weak but still competitive. For tire distributors, implementing the price increase policy of manufacturers is undoubtedly a further "blocked" sales road. So, it is important to keep up with the market and make stock planning and market strategies, which is the key topic of the current tire distributors and terminal stores.

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