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3. Global Overview on the Wheel and Tyre Industry
Whilst the demand and supply of the wheels and tyre industry is driven by growth in the number of vehicles in use across the globe, demand for wheel alignment machines on the other hand is on rise owing to increasing awareness towards the necessity and benefits of accurately aligned vehicles. Also, wheel balancing and alignment is fueled by cars mileage coverage and roads’
conditions of the countries. The wheels and tyres industry includes companies that produce, manufacture and sell automobiles or any motor vehicle wheels and tyres to the consumers, dealers, retailers or industries whose main business is related to wheels and tyres. This industry put emphases on either new or re-treaded tyres, for trucks and lorries, buses, vans, SUVs, motorcycles, trailers or any transportation vehicles involved in carrying out repairs and fixes on tyres. Tyres industry is a mature industry after having evolved rather than revolved over many cycles and stages in the last century. And as such, the industry has developed to stages whereby it has been able to effectively maintain the demand and supply chain at its optimal level. (Market Research Reports, Inc, 2018)
The tyre industry is considered one of the biggest contributors to the global economy and have been performing excellently after having gone through rough patches and unfavorable economic situations. The wheel and tyre industry is a structured industry and is projected to underperform and contrast against the economy until the end of 2019 due to several global factors that include consumer spending patterns, drops in government economies and increases in manufacturing inputs. The revenue is also estimated to decrease over the next five owing to all the above and will affect negatively the profit margins for all players in the industry.
Investment in heavy research and development though is expected to improve the operations of
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manufacturers in the industry in such a way that, they will find cheaper and economical means to scale production thus becoming professional in their operations. Eventually the industry's revenue is expected to grow by 2.2% annually until 2024 to reach the value of $5 billion.
(Freedonia Group, 2018)
The tyres industry and retailers at large is said to have performed well over the last five years when compared with other industries in the automotive sector. The consumers income, buying power and the global trends in latest technological advances in automobiles have increased the demand for tyres across the globe. One should mention that there are certain factors that have been affecting the tyre industry and lessening tyre demand. This include hikes in rubber prices for the manufacturers involved in producing tyres whom in return have transferred those costs to the final consumers. Increases in fuel prices and oil on the other hand have also been detrimental factors to the industry considering the fact that mileage coverage depends on fueling ability by motorist. The less distance travelled by each consumer vehicle results in more years taken for tyres to worn out and get replaced, thus lessening demand for new tyres.
Economic recovery and emerging markets such as Korea, India and China over the next years is expected to give rise to profit margins in the overall tyre market. These countries are expected to come with benefits in the industry considering the fact that they are coming up with latest technologies in mass production and developing economies and as such, the opportunities brought about by the new entrants in those markets are tremendous. According to Freedonia Group (2018), the global tyre industry is estimated and calculated to record an approximate of 5% yearly growth in volume demand until 2015 and reaching almost 3.5 billion units in sales.
The industry is expected to record 7% year on year growth to reach the revenue of $220 billion by the end of 2015.
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3.1. Wheels and Tyres Services and Safe Driving Concept
Road Safety authorities and governments in different countries across the globe have given much focus to vehicle maintenance and aspects such as tyre safety and wheel steering stability.
Vehicle factors have proved to be attributable to road crashes such that motorist and drivers at large have been advised most often than not to carefully inspect their vehicles and vehicle components making sure that they are proper. Doing so allows them the best possible chance that they arrive safely at their final destinations!
Wheel balancing and alignment according to the arrive alive South African website are aspects that are often neglected by vehicle owners. Most often, these aspects are considered least important and little attention is given to their importance. Whilst tyre life is important to driver’s safety, these aspects should also be considered as prevention measures towards road accidents and as important as tyres. Considering that wheel balance refers to the even distribution of weight around a wheel and tyre in motion, an out of balance wheel will cause the vehicle to vibrate as it accelerates to reach certain speeds. The uncomfortable bounces caused by the wheels are so disturbing that the driver might lose control of the vehicle in the process. Below are dangers of unbalanced vehicle:
• Wheels that are not balanced or are out of balance generally produce a vibration that is uncomfortable to drive in and compromises the handling of the vehicle.
• Unbalanced wheels put unnecessary stresses and strains on the wheel bearings and suspension components.
• Steering components including tyre rod ends and ball joints can also be damaged and all the parts may fail unexpectedly in life-threatening cases.
• Unbalanced wheels result in early wearing of suspension and steering components,
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rotating parts and tyres.
• Unbalanced wheels also increase fuel consumption. Ignoring the symptoms can be dangerous and expensive as illustrated in figure 7 below whereby the figure depicts a tyre burst due to unbalance wheels.
Figure 7: Tyre burst due to lack of wheel alignment and balancing Source: Arrive Alive Website, South Africa, 2018
Wheel alignment on the other hand is the process whereby the wheels are rotating proportionally and in line with the ground. This is done to ensure that the tyres are adjusted straight with the road such that the car would move straight over a certain distance without the driver touching the steering wheel. There are more significant reasons why wheel alignment is so important to safety other than just referring to it as tyre wear and wear patterns.
Whilst a vehicle that is knocked out of alignment compromises the safety of motorists and drivers through noticeable effects on your ability to steer the vehicle, the degree of misalignment is not obvious to the human eye. Unless the driver knows to have hit potholes and rough roads more often, alignment should be checked every 10,000 km or 6 months, whichever occurs first as a precaution to wheel alignment, otherwise motorist should stay alert to the warning signs that the wheels might be out of alignment. Uneven tread wear as in figure
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3 above is a sign that the car was driven quite a while with improper wheel alignment. Often, as seen on the figure above, the inner tyre tread will wear down smooth while there is still plenty of outer tread left, or visa-versa. The result is that tyres have to be replaced sooner than expected otherwise road accidents are inevitable. (South Africa Online Road Safety Awareness , 2018)
3.2. Wheels and Tyres Demand
Demand for wheels and tyres in the developing regions will be fueled by growth in the number of vehicles in use, whilst increases in average annual vehicle mileage worldwide will be boosting tyre replacements, wheel alignment and balancing services. The development of newer and more classy vehicle designs comes with a need for technically advanced automotive wheel alignment and balancing components. A world study by Freedonia Group states that the world demand for tyres is projected to rise 4.1 percent per year to 3.0 billion units in 2019. The study assures that sales of tyres are projected to increase by 7.0 percent per annum to $258 billion.
Improved incomes in developing regions on the other hand will trigger growth in vehicle demand, fueling demand for wheels, tyres and wheel balancing and alignment services at large.
Higher income levels and expanding economic activity will also contribute to increases in average annual vehicle mileage, boosting replacement and wheel and tyre service rates.
However, tyre quality and quality wheel alignment and balancing services will exert marginal downward pressure on replacement rates and demand for tyres and the services. Accurately aligned vehicles through quality alignment components would result in longer suspension life and would reduce the repair expenses.
The Asia/Pacific region accounts for half of all tyres sold around the globe and the region is forecasted to post the fastest growth and demand through 2019. According to the Freedonia group study, China which accounted for almost one-fourth of global tyre demand in 2014, will
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remain one of the fastest growing national markets for tyres. Other countries including India, Indonesia, and Thailand are expected to spur rapid tyre demands with Japan having been the fourth largest market for tyres forecasted to experience a downturn and disappointing sales over the period. The developing Africa/Mideast region and Central and South America are expected to remain below six percent of the global total tyre sales in 2019 after having maintained just above average in tyre performance sales. Growth in demand for tyres is expected rise about 1%
annually through 2019 for the North America and Western Europe whilst replacement tyre markets in these regions are mature, considering the fact that vehicle ownership rates are already at optimal levels.
Figure 8 below depicts global tyre sales by global demand for car and light commercial vehicles across the globe. The trend looks positive over the years and tyre demand have grown from 1335 units in 2012 to 1624 units by 2018. The growth depicts a 21.64% increase over the years to 2018 and an incremental average annual increase of about 8% through the years 2012 to 2018.
Figure 8: Global Trend in Tyre Demand by unit sales
Source: The Statistics Portal (statistics and studies from more than 22,500 sources) 0
Source:The Statistics Portal (Statistics and Studies from more than 22,500 Sources)
Global Demand for Car and Light Commercial Vehicle Tyres from 2012 to 2018
Demand
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3.3. Wheels and Tyres Supply
According to the Daily Records 2017-2018, the “Top 10 Largest Tyre Manufacturing Companies in The World in 2018”, the largest tyre manufacturers by far have been Europe and Asia. Considering that Asian manufacturers boast with cheap labor costs, Japan’s Bridgestone continued to dominate the industry by pushing revenues of about 26.2 billion during the year 2017 as depicted in Figure 9 below. Second-ranked Michelin of the United States boast with 23.4 billion in revenues whilst third-ranked Goodyear Tyre Company with its headquarters in the United States as well have pumped in 14.6 billion in revenue over the same year. While Continental’s closest competitor, Bridgestone of Japan, generated about 83 percent of its revenue from the tyre production and sales in the 2016 fiscal year, Germany's Continental in fourth position is the major player based on tyre sales overall revenue and have been active in various production lines including brake systems manufacturing and automotive safety.
Founded in 1871, Continental generated a total of about 40.55 billion euros in revenue over plants that employed around 216,000 employees worldwide during the fiscal year of 2016. (The Daily Records, 2018)
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Figure 9: Tyre related sales Global Distribution of Producers and Manufacturers Source: The Statistics Portal, Largest Tire Manufacturers by revenue, 2017
Having highlighted the trend in the tyre market around the globe, the Asia Pacific region on the other hand is projected to dominate the global wheel alignment market over the forecast period year 2017 - 2025. The region including China and India is said to account for a larger share attributable to the high demand for automotive industry as highlighted in the above sections.
While Latin America and Middle East is forecasted to depict a sluggish growth over the forecast period, Europe and North America will account for a significant market share owing to developed manufacturing sector and demand for precision equipment. (Research, Persistence Market, 2018)
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