Continental AG, as a manufacturer just outside the top three in terms of U.K. commercial vehicle replacement tyre marketshare, must be examining the market very closely – something that made executives’ recent market research presentation all the more interesting. U.K. commercial vehicle brand manager Jill Rodgers and truck and remould brand manager Mike Nyren presented the data.
According to Continental, the U.K. commercial vehicle tyre replacement market totalled approximately 1.178 million units in 2006. The figure, based on Europool statistics plus an estimated import total of 100,000 units, is just shy of Tyres & Accessories’ 1.2 million unit prediction in October 2006.
Market pressures including price increases caused by this year’s high raw material costs reportedly eased the influx of Asian brands. Asked if there was any evidence of dumping, Nyren replied: “Yes, in the last 18 months…this has been of varying quality.” Nyren qualified this trend by describing it as something of a one-off and suggesting: “Asian markets will be focusing on the growth of the Chinese and Far Eastern domestic markets as opposed to exports.”
The van tyre market is described as being 1.4 million units in 2005, but 4% smaller in 2006.
Continental’s research shows that steer tyres represent 57% of the market. This figure has remained more or less flat for the last three years. The proportion of trailer tyres has reportedly declined to 28% since 2002.
The opposite effect can be seen with regard to drive axles tyres. Sales of these products accounted for 16% of the market – this is the result of consistent growth from levels nearer 12% in 2002. Company representatives explained the changing breakdown of the market as being a result of the influence of remoulds and the growth in the number of different applications trucks are now used in. The fact that regional and long distance applications now account for the majority of the market was described as an influential factor.
As far as sizes are concerned, Continental’s market research shows that the influence of a few key sizes has increased significantly since 1997. Ten years ago, the top five sizes represented 44% of the market, with two-thirds of this divided between the top two fitments. In 2005, the top five sizes represented 55% of the market, but the breakdown has become much more evenly spread; the 295/8022.5 remains the most popular tyre, but real growth can be seen in 295/80R22.5, and the 315/80R22.5 is now in the top five.
A Lower Profile?
Continental’s research also shows a clear trend towards lower-profile products. Now 80 series sales make up 38% of market, followed by 65 series (19%) and 70 and 85 series (representing 11% each). Sales of 55 series truck tyres now represent 1% of the market, when, in 1997, they were virtually unheard of.
Looking forward, Continental predicts growth in sales of 315/70 and 315/80-based sizes, not to mention further growth across the low-profile size range. Sales of the 385/65 trailer tyre are expected to stay strong, and increased take-up of super-single products is also expected. However, product development is predicted to be a matter of evolution rather than revolution.
Continental representatives also predicted that the role manufacturer-owned equities play in the market will substantially diminish in the years to come. Equities previously sold over 50% of CV tyres, but, according to Continental, this option does not deliver the profitability that is required. “We believe equities will remain [for the time being], but ATS Euromaster may be the only one left in the next five years.”
According to Nyren, this trend can be seen in the fact that independent dealers already sell 60% of the market’s tyres. And, if this theory is correct, it means we can expect a significant increase in the number of independent dealers that will “hopefully become ContiNetwork partners,” quips Nyren.
