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Michelin: November’s Market Worse Than October’s

The report published by Morgan Stanley Research Europe says it all: “If investors thought tyre data was poor in October, it just got worse…”

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What this memorable sentence refers to is data released by Michelin on Dec. 18, which shows the supposedly more resilient passenger car tyre replacement market to be down in Europe 10.3% in November, and in North America by a hefty 20.2%. OE sales in the segment dropped a spectacular 33.5% in Europe and 31.2% in North America.

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In the truck tyre market, replacement markets sales in Europe (including the CIS) were down 25.7% on November 2007, while in North America they had decreased by 18.7%. In terms of truck tyre OE sales, Europe and CIS sales dropped 36.1%, while those in North America were down 25%.

Morgan Stanley believes that, given the volume slowdown, Michelin will struggle to stay above break-even in the fourth financial quarter. Tyre companies claim unprecedented price discipline, but according to Morgan Stanley it is unrealistic to expect current tyre prices to hold during an historic collapse of volume and raw materials. It forecasts a “peaceful” 4% decline in pricing in 2009. (Tyres & Accessories/Staffordshire, U.K.)

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