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Wednesday, August 17, 2022

Tire market forecast to reach $30.26 billion by 2021

Pune, India – The tires market for original equipment (OE) is projected to grow at a CAGR of 5.48 percent from 2016 to 2021, to reach a market size of $30.26 billion by 2021, according to the latest report by MarketsandMarkets. The OE market is primarily driven by the demand for improved fuel economy, low rolling resistance tires, eco-friendly and smart tires, and other factors. Passenger cars are expected to dominate the tires market for OE and replacement.

According to OICA, the passenger car sales around the globe increased from 55.6 million units in 2010 to 66.3 million units in 2015. According to the same publication, the passenger car sales were ~73 percent of the total vehicle sales in 2015. With an increase in sales and increased average life of passenger cars, the passenger car fleet has also risen over the period of time. Based on another report from OICA, the passenger car fleet has risen from 776 million units in 2010 to 907 million units in 2014-2015. This rise in sales of passenger cars has influenced the demand for tires in the OE as well as in the replacement market. However, factors such as increased average replacement life of tires with advancement in technologies, and unawareness or unwillingness to replace the tires have been creating a minor influence on the tire replacement market.

Light commercial vehicles are estimated to witness the highest growth in the retreading tires market. According to the Rubber Manufacturers Association, light truck retread accounted for only 1.67 percent of the tires aftermarket, in terms of volume. Retreading of tires has always been a popular concept with heavy commercial vehicles, but with time the potential benefits of using it for light commercial vehicles has been noticed. In a light duty vehicle, single tire manufacturing consumes, on an average, 26.4 liters of oil.

However, retreading of the same tire consumes only 9 liters of oil, which is almost 34 percent of the new manufacturing process. On the other hand, according to the Retread Tire Association, the cost for a set of four large SUV tires is around $1,000. Almost 50 percent of the cost is saved by adopting retreading for light duty vehicles. Thus, retreading suppliers are now focusing on light duty vehicle retreading. Certain tire manufacturers are also entering the retreading business, such as The Goodyear Tire & Rubber Company (U.S.), which has more than 1,700 tire retreading and service centers for commercial vehicles.

Asia-Oceania is estimated to dominate the tires market for OE and replacement. The growth in Asia-Oceania can be attributed to increasing vehicle production in countries such as China, India, Japan and South Korea. These Asian countries contributed ~46 percent of the global vehicle production in 2015. The increase in sales of the vehicles is owing to various factors such as increasing per capita income, increased infrastructure spending, attractive FDI from governments, economic production cost, lenient environment regulations, and so on. Additionally, the number of vehicles on the road is increasing owing to the improving road infrastructure, rising consumer awareness regarding vehicle maintenance, and stringent fuel economy norms. This positively affects the replacement market for tires.

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