Since last year, domestic natural rubber prices falling, tyre production and distribution companies from the raw material prices have not been in to enjoy the good, but into a price war quagmire unable to extricate themselves, and ultimately resulting in tyre prices "stumble endlessly." The reason is mainly produced in recent years, industry overcapacity and other factors.

 

In the price war intensified, excess capacity, inventory, competition in the market context, "industry big reshuffle" and "going out" to become some of the two directions of the tyre company to solve the problem.

 

On the one hand, the major tyre companies have increased their export efforts. Data show that in 2012, China's tyre exports grew 9.6%, to 2013, tyre exports up 13.3% increase in volume. It is reported that domestic tyre companies go out of channels and methods are: commissioned by the local agents to invest in overseas tyre factory, foreign exhibitors and so on.

 

On the other hand, the industry faces reshuffle pattern, including Aeolus such as mergers and acquisitions of listed companies have issued a related announcement, the tyre industry mergers and reorganization become a trend.

 

In September, domestic natural rubber prices fell four-year low, which is the chain of rubber tyre industry this is good, but tyre production, distribution companies do not benefit, but had to cut prices to promote industry-wide price war heating up, eventually leading tyre prices "stumble endlessly." Data show that this year, tyre price decline of more than 10%.

 

The reason, the "Daily Economic News" reporter learned that, in recent years, mainly producing industry overcapacity, tyre business inventories generally up to a half to two months of production capacity, about 50% higher than normal. China Rubber Industry Association survey data also show that in the first half of this year, the total value of 47 tyre companies stocking up to 18.54 billion yuan, 19 percent of total sales.

 

Many industry insiders told reporters that this will further exacerbate the pace of mergers and restructuring of the industry, some small, small enterprise strength will soon be eliminated.

 

Raw material prices and promote a price war is heating up

 

If last year's tyre market is "entangled uneasy", then this year's tyre market, it will need to "tragic tragic" to describe the delay ease oversupply situation, the price war is heating up.

 

"tyre Specials, there is a need to call", "large price better, please consult" ...... in the major tyre dealers forums, a variety of price promotions everywhere. tyre dealers, the price is already surprising, is now "down to see who was more than anyone else."

 

In North America, Cooper tyre Model 205 / 55R14, for example, the current average market price of around 300 yuan each, while the tension at the tyre dealer in Beijing, the price of the tyre model has been reduced to 220 yuan, a decline of nearly 27%.

 

"Before selling 280 yuan, then the dealer gives the price of $ 250, so I quickly dropped to 220 yuan, to see who can drop any lower than this price?" Joked tension.

 

"Daily Economic News" reporter learned that the reason why the price war intensified, with the price of the main raw material of rubber tyre is directly related decline.

 

It is understood that, in tyre production, raw material costs account for about 80%; and rubber accounts for about 50% to 60% in raw material costs, which constitute the cost of natural rubber in the tyre largest proportion, about 40% to 50%, proportion of synthetic rubber is about 10%.

 

Publicly available data, after February 2011, the global natural rubber prices in rapid downward path by the end of May 2011 to 2013, prices fell 50% natural rubber, synthetic rubber prices fell 54 percent. This year, natural rubber prices dropping again, down from the beginning to around 18,000 yuan per ton, now 11,000 yuan per ton.

 

Affected by this year, the domestic tyre prices overall decrease of more than 10%, and continues to decline.

 

Yu-Chi Industry Market Statistics Research Center show that in May, Chinese passenger car tyre dealer price index was 80.83, down 3.44%; Chinese truck and bus tyre dealer price index was 71.46, down 2.6%.

 

In this regard, Tyreworld chairman DU Yu Dai has said publicly that, in a short time, companies may bring the cost down to taste the "sweetness", but in the long run, rubber prices fluctuate too much endless troubles. "On the one hand, price volatility greatly increases the difficulty of the enterprise product pricing is not conducive to the normal trading; on the other hand, companies continue to launch an attack tyre purchase: Rubber prices drop, tyre prices should fall, leading tyre companies are equal tied on a chariot. "

 

Yu-Chi Industry Market Research Center Senior Fellow Juan Yuan Wei also told reporters that, as a result of rubber prices in the long-term downtrend, and the short-term reversal may not see, and therefore tyre prices severely suppressed, according to experience projections, China's tyre prices stabilize or uP also need more than six months time, although with the arrival of the Spring Festival, the peak traffic and transport occurs, increased demand for tyres, tyre price decline will be reduced, but the decline is still the main tone.

 

Yuan Wei Juan analysts said that for more than 900 domestic rubber, tyre companies, rubber prices, tyre business customers will be required to lower prices, therefore, tyre production, distribution companies actually want to rubber price stability, rather than the ups and downs.

 

Tension, said raw material prices are not dealers want. A tyre down ten dollars, which means that the dealer could lose a night more than ten million.

 

It is understood that the tyre is divided into three distribution channels - factories, dealers (agents) and retailers. Reporters found that the current price war focused on manufacturers and dealer level, few cases by substantial price cuts to boost sales among tyre retailers.

 

Recently, the manager of a tyre shop in Shenzhen Bao'an District, told reporters that at present, it does not feel the tyre industry downturn, because the store's sales, compared with the past, not much changed. "tyre after all just need the product, the owner will not change a tyre on markdowns, so sales changed little, but the current situation, our profit is definitely improved."

 

However, the manager admitted that the tyre shop, and now, many manufacturers and distributors all want more tyre shop can purchase to consumptive business inventory, "but we sold out a long time to take up a robust strategy to purchase only one week once every dozen, not into too much. "

 

For owners, dealers so that they benefit from a lot of the price war. A car owner told reporters that the four-time to replace the tyres, from 200 to 300 yuan of its expenditures can be less than before.

 

Production business inventories 50% higher than normal

 

In some industry view, the tyre industry price war is heating up, in addition to raw material prices factors, the deeper reason is overcapacity, overstock serious.

 

"Raw rubber prices are low but the one hand, more importantly, the end and the beginning of this year, tyre plant generally increased output, inventory rate increased." Yuan Wei Juan told reporters that this leads to tyre manufacturers now reach a common stock half to February production, about 50% higher than normal.

 

It is understood that since last year, by the tyre market "optimistic" atmosphere and high profit impact of blind investment rise, causing the tyre to more serious structural surplus production capacity.

 

Yu-Chi Industry Market Statistics Research Center shows that in 2013, China's new steel production capacity of 15 million sets of tyres and semi-steel tyre production capacity of 100 million units, while the tyre business equipment purchases from the current estimate, 2014 will add steel tyre production capacity of 15 million units and 150 million sets of semi-steel tyre, resulting in mostly small and medium overcapacity in the tyre business operation rate below 70%, which in mid-January, Shandong Province steel tyre tyre companies operating rate had dropped to 64.8%.

 

According to the China Rubber Industry Association, the first half of the 47 major tyre companies in the survey, the total value of 47 tyre companies stocking up to 18.54 billion yuan, accounting for 19% of sales, which accounted for sales of more than 30% of the stock of companies there are 10, accounting for annual sales of more than 90% had three.

 

In addition, the agent level, under normal circumstances, stocks are about three thousand pieces of normal, but the "Daily Economic News" interview, agents found more than at present, several companies have been far from normal stock inventory quantity, generally above eight thousand pieces, over ten thousand either.

 

According to Zhou introduced hundreds of millions of its tyre business in which an agent, getting goods directly from the factory, as previously allowed to grasp on the market, the current inventory has reached more than 40,000 pieces.

 

Zhou also introduced hundreds of millions that its business is usually first hit the tyre factory, then shipped factory direct, self-financing, there is no "return" one said.

 

As to why the stock is so high that week and do not want to talk to one hundred million, but said, mainly due to rubber prices, as well as the transport industry downturn affected.

 

To have the dealer inventory of over 40,000 pieces of the phenomenon, the tension so that the tyre industry is a major reshuffle, all the tyres began to cut prices, so there will certainly be some vendors go out of business.

 

Tension further noted that its current inventory at more than 2000, while the highest had ten thousand pieces, can continue to cut prices to sell down is the result of more than 50 each general wholesale. "Mostly I sell hard, terrible price, either way, it will lose a lot more."

 

From this perspective, the face of excessive tyre inventory backlog in the form of a price war consumptive inventory, be placed in front of the dealer Zhou million, tension the best and most realistic solution.

 

And the king who has been involved in consulting listed tyre company research analyst, told reporters that the tyre industry business logic has been simplified for the size and price competition, which is the underlying causes of inventory and price wars exist.

 

Industry has entered a "Ebb Tide" period

 

Business impact of the downturn on the business of the tyre industry is obvious.

 

Statistics show that from January to June, China Rubber Industry Association 47 member companies achieved a total output value of 102.962 billion yuan, down 0.13%; sales revenue 974.148 billion yuan, down 3.52%; export delivery value of 34.43 billion yuan, down 1.20%; 5.27% profit growth, and profits fell 3.22 percent.

 

And according to the "Daily Economic News" reporter statistics, as of September 30, 2014, six listed companies, including Aeolus tyres, race round stock, S Jia Tong, Qianlun, Qingdao Double Star, double the money stock, including in there are five operating income declined.

 

According to the tyre world network statistics, at present, China's tyre manufacturers have around 550, with an average production of about 1.6 million tyres / year, many producers, generally small scale of production, the former industry's top 10 companies market share of about 30 %, the international front three multinational global market sales were accounted for 46%.

 

Champoux consulting analyst, said Zhou Yufang, low industrial concentration, easily lead to disorderly competition, overcapacity, leading to a substantial decline in product prices, business losses and other serious problems.

 

Guangdong Provincial Academy of Social Sciences, director of the Comprehensive Development Research Center Li Youhuan believes that China's tyre industry has entered a survival of the fittest, Ebb Tide very period, a number of small-scale and strength of small businesses will soon be eliminated.

 

It is reported that in the future as China Aeolus Tyre Chemical Group asset integration platform, is expected before the end of 2017 China's chemical industry will meet the conditions of the tyre business or assets have injected Aeolus. The industry believes that, although the wheel in the background is the integration of assets and the rubber Aeolus, exist in the same competition the actual controller China Chemical control of some companies, but this is just a microcosm of the upcoming merger and reorganization under the tyre industry, the future of small tyre companies through mergers and acquisitions, restructuring, etc. gradually withdraw, the concentration of the domestic tyre industry will continue to improve. As Aeolus secretaries told reporters that the strong Korean law, the tyre industry will enter a period of mergers and acquisitions.

 

For the future trend of the tyre industry, including petrochemical network analyst Wang Kaifu Long congregation, Champoux consulting analyst 周玉芳, including a number of industry insiders have said is not optimistic.

 

 

Wang Kaifu noted that under the current environment the actual status of international and domestic tyre market, next year, the trend is still not optimistic tyres, raw material prices remain low, sluggish sales, product inventory serious, in order to reduce pressure on the stock, in a substantial cut in Meanwhile, in order to promote sales, the price war is more intense, tyre corporate profits will fall sharply. In addition, some funds is weak, brand awareness, low-tech small and medium enterprises will face a crisis of survival tyre, while large enterprises will adopt layoffs and other measures to reduce spending, cut costs to cope with the downturn in the latter part of the long situation.

 

"The next project with the capacity of the new tyres and the United States on China gradually formed semi-steel tyre dual investigation, China's tyre industry, the situation is more severe," Zhou Yufang, Yuan Wei Juan invariably said to reporters.

 

Crisis is opportunity, how to open the external sales channels is an important way the tyre industry. Tyreword always thought that the tyre is a consumable, car travel is already a necessity, the use of tyres in the macro is still on the rise.

Enhance the quality of the tyre itself, with the scientific and technological content, eliminate inventory is now the best choice.