2023 China Replacement Tire Market Poised to Revive
Snapshot: In Q1, 2023, China’s tire market extended gains. The demand in the replacement tire market revived, with a fairish performance in Q1. However, in the long run, the overall demand in the replacement tire market may swing down, stemming from changes in China’s transportation mode, the improvement of the tire wear resistance, etc. In 2023, backed by economic recovery, it is envisaged that the demand in the replacement tire market may ratchet up Y-O-Y, but it is unlikely to exceed the demand in Q1, 2021.
In Q1, 2023, China’s tire market performed well.
The inventory replenishment in the market was inadequate ahead of the Spring Festival. Thereafter, merchants were active in stocking up along with the opening of purchasing meetings. Thus, agents sold goods decently, pushing up the sales in the replacement tire market.
As seen from the above charts, affected by the Spring Festival holiday in January, the tire market and producers faced a long time of supply outages. Sales in the replacement tire market saw M-O-M and Y-O-Y drops in January. Thereafter, the tire market recovered, and tire traders were active in stocking up. Sales in the replacement tire market climbed to a high level. Especially in February, sales at agents were favorable in the wake of centralized procurement in the market. With stock-up activities finished in the market, sales at agents slowed down. Therefore, in March, sales in the replacement tire market retarded. On the whole, underpinned by sales in February and March, sales of replacement tire in Q1 performed well, especially that those of all-steel tire surged by upwards of 20% Y-O-Y.
The replacement tire market faced headwinds.
In recent years, due to low-carbon policy, etc., China’s transportation structure underwent adjustments, from road to railway transportation. From 2019, the resource volume transported by road dwindled year by year. Especially in 2022, the resource volume transported by road slipped by 5.2%, but that transported by railway witnessed 6-year growth from 2017. The transportation mode altered from road to railway, so the demand for all-steel tire descended.
Besides, apart from the adjustment of the transportation structure, poor downstream mining and infrastructure sectors pulled down the demand for replacement tire. Moreover, in recent years, the overload cuts and rising wear resistance of tire leveled up the tire replacement cycle. Thus, China’s all-steel tire replacement market faced headwinds. In the long run, China’s all-steel tire replacement tire market will hardly see constant growth.
In 2023, China’s replacement tire market is poised to revive.
Source: IMF
In 2023, the growth of the global economy may slow down, while that of China’s economy may see recovery growth. The International Monetary Fund (IMF) released its latest World Economic Outlook Report on April 11. It is predicted that China’s GDP growth rate will increase from 3.2% in 2022 to 5.2% in 2023. China’s real estate sector will usher in recovery. Consumers are spending more on travel, from logistics to vehicle travel. On the whole, in 2023, the demand for replacement tire may ramp up both in semi-steel tire and all-steel tire markets.
According to SCI, the sales volume of replacement tire at enterprises registered a crash in 2022. Thus, when formulating sales targets for the replacement market in 2023, enterprises will pursue a Y-O-Y increase of between 8% and 15%. Especially, several enterprises even pursue reaching the task level in 2021, with a Y-O-Y increase of 20%.
In 2023, the demand in the replacement tire market may float up Y-O-Y.
In 2023, China’s market is poised to recover, taking cues from the rise in GDP growth rate, resuming the real estate sector and more consumers’ travels. Moreover, both transportation and car travel will gear up. Thus, the demand for replacement tire in China may revive overall. Meanwhile, in 2023, China’s tire enterprises will hold bullish sentiment in the market. Fueled by demand recovery and tire enterprises’ boost, it is estimated that the increment in sales volume of replacement tire in 2023 may be fairish, but there is still a certain gap compared with the level in 2021.
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