China All-Steel OE Tire Rises by 20% with Commercial Vehicle Output Recovering
Snapshot: In 2023, China’s commercial vehicle market ushered in recovery after the doldrums in 2022. The recovery was mainly attributed to multiple factors including the improvement of the global and China’s economy and the policy environment. As seen from the data, in January-September 2023, China’s commercial vehicle output increased by 19.8% in total, leading to a large increment in the all-steel OE tire.
The Y-O-Y increase in the total output continued, but the M-O-M change was unstable.
In January 2023, tire enterprises cut operation time due to the Spring Festival holiday, and it took some time for the market demand to recover after the holiday. Thus, the output of commercial vehicles remained low, down 42.9% Y-O-Y. After February, the output of commercial vehicles constantly increased. The largest Y-O-Y increment appeared in April, reaching 68.8%. The output in other months all rose to different degrees. On the one hand, the output basis in 2022 was relatively low. On the other hand, the global and China’s economy and the policy environment improved, bolstering tire production. However, as seen from the M-O-M change, the output of commercial vehicles declined continuously from April to July, which showed that the growth momentum of commercial vehicles was unstable. Besides, there were more vehicles and fewer goods in the freight industry, which has not been solved yet. High oil price and low freight price also put pressure on the freight market.
The continuous drop finished. The total volume of all-steel OE tires increased Y-O-Y in 2023.
Source: CAAM, SCI
As the major application of OE tires, the output of new vehicles decides the size and demand of the OE tire market. All-steel OE tires are mainly used on commercial vehicles, so changes in the commercial vehicle output will lead to changes in the OE tire volume.
Commercial vehicles can be divided into trucks and buses. Therein, the truck output accounted for around 90% of the total commercial vehicle output, while the bus output took up only around 10%. Thus, China’s all-steel OE tires were mainly used on trucks. According to different numbers of all-steel OE tires used on different vehicles, SCI estimated that the Y-O-Y change in China’s all-steel OE tire volume was generally in line with that in the commercial vehicle output. Based on the analysis of the changes in the commercial vehicle output, China’s volume of all-steel OE tires from Q1 to Q3, 2023 increased by nearly 20% Y-O-Y. The drop for two consecutive years came to an end in 2023.
Overall, the commercial vehicle market perked up from Q1 to Q3, 2023, but the growth momentum still needed to strengthen. In Q4, SCI reckons that China’s commercial vehicle output may remain increasing, and the increment is expected to widen. The annual increment in 2023 may get close to the large increment in the previous years. The main reasons were as follows. First, China’s economic activities are expected to continue to recover, providing some potential demand in the coming days. Second, China’s commercial vehicle brands may be increasingly influential in overseas markets. Bolstered by relatively strong overseas demand, China’s commercial vehicle exports are expected to continue to increase, lending support to the release of commercial vehicle capacity. Third, the penetration rate of new energy commercial vehicles is likely to see a continuous rise. Fourth, China’s a series of economic policies may be further implemented, driving up the commercial vehicle market. In the entire 2023, China’s commercial vehicle output is expected to rise notably Y-O-Y, leading to a Y-O-Y increase in the volume of all-steel OE tires.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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