Over the last few years and in the last year in particular, the latest trend that is really motoring along in the tyre industry is the emergence of economy brands and the increase in both the quality and quantity of their production.
Today, the Number 10 factory in the world is HangZhou Zhongce Rubber Company in China. This factory is one that is commonly associated with building budget or economy brands such as Westlake. And today, it is ahead of more 'legacy' brands such as Cooper which was the former occupant of that position. If you then go down the list of the next ten producers, they are again producers of budget or economy brands.
Expanding market in Europe
In fact, in Europe, the fear amongst many legacy manufacturers is that other countries go the way of the UK in adopting the economy brands. Currently, 52% of the tyres sold in the UK are economy brands and that is only increasing. In France, it is 28%, Spain 20%, Italy 20% and Germany 20% in summer and 10% in winter. In the UK, in 2010, of the 29 million tyres sold, 15 million were economy tyres.
In Europe as a whole, the number is just above 350 million tyres. So, if Europe went the way of the UK, about 175 million tyres sold in the UK could be budget tyres! Now that is a growing market!
The major economy brands have been working hard, including changing many moulds and patterns to ensure that they comply with regulations such as Clean Oil / REACH / PAH.
Wide range of tyres
With the worldwide recession, we are seeing this growth as ‘legacy’ brands are charging too high prices for their tyres and encouraging people to try a different option. And as economy brands are getting their chance to get onto wheels, people are realising more and more that just because tyres are cheaper they don’t have to be bad tyres. More importantly, one of the areas where the brands are also competing on is the range of tyres they produce.
In the past, economy brand manufacturers had much smaller ranges. Today, you have ranges on the economy brands that can rival some of the legacy manufacturers. With heavy investments in moulds and presses, you can now get sizes in economy brands to fit a Ford Focus or a Porsche Cayenne or a Bentley.
In fact, now tyre dealers are encouraging to promote concepts such as Cost Per Kilometre with the economy brands as the economy brands are actually in a position to challenge and beat ‘legacy’ brands on performance criteria such as CPK.
One of the other factors that is helping the growth of economy brands is the Internet. More and more people are buying tyres on the web. Internet buying accounts between 8% and 13% of tyre purchases depending on which European market you look at. Germany is close to 13% and some smaller markets at 8%. As the Internet harmonises the availability of information, more and more people can see the price differences of the economy brands. Moreover, the Internet has also increased the availability of these budget brands to the average public.