Chinese tire manufacturers are catching up with world leaders

Eleven major Chinese tire manufacturers, including Linglong, Doublestar, General Science and Aeolus, recorded total sales of 4.8 billion euros (38.4 billion yuan) for the first half of 2020. This is 11% lower than last year's figures.

By comparison, sales of eight of the world's top tire manufacturers, including Bridgestone, Michelin, Goodyear and Continental, declined 23% in half-year (to €37 billion), according to the China Rubber Industry Association (CRIA).

“Chinese and foreign [tire manufacturers] have gone their separate ways since April,” Xu Wenying, vice chairman and general secretary of CRIA, said during an online conference. "In the EU and the Americas, the utilization rate of enterprises was quite low, while in China it grew month after month."

World leaders (with the exception of Continental, whose profit data is not yet available) posted a net loss of € 1.5 billion in the first half of 2020, up from €2.3 billion in net profit a year earlier.

Net profit for Chinese manufacturers fell 23% year-over-year to € 220 million. In addition, the gross profit margin of Chinese companies grew 0.7% compared to the first half of 2019, to 20%.

According to Xu Wenying, this figure is comparable to the drop in profitability of world leaders by 4.4%, to 23.6%.

In terms of the forecast for 2020 as a whole, CRIA estimates total tire production in China in 2020 to be 542 million units, down 17% from 2019.

Chinese tire manufacturers, Xu Wenying notes, still need to be guided by the practice of the world's tire market leaders who are keen to avoid over-stocking.

In addition, global tire players are in talks with automakers to make adjustments to production and are monitoring market dynamics to prioritize the most popular and profitable products.

During the coronavirus pandemic, carmakers are trying to cut their costs, Xu Wenying said, so Chinese tire companies will have the opportunity to become OE tire suppliers if they can offer competitive products at lower prices.