In 2022, many domestic tire enterprises mentioned the crazy growth of special tire exports. The booming mining industry and the continuous growth of agricultural demand have led to a large increase in the sales of special machinery and equipment, which in turn led to an increase in the demand for special tires.
However, as the demand for agricultural equipment is close to saturation, the growth momentum of the sales of matching tires begins to be insufficient. According to the latest research of the Special Equipment Market Association (SEMA), special equipment auto parts will cool down in 2022. However, the association also mentioned that the demand for auto parts for special equipment is expected to return to "normalization" in 2023, and will return to an annual growth rate of 3% to 4% thereafter.
Sales growth slows down
SEMA said that although the value of the special equipment parts market in 2022 reached US $51.8 billion (an increase of about 2%) compared with 2021, the supply chain has become an important factor affecting the growth of the whole industry - 90% of industry companies in 2022 said they were "moderately" or "seriously" affected by the supply chain problems. Some sources said that this influence factor is still continuing.
In addition, consumer demand, cost growth, tire prices, economic conditions, special equipment sales and other factors are also affecting the sales growth of special tire business. SEMA pointed out in its "SEMA Future Trends 2023" report that the automotive aftermarket continues to be affected by changes in the industry and the overall economy. In order to maintain competitiveness, enterprises need to know the six challenges from the market.
Costs continue to grow
Inflation is one of the most important factors for tire sales. In 2022, inflation in the United States reached a record level, which also means that its tire manufacturing costs are facing unprecedented growth. According to the data, high inflation in 2022 caused an increase of about 41.5% in fuel costs, 19.3% in pipeline natural gas, 15.6% in energy services, 14.6% in transportation services, and 14.3% and 13.0% in electric power and motor vehicle maintenance and repair, respectively. From raw materials, to transportation, to production, the cost increase of tire enterprises is not the highest but higher.
However, SEMA also pointed out that the impact of inflation had reached its peak in 2022, and now began to show a downward trend. It is expected that by the end of 2023, the inflation rate will return to about 2% per year, and the cost of producers will also decline. However, this prediction also means that tire enterprises will still face the impact of high inflation pressure in 2023. For the manufacturing of special tires with higher demand for raw materials, the cost pressure in 2023 is still huge.
SEMA said that consumer spending at the beginning of 2023 was still strong, but with the exhaustion of post-epidemic stimulus measures and the rise of consumer costs, disposable income was tightening. Especially under the circumstance that the inflation rate is still high and the domestic economy of the United States continues to slow down, SEMA warned the tire companies to continuously monitor the changes in consumer spending.
According to the sales experience of passenger cars and light truck tires from 2020 to 2022, changes in consumer spending directly affect the sales changes of tire enterprises. The reason for the record growth of tire enterprises in the previous three years was that the sales growth of the replacement market was accelerated when consumers gave up buying new cars and continued to use the original vehicles.
In the special tire market, because a large amount of consumption was concentrated on the equipment itself, it also left more space for the special tire replacement market. With inflation returning to normal, the multiple uncertainties affecting the North American sales market have dissipated, consumer confidence should improve, and the demand for special tires is expected to rise further. In addition to the sales of special tires for mining and agriculture, SEMA also specifically mentioned the sales forecast of off-road tires in the North American market in 2023.
By interpreting the sales of off-road tires in the past three years, SEMA said that off-road products and accessories have become an important market segment and are growing, and pointed out that 62% of pickup truck owners purchase off-road parts or off-road their vehicles. At the same time, about 80% of people have used their pickup trucks for outdoor entertainment, which proves that people are increasingly interested in "product function superposition". Therefore, the sales of off-road tires will continue to increase with the increase of people's interest in long-distance travel, off-road and camping. In general, the prospect of this market segment is worth looking forward to.
Disclaimer: The image materials and articles of this platform are from the network, so the copyright belongs to the original author. If it infringes your copyright and interests, please contact us, we apologize and delete it quickly. Source: tire business
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