Domestic tire companies have full orders, accelerating their overseas expansion to seize the market
2023/12/28
Specifically, since the beginning of this year, the tire industry has benefited from the continuous recovery of the domestic economy and the increase in overseas market demand, resulting in a strong recovery momentum. In terms of performance, in the first three quarters of this year, all 9 tire listed companies in A-share market achieved growth in operating revenue and net profit. Especially in terms of net profit, six companies including Linglong Tire, S Jiatong, General Motors, Fengshen, Guizhou Tire, and Triangle Tire all saw a year-on-year growth rate of over 100%.
Entering the fourth quarter, the tire industry continued its previous positive trend. A person related to Linglong Tire told reporters, "Currently, semi steel (tire) orders continue to be hot, and the utilization rate of all steel (tire) production capacity is slightly low but gradually recovering. The overall utilization rate of the company's production capacity is around 90%. Overall, the demand for orders in the foreign market is better."
Recently, Sen Qilin also revealed on the interactive platform that the company had strong production and sales in October and November, and the semi steel tires continued to operate at full capacity. The business situation is stable and good. Based on communication with customers, it is expected that orders will remain full next year.
A person in charge of General Motors recently revealed, "Since the beginning of this year, the demand for overseas tires has continued to improve. The company's orders are in short supply, especially the orders and demand for semi-steel tires have increased sharply."
"This year, the tire industry has experienced two strong production and sales, mainly due to two factors." Zhu Zhiwei, an analyst in the tire industry at Longzhong Information, told reporters. On the one hand, the rapid growth in production and sales of new energy vehicles has greatly boosted the demand for semi steel tires. On the other hand, against the backdrop of reduced production costs and falling shipping costs, exports have become another key factor driving significant growth in tire production and sales.
According to recent data released by the General Administration of Customs, the total export volume of rubber tires from China reached 760000 tons in November, a year-on-year increase of 34.6%, setting a new high for year-on-year growth this year; The total amount of tire exports reached 13.416 billion yuan, an increase of 30.3% compared to the same period last year.
"With the recovery of the automotive industry chain this year, the demand for tire matching and tire replacement in the global tire market has recovered." Luo Timing, senior investment advisor at Jufeng Investment Consulting, said that under the high inflation in the European and American markets, China's tires have a significant advantage in high cost-effectiveness and are constantly seizing global market share; At the same time, Chinese tire companies have increased their development in markets such as Brazil, Mexico, and Russia, resulting in full orders from tire companies and some products even experiencing supply shortages.
Along with the booming demand in overseas markets, tire companies are also accelerating their pace of going global.
On December 20th, Wanli Tire revealed at a dealer conference that it will invest in building overseas factories to solve the current situation of supply shortage. On December 16th, Sailun Tire announced that its subsidiary Sailun Singapore signed a joint venture agreement with TD Company in Mexico, planning to invest $240 million in Mexico to build a semi steel radial tire factory with an annual output of 6 million tires. This is the first layout of a Chinese tire company in North America. In addition, after building factories in Thailand and Serbia, Linglong Tire is currently planning to build a third overseas factory. Company insiders stated that the relevant team is currently conducting on-site inspections and will announce the site selection in a timely manner.
Zhu Zhiwei believes that avoiding trade barriers is an important reason for China's tire companies to build overseas factories, as the pace of overseas factory building has significantly accelerated this year.
"In addition, building factories overseas is also an important strategy for Chinese tire companies to grow and strengthen." Luo Timing believes that actively expanding overseas can help enhance the competitiveness of products and services, thereby further enhancing market share and brand influence.
For example, if tire companies choose to build factories in Southeast Asia, they can not only obtain the core raw material rubber for tires nearby, but also use local lower labor costs to reduce production costs. The demand for tires in Europe and America accounts for more than 50% of the global market, while Chinese tire companies can build factories in Europe and North America, providing customers with faster and higher quality market services nearby, improving customer satisfaction, and further enhancing customer satisfaction "Market development capability." Luo Timing said.
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