Market Overview

Global Tire Logistics Market 2017-2021: Key Drivers and Forecasts by Technavio

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Technavio
market research analysts forecast the global
tire logistics market
to grow at a CAGR of close to 6% during
the forecast period, according to their latest report.

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Technavio has published a new report on the global tire logistics market from 2017-2021. (Graphic: B ...

Technavio has published a new report on the global tire logistics market from 2017-2021. (Graphic: Business Wire)

The market study covers the present scenario and growth prospects of the
global tire
logistics
market for 2017-2021. The report also
lists original equipment tire manufacturers (OEM), and aftermarket
as the two major end-user segments. OEMs accounted for approximately 28%
of the global tire logistics market in 2016, as compared to around 72%
for the aftermarket players.

According to Jhansi Mary, a lead analyst at Technavio for logistics
research, "Most of the demand for the global tire logistics
market is expected to come from APAC, especially from China, India, and
Japan, where the automotive industry is growing at a rapid rate when
compared to mature markets such as the US and Western Europe."

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Technavio analysts highlight the following three market drivers that are
contributing to the growth of the global tire logistics market:

  • Upward trend in global automotive sales
  • Higher profit margins for replacement tires
  • Increase in tire production due to declining rubber prices

Upward trend in global automotive sales

The growth in manufacturing industries, such as automobile production,
electronic product shipments, and the food and beverage industry will
benefit the spare parts market.

There has been a substantial increase in the global automotive
manufacturing market with APAC dominating it. This will provide several
benefits to logistics companies, which will eventually fuel the spare
parts logistics market. Automotive manufacturing companies are adopting
supply chain methods such as JIT and Kanban, which ensure the seamless
transportation of inventory, and outsourcing of logistics services to
contract logistics companies, hence driving the logistics market.

"In addition, sales of electric vehicles are expected to rise due to
the increase in emission regulations imposed by governments worldwide
and the reduction in battery prices. Hence, the growth in the automobile
industry is expected to boost the tire logistics market during the
forecast period,"
says Jhansi.

Higher profit margins for replacement tires

In mature markets, such as the US and Europe, the revenue generated from
the replacement tires business is in the 30%-35% range. The supply chain
is very well established in these markets to reach healthy profit
margins, which can be 60%-70% higher than traditional vehicle sales.

The potential of the replacement tires market has yet to be completely
utilized in APAC as the key areas of spare parts logistics are not
efficient. Over the past few years, China has maintained its position as
the world's second-largest automotive market. The market in India is
dynamic and is rapidly growing, and many auto OEMs are entering the
market to tap this potential.

Increase in tire production due to declining rubber prices

The profile of the tire manufacturers has improved because of increased
global vehicle production, the rise in older vehicle numbers leading to
high volume sales, and falling rubber prices, leading to higher profit
margins. The rubber industry has witnessed a steep fall from 22 basis
points (bps) in early 2016 to 4 bps in late 2016 as profitability and
liquidity levels improved. Hence, the outlook for tire manufacturers
looks positive, with lower raw material costs and higher demand for
logistics services.

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About Technavio

Technavio
is a leading global technology research and advisory company. The
company develops over 2000 pieces of research every year, covering more
than 500 technologies across 80 countries. Technavio has about 300
analysts globally who specialize in customized consulting and business
research assignments across the latest leading edge technologies.

Technavio analysts employ primary as well as secondary research
techniques to ascertain the size and vendor landscape in a range of
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and top-down approaches, besides using in-house market modeling tools
and proprietary databases. They corroborate this data with the data
obtained from various market participants and stakeholders across the
value chain, including vendors, service providers, distributors,
re-sellers, and end-users.

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