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The automobile market seems not optimistic, and the tire output expected to drop by 15% this year 02 June 2020 | Source from China Rubber Journal

Yang Honghui

On May 28, CRIA held online live broadcasting of “2020 China Rubber Annual Conference”. Xu Haidong, Deputy Chief Engineer and Director of Industry Research Department of China Association of Automobile Manufacturers, said that this year’s three major reasons affect automobile consumption. If the domestic and foreign epidemic situation is effectively controlled, it is optimistic that China’s automobile output will drop 15% year-on-year (the same below); if the overseas epidemic continues to spread, it is pessimistic that China’s automobile output will drop 25%.

The reasons for the impact on automobile consumption are as follows: first, the epidemic has led to the damage of related industries in China, the decline of employees’ income, and thus the impact on automobile consumption; second, the foreign epidemic has affected China’s export-oriented economy, resulting in the damage of the income of relevant domestic employees, and then the impact on automobile consumption; third, the continuous epidemic has led to the obstruction of China’s automobile export.

Xu Haidong said that with the gradual improvement of the situation of domestic epidemic prevention and control and the introduction of a series of favorable policies by the central and local governments, the production and marketing of China’s automobile industry has maintained a warming trend. In April of this year, China’s automobile production and sales respectively completed 2.012 million and 2.07 million, with a month on month growth of 46.6% and 43.5% and a year-on-year growth of 2.3% and 4.4% respectively. It was the first monthly growth since this year, and the sales volume has ended the decline of 21 consecutive months. From January to April, 5.596 million cars and 5.761 million cars were produced and sold, down 33.4% and 31.1% respectively.

Among them, the decline in production and sales of passenger cars was significantly narrowed. In April, the production and sales of passenger cars were 1.587 million and 1.536 million respectively, up 49.7% and 45.6% month on month, down 22.8% and 11.5% year on year respectively. From January to April, the production and sales of passenger cars completed 4.291 million and 4.433 million, down 37.8% and 35.3% respectively.

Commercial vehicle production and sales reached a record high. In April, the production and sales of commercial vehicles completed 514,000 and 534,000 respectively, the highest level in history, with a growth rate of 37.8% and 37.7% on a monthly basis, and a growth rate of 31.3% and 31.6% on a year-on-year basis. From January to April, the production and sales of commercial vehicles completed 1.304 million and 1.328 million, down 13.1% and 12.4% respectively.

Tire is an important part of automobile. According to the calculation of China Rubber Industry Association, the total output of automobile tire in 2019 was 652 million, an increase of 0.61%. Among them, the full-steel tire output was 132 million, down 1%; the semi-steel tire output was 484 million, up 1.7%; the bias tire output was 36 million, down 7.7%. The export volume of tires accounted for 41%, the local replacement market accounted for 37%, and the local original tires made up 22%. The annual average capacity load was close to 75%.

This year’s decline in the vehicle market will affect the decline in production of spare parts enterprises. According to Shi Yifeng, Secretary General of CRIA Tire Branch, this year’s truck and bus (TBR) tire market is better than passenger car (PCR) tire market. Among them, due to the national supporting policies, the recovery of domestic industrial production and the gradual recovery of developed countries, the original market of TBR tires is expected to be close to the level of last year; the domestic replacement market is estimated to decline by 5% – 8%; the export market is highly uncertain, which is likely to decline by about 15%, and it is expected to decline by 10% – 15% in the whole year. The PCR tire market is greatly affected by the export, which may decrease by about 25%; the domestic replacement market will be better than the original market, which is close to the level of last year or slightly increased; the original tire market is expected to decrease by about 15%.

Shi Yifeng predicted that the overall tire production in 2020 is expected to decline by about 15%.

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