How long can the 'good days' of truck and bus tires last?Issuing time:2024-10-29 14:47 With the release of semi annual operating data of listed companies in July and August this year, the profitability of tire enterprises has significantly increased. The revenue and profit of tire listed companies in the second quarter of 2023 have both increased significantly. The total revenue of 9 tire listed companies in Q2 2023 increased by 14.73% year-on-year and 13.74% month on month, with a year-on-year increase of 115.08% and a month on month increase of 93.86%. As is well known, the two main categories of tires are all steel radial tires (TBR) and semi steel radial tires (PCR). Industry insiders understand that in recent years, PCR has always had stronger profitability than TBR in the industry. PCR will not be discussed here for now, we will mainly analyze TBR. According to the semi annual report of Guizhou Tire, which mainly focuses on TBR, Guizhou Tire achieved a revenue of approximately 4.441 billion yuan in the first half of this year, a year-on-year increase of 12.45%; The net profit attributable to shareholders of the listed company was approximately 340 million yuan, a year-on-year increase of 112.02%; Basic earnings per share were 0.3 yuan, an increase of 87.5% year-on-year. According to data released by the General Administration of Customs, since the second quarter of this year, China's tire exports have continuously broken historical records and set new highs. According to relevant media reports, the average operating rate of TBR in the first half of this year was about 75%, an increase of 10 percentage points year-on-year. Overall, tire companies have achieved impressive business performance in the first half of this year, especially in the TBR industry, which has basically achieved overall improvement. Many industry insiders have a question: how long can TBR's good days last? 1. Background The TBR industry achieved such performance as of August this year under the following three difficulties, which is indeed not easy and unexpected for many industry insiders. ① In the current period of political instability and conflict in some international regions, global economic growth is slow and weak, and trade globalization is constantly facing serious impacts, with the market "cake" facing shrinkage. ② As the world's largest economy, the United States adjusted its anti subsidy tax on truck and bus tires exported from China by a few 10 companies in August last year. China's exports of truck and bus tires rebounded, but this year, due to high inflation, domestic demand in the United States has decreased. In the first half of this year, the United States imported a total of 118.36 million tires, a year-on-year decrease of 23.2%, and imported 11.98 million tires from China, a year-on-year decrease of 52%, of which truck and bus tires decreased by 34%. ③ The domestic consumer demand has contracted severely, especially since the second quarter when the market gradually turned cautious. There are problems such as the decline in real estate, weak social consumption, low prices, high local government debt, and low enthusiasm for private economic investment 2. Reason In fact, those with discerning eyes can see some clues from the above "triple difficulties": domestic truck and bus tire exports account for nearly 50% of the total production, and except for the significant contraction of the North American market, the year-on-year growth rate of domestic TBR exports to South America, Europe, Africa and other places is astonishing, reaching 27% to 43%; Due to its large base and the concentration of domestic tire companies' overseas bases in Southeast Asia, the Asian region has achieved impressive performance with a year-on-year growth rate of 8.5%. The main reason here is: ① Recently, the Chinese yuan has depreciated against the US dollar, especially due to the rapid rise of the US dollar index. With the depreciation of the Chinese yuan against the US dollar, it helps to increase exchange rate gains, which to some extent benefits the export of domestic tires. ② As of mid September, China's export container freight rate index has remained low, indirectly compensating for the profit margin of rising raw material costs in terms of freight costs. At the same time, with the global economic downturn and consumption downgrades overseas, the demand for cost-effective tires from China continues to rise. ③ The domestic independent brand TBR has been persistently exploring markets and establishing channels at home and abroad for more than 20 years. After years of repeated trials, it has gradually gained recognition from local end users. On the other hand, the production equipment and process technology of domestic factories have been continuously improved, and the experience of technical personnel has been continuously enriched, resulting in the continuous improvement and stability of tire quality. ④ Compared to PCR, TBR is more sensitive to the prices of bulk raw materials. In the first half of the year, the market prices of the main raw materials for tires were at a low level compared to the same period last year, and fluctuated downwards, with a certain degree of decline compared to the same period last year. However, the prices of tire products remained relatively stable, so the pressure on tire costs eased. 3. A few suggestions It is not easy for the TBR industry to achieve good performance in the past three years despite the economic downturn both domestically and internationally. The external factors are important, such as the decline in the RMB exchange rate, low container freight rates, and bulk raw material prices, but the internal factors are more crucial. More importantly, many external factors are beyond the control or ability of enterprises to change, and can only be adapted to; The internal factors are what we tire companies can control or change. If internal factors improve or strengthen, our good days like TBR can last longer. ① We should have healthy competition, not vicious competition Competition in market economy products is only healthy through competition in quality, performance, price, service, and other aspects. When the performance and quality are basically the same, and the services are also similar, only price competition is vicious competition. In recent years, there has been no lowest price in the domestic TBR market, only lower prices. Overseas, we often listen to how our peers use prices to dig a wall, and there are many such incidents that have been going on for a long time. Without profits, companies have no funds to invest in research and development or equipment upgrades, and the performance and quality of products cannot be improved, leading to the entire TBR industry spinning in place and making it difficult to move forward. We should seize the current good opportunity, hold the bottom line of prices, especially the red line of product costs, stop the price war, improve product performance and further stabilize quality through our own efforts, develop more marketable specifications and varieties, and let consumers feel the improvement of product cost-effectiveness or service. In this way, consumers, businesses, and industries benefit from it, and the entire industry enters a virtuous cycle. ② To cultivate talents, do not maliciously poach people For a company to develop in the long run, it should focus on self cultivation in talent team building, rather than maliciously offering high prices to poach people, especially the introduction of the entire team. The introduction of the entire team seems to have improved rapidly in the short term. But the hidden dangers are not small, whether the technical route of this team is consistent with the original enterprise; If there is inconsistency, the running in period will bring back many quality issues. In addition, whether this team is loyal to the enterprise, if there is friction in the future and the entire team leaves together, it will leave a gap in technology and quality, and the talent team will also experience a shortage. ③ Prioritize quality over quantity In the past, especially in the 15 years after the new century, everyone in the tire industry focused on production, resulting in a serious structural overcapacity of the entire tire production capacity in China, especially TBR, which led to a significant decline in the profitability of the entire industry and severely hindered sustainable and high-quality development. Tires are safety products, TBR is production material, and more than 95% of end users are "experienced drivers". Many of them have more than 10 or even 20 years of experience in using tires, and they are very clear about what kind of tires to use for different loads, vehicle conditions, road conditions, and wheel positions. So, the quality of TBR products is crucial. During the production process of TBR, there are many human-computer interactions. So employee training is very important. Only through continuous training and practical operation can we have skilled employees and ensure product quality. In the current fierce market competition, only products with excellent performance and high quality can enterprises achieve stability and long-term success. ④ To establish a brand, it is the soul of a company's existence and development to minimize the use of OEM brands. Only products, no brand; It is difficult for a company without a brand to sustain itself in the long run, whether it is through branding or OEM. Only by valuing the brand and building the soul of its own development can a company become strong and sustainable. Domestic TBR enterprises above a certain scale have gone through the "pains" of the third quarter of last year, with astonishing increases in carbon black and some additives, but tire prices are difficult to transmit to end-users and are suffering greatly. Although there are many reasons, it is an undeniable fact that the brand's market influence is relatively weak. Therefore, tire companies should attach great importance to brand building so that their products can withstand fluctuations in raw material prices. Only when there are significant changes in material prices can they be transmitted in a timely manner, and the enterprise can last for a long time. ⑤ To develop, do not plagiarize Tire enterprises with a certain foundation must attach great importance to the research and development of tire technology, as does TBR. They must follow the technological trend of modern automobile development, and pay attention to the segmentation of tire market, rather than copying what other manufacturers found to be popular in the past and immediately bought a good sample tire to return to the first mock examination. Later products are very similar, with no characteristics, and can only rely on price reduction to attract sales promotion. Tires are the supporting products of automobiles and the only accessories that come into contact with the ground. Many of the performance characteristics of a car are directly related to the tires it is equipped with. Compared to last year's "agony" for domestic TBR companies, domestic PCR companies, especially top companies, are much more "comfortable". PCR top companies have bathed in a wave of "spring breeze" for new energy vehicles, mainly meeting their performance requirements for quietness and self sealing. In the foreseeable future, for PCR, these two features will become mainstream in the market, especially the self sealing performance. Not only will new energy vehicles become standard, but traditional fuel vehicles will also "like" this feature. After all, it can save space for a spare tire and effectively increase the available space of the sedan. So, tire companies that can keep up with these technological trends will not lose market share; If there are improvements or optimizations in these new technologies, or if costs decrease while maintaining comparable performance, their market share will gradually increase. The new energy wind has blown onto commercial vehicles, such as the widespread use of new energy buses; There have been reports of new energy trucks pushing faster on some fixed route trucks. The load-bearing, acceleration, and wear performance of new energy commercial vehicles are definitely different from traditional vehicles. If we can seize the opportunity in a timely manner and develop TBR suitable for new energy, we can seize this new market. In summary, our tire enterprises, especially TBR enterprises, should seize rare opportunities, abandon price wars and malicious poaching, attach great importance to research and development, talent cultivation, quality, brand, etc., make long-term plans, effectively improve product competitiveness, enhance brand influence, and so on. Only in this way can the "good days" last long, and the healthy development of the industry will also enter the normalization. Pingzhi Road |
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