How powerful are the top five tire manufacturers in the world?
In 2023, the total revenue of the world's top five tire companies will be about 736.2 billion yuan. The sales of nearly one trillion yuan far surpass the second-tier tire companies.
The world's top five tire companies have built a "copper wall and iron wall" fortress based on time, production capacity, technology, brand, and channels, making it almost impossible for the second-tier tire companies to surpass...
Hundred years of development time, several times of development experience
The development time of the top five tire companies has almost exceeded 90 years, and some tire companies have even entered the second hundred years. The first industrial revolution in the tire industry is only about 130 years away from today, and the top five tire companies have even participated in and led the first three industrial revolutions.
This also means that in their corporate development history that is as long as the development of the tire industry, they are the creators of industry rules and industry business models. The development history of nearly a hundred years, or even more than a hundred years, has allowed them to experience more "life and death moments".
The global economic depression in the 1930s, the oil crisis in the mid-20th century, and the inflation in South America in the 1980s are several economic crises directly related to the investment, factory construction, and development of tire companies.
After the 1970s, the surge in the number of tire companies brought more intense market share challenges; recall accidents in the development of the automobile industry led to innocent involvement of tire products; the collapse of the blueprint for win-win cooperation among tire companies in the late 20th century; as the saying goes, "one failure makes one wiser", the above crises, while bringing operational shocks to the leading companies, also allowed these leading tire companies to be reborn from the ashes, with more rational and clear production capacity layout planning, employment planning, marketing strategies, and experience in mergers and acquisitions.
Only time can provide solutions to challenges; a keen sense of industry dynamics and product demand trends is also a gift from time. The top five tire companies have the advantage of time to maintain their ability to turn danger into safety. At the same time, thanks to the earlier establishment of tire companies, the top five tire companies also have strengths in production capacity layout that are difficult for second-tier companies to match!
Tonnage determines status, and the capacity barriers of giants
At the end of 2023, based on the data of factories that have reached full production worldwide, industry media summarized the capacity data of the top fifteen tire companies in the world. As of December 2023, the number of global tire factories of the top five tire companies exceeded 190, more than twice the total number of factories of the 10 tire companies ranked 6th to 15th.
More tire factories mean stronger global supply capabilities and localized sales capabilities. Of course, it also means better control over production capacity and market. While tire factories with global layouts can more conveniently supply products to the local market, they can also more accurately judge the tire sales preferences and real tire conditions in different regions of the world from the actual capacity utilization of each factory.
While the second-tier tire companies are still understanding the market through dealer channels, the five giants have already firmly controlled the front-line market information through changes in capacity utilization in different regions. This is why the world's top three companies have been "fearlessly and drastically" integrating capacity in recent years-the giant capacity support has prevented them from worrying about supply problems after reducing capacity.
According to rough calculations, the annual production capacity of the top three tire companies in the world currently exceeds 600 million tires and 820,000 tons. The top three with huge tonnage have directly opened up an insurmountable gap with other tire companies in terms of supply capacity.
In addition, Germany's Continental and Sumitomo Rubber, which are also ranked in the top five, are also increasing their tire production capacity in Asia and North America. The tire giants are already huge in scale, and with more production capacity, they are afraid that they will be further and further behind the second echelon.
The strong supply strength allows the top five tire companies to occupy nearly half of the global sales. It can be said that at least in the past 50 years, the top five tire companies have occupied about half of the global tire market sales.
The technical strength of the top five tire companies is an important guarantee for half of the market to pay.
Technological barriers control global market share
Technological advantages have formed a natural barrier between the top six tire companies (plus Pirelli) and the second echelon.
This does not mean that the second echelon of the tire industry has weak R&D capabilities, but that the top six tire companies have a longer time to become the creators of key technologies.
The first industrial revolution - the birth of pneumatic tires;
The second industrial revolution - the update and upgrade of formula;
The third industrial revolution - the birth of radial tires;
And the current grasp of high-value tire technology;
In the past 100 years, the upgrade of tire demand has been driven by the top five tire companies. Even the most urgent alternative to the tire anti-aging agent formula was given the first five solutions after the discussion of the top tire companies.
Even the first to propose 100% sustainable raw material tires by 2050 were the top five tire companies. The contribution and leading role of the top tire companies in the development of the entire industry have given them a greater voice in the market to control the market. And this voice also allows them to occupy an important position in more brand promotions that are conducive to the development of enterprises.
A century of accumulation gives brand strength
Time gives experience, production capacity helps sales, technology controls the market, and brand determines status. Almost without exception, brands that can survive the test of the market for a century are sharing the largest piece of the cake in the most profitable high-end market.
Looking at the world's well-known racing events (F1 events), sports events, space exploration, and the original equipment of major luxury cars, you will find that almost without exception, the tires used in these events are almost all sponsored by the top six companies. Do other tire companies not want to sponsor? Definitely not!
In fact, in many top event sponsorships, the only qualified competitors are well-known tire brands in the high-end market, including Pirelli. The "halo" that these brands bring endorses their performance, allowing them to more easily expand any market share they want.
Although the second-tier tire companies are also desperately rolling up sales in various market segments and appearing in various events to increase their visibility. However, in the heavyweight event sponsorship and the supporting list of the million-dollar supercar club, the six major tire companies still got more opportunities to appear.
This is why when thinking of high-end, the market will unconsciously mention the top six tire brands. For example, this year, Xiaomi SU7 was launched, and its tire partners were the top companies Michelin, Bridgestone and Pirelli.
The channel and sales advantages brought by brand reputation are also important reasons why the six tire companies in the first echelon can leave the second echelon tires far behind.
When will Chinese tire companies enter the top five
Although the "five-dimensional" iron wall of the world's first-tier tire companies is difficult to break, this does not mean that the second-tier tire companies have no chance to break the current competitive landscape. After all, as the second-tier tire companies continue to invest a lot of money in capacity expansion and technology research and development, many Chinese tire companies have the potential to enter the top five in the world.
In terms of capacity, among the top five tire companies in China, Zhongce Rubber, Sailun Tire and Linglong Tire all have huge capacity layouts. Especially in terms of overseas capacity, the three leading companies have begun to explore more possibilities in North America and Europe, and have begun to try more effective overseas localization operation models.
In terms of sustainable product development, Sailun has been at the forefront of the domestic tire industry. From expanding capacity globally to acquiring overseas tire companies to expand scale and market share, Chinese tire companies are doing their best to accelerate their full wings with multiple measures.
Although there are risks to the security of the capital chain due to the excessive investment amount, looking at the development history of the world's top five tire companies, which one of them is not aggressive in development?
