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Low price segment for tires surges forward.

Budget tires grabs nearly a third of market.

ID: 1000482
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(businesspress24) - A broad spectrum of industries has felt the significance of, and the resulting in-creased expenditures in, the “low price” segment over the past years. In German domestic air travel discount carriers have already captured over 40% of the mar-ket. It is, therefore, of little surprise that the trend is also very evident in the mar-ket of passenger car tires. Over the past few years massive number of tire offers from the Far East has inundated Germany. A prime example and indicator of this trend is the increased participation of international exhibitors at the tire fair in Es-sen, Germany 2008. 2hm & Associates GmbH, Strategy and Management Con-sultants in Mainz, has followed this trend and has analyzed the development of the price segments in the passenger car tire replacement market.

Consider these facts- the lower price segment has now attained a 31% share of the summer tire market, and 21% for winter tires. The brunt of this success of these so-called budget tires is borne by both the premium and standard brands of the mid-class tires. For some time premium brands have attempted to maintain price-levels by resorting to launching second or “trade” brands. Although these are usually found in specific distribution channels, and are customarily weakly promoted by the manufacturers and trade partners; the fact that manufacturers address the segment as such still underlines the significance lower-priced tires have on the marketplace.

Discount tires dominate with TR-tires.
While the share of budget summer tires has doubled over the past ten years, the share of the premium segments has decreased from 50% to 39% over the same period. The development was decidedly evident with TR-tires, where the impor-tance of the high-price brands has almost been halved; a drop from 37% to 14%. Market growth for all–season-tires had a stabilizing effect on the upper price classes. The trend to discount tires, especially with smaller vehicles, is also a consequence of the aging car park, which rose in the last 10 years from 6.8 on an average value to now 8.2 years.

High-speed tires remain the domain of premium brands.
With V/W/Y/Z tires a distinct development gap is visible. Share of the mid-price class has decreased , while a simultaneous increase of low-priced tires at 15% is evident- Premium brands maintain a stable 58% share. The positive development of the high price segment is primarily affected by the newer European cars, in particular by business car drivers. In this case original equipment brands are pre-ferred. The gradual evolution to new tire dimensions as well as to RunFlat ver-sions has also stabilized the premium segment. Inexpensive offerings from the Far East could profit from the market growth (+ 60%) and from the older car park.

Low-price tires have more than one fifth of winter tire market.
Within ten years the low-price segment has grown with winter tires by over 400%, equivalent to approx. 4 million tires. Premium brands dropped effortlessly in their share from 43% to 39%. Similarly, as with the summer standard tires (TR), the low-price class achieved the highest share with 25%. In the winter high-speed range there are no signs of substantial change in the price segment mix. This was evident in particular with the consistent growth in the demand for RunFlat versions. Premium brands were able to maintain their position over the last two years.

Competitive pressure by budget segment continues undiminished.
Both casual and in-depth views into these trends point to a development which will most probably continue in the near future. The rising average age of the vehi-cles as well as raising the price of the vehicle maintenance will continue to lead drivers to purchase low-price offers. Businesses will most probably place even more focus on gross profit. Opportunities for new innovative products, fuel-savings tires, will become significant areas for research and development in order to win over discerning customers. Hans Herrmann, Director of the Competence Center „Mobility“ within 2hm & Associates GmbH notes that research indicates purchase criteria of „low rolling friction “and fuel savings will take on a growing importance for car drivers. For the retail tire trade it is one of the few chances to distinguish oneself; not only as an assembly partner, but also as a competent tire and car service shop.

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Company information / Profile:

2hm & Associates GmbH is an owner-run international management consultancy with headquarters in Mainz, Germany. Over 30 consultants and more than 40 call-center employees uphold the high standards of the 360o consulting approach - 2hm: „Research. Consulting. Implementation.“ 2hm is proud of its expertise and the trust offered by clients on all five continents. 2hm combines excellence in methodology with practical business, consultancy and implementation experi-ence. Areas of competency include: brand management, customer relationship management, marketing controlling, sales management, as well as product and price management. More than 50 authored books and 200 professional articles attest to competence in know-how and practice.

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2hm & Associates GmbH
Breidenbacherstr. 8-10
D-55116 Mainz
fon: +49 6131 37.16.60
fax: +49 6131 37.16.50
eMail: hans.herrmann(at)

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published by: 56francis
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Date: 05/02/2008 - 11:53
Language: English
News-ID 1000482
Character count: 0
Firma: 2hm & Associates GmbH
Ansprechpartner: Hans Herrmann Feedback to about Pressrelease-id:
Stadt: Mainz
Telefon: +49 6131 37.16.60


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