Feeling the pulse of the market
What can be said about the year that just ended? What can we or should we expect from 2020? We spoke about it with a number of managers from some of the major players in the Italian market
All-season tires under the spotlight. But also new technologies and sales network development. This, in a nutshell, is the feeling that comes from an initial examination of the Italian market in 2019, supported by recent anti-dumping measures imposed by the institutions. Looking at the coming year, growth in medium and long-term rentals, which should boost sales aimed at rental fleets, fleet management and service, must be increasingly taken into account. And if, on the one hand, All Seasons tires look set to take a quarter of the national market, on the other we can expect also a significant growth in the segment dedicated to SUVs.
vice-president Bridgestone south region
"In the January-October 2019 period our company confirmed its positive trend and consolidation among the market leaders in Italy in both the car and truck segments.
As far as cars are concerned, the demand dropped in the summer segment as the market suffered the general decrease in the overall wheel diameters. Winter tires didn’t exactly shine either, while the All-Season segment keeps on growing significantly, as evidenced by its performance in throughout 2019. In this context, Bridgestone has been able to capitalise on the encouraging figures coming from high-end tires, thanks to the expansion of a product portfolio that now focuses decisively on 17, 18 inch wheels and above.
In the truck segment, the market trend for the "Europool group" is, on the other hand, "normalising" after a significant rebound in the first half of the year, mainly due to the effect of anti-dumping measures, which had a significant impact on numbers, especially in the first quarter.
The first part of 2019 was also a milestone for Bridgestone's digital solutions as part of a transformation process from a premium tire manufacturer to a leader in mobility solutions. The acquisition of Webfleet Solutions (former TomTom Telematics) consolidates Bridgestone's role in data acquisition-based mobility solutions aimed at making fleet management more effective and efficient.
The emergence of car fleets is one of the most relevant phenomena in the automotive sector, a reflection of new social, economic and technological trends in today's world. Fleets will grow even more in the near future especially in large urban areas, where direct car ownership is increasingly giving way to rental and sharing based mobility models.
Tire management is one of the most complex and crucial aspects in this context and Bridgestone's objective is to support its partners by simplifying processes, reducing costs and multiplying business opportunities".
Commercial director BU TL Replacement Continental Italia
"2019 was certainly a complicated year with the market down by 4.5% (YTD figure). We observed a growth of about 20% in the All Season segment, but I personally believe that this trend has been induced by trade strategies that are overestimating the change of preference by the end consumer. Many view this as a means to “deseasonalise” the job as well as a simplification of management procedures and a lower risk of obsolescence. In reality, over the years we have observed an erosion of the demand for Summer tires contrasted by a growth in Winter segment. At this stage, what must be verified is if, in a phase of greater maturity of the demand, also sales of Winter tires will be affected. My fear is that, in the face of a drop in pre-orders for Winter tires, the availability of winter tires will be reduced, which will result in higher sales figures for All-Season tires that has nothing to do with consumer preferences.
OEMs are not currently affecting the growth trend which, I am convinced, is bound to become more stable in the next two years. The product is interesting more for short-term rental fleets, less for long-term rentals.
Analysing the general market decline a little more in detail, we notice a downward trend for Quality products, in my opinion linked to some manufacturers failing to invest in high service levels and logistic flexibility. The Italian market remains, in a sense, immature and unable to give itself a more structured framework and greater planning of spaces and financial flows. This is harming, at least in the medium-short term, those who have made drastic choices. Premium products have to deal with a stagnating economy situation and the difficulty of the system as a whole in sustaining prices.
The market is showing signs of a further process of convergence of distribution, which is still struggling to find a balance between business models and economic sustainability. Certainly the retailer is still a vital mediator for the industry, considering how spread out the resale is and the tendency of tire dealers to work on a 'just-in-time' basis.
Tire dealers and distributors are increasingly required to have a higher level of skills and expertise, due to the growing awareness of the average customer, the complexity of the newest vehicles and the consequent request for the skills necessary to master the on-board electronics. Customer loyalty is bound to increase towards service centres able to meet these requirements, which may then decide to extend their range of action to tires, as more and more consumers appreciates the "one-stop-shop" approach. The rise of such “hybrid” stores is a trend that has been underway for some time and will continue in the coming years. Car dealers are also going through a rather complex phase, focusing more on alternative services which involve, for example, tires, in order to provide a qualified customer service. However, in some cases we have noticed strange dynamics that have little to do with long-term strategic development.
As far as Continental is concerned, I can say that I am satisfied, because despite our margins being under pressure, our market share keeps growing against the general trend and we are committed to developing our distribution networks in the country, with a new impulse coming from a partnership with PneusExpert, a long standing network, and the ambitious BestDrive project.
Next year I expect to see the current macro trends being confirmed. The All Season segment will continue to grow, albeit slower, stabilizing at around 22%. Unfortunately, I also expect another year of turbulence for the distribution with a concentration process that is destined to continue. The rather gloomy scenario involving new car sales is not having a huge impact on the tire market in the short term: less new vehicle means more replacement tires.
I believe that tire manufacturers will focus more on quality franchise networks and, by and large, the industry will be called upon to come up with efficient organizations and better marketing policies, a real turning point for the coming years for all the players in the supply chain ".
Falken Tire Europe sales manager for Italy and Malta
Last year was rather difficult, and not just due to a pervasive stagnation in the market, but also because some of our historic distributors went out of business. Therefore, we had to reorganize our network, but, surprisingly enough, together with our current partners we still managed to grow, both in terms of volumes and importance in their product portfolio.
The All Season segment scored the best figures, thanks also to the launch of the new Eurocall All Seasons 210 which, thanks to an impressive media campaign, proved to be a real success in terms of volumes and feedback from retailers and end users.
We aim to consolidate our strengths and grow further in market share, thanks to investments in the distribution network. In addition, we have placed a lot of confidence in the launch of the new Sincera SN110 - dedicated to compact and city cars (a significant part of the vehicles on Italian roads) - and on a wider SUV range, all supported by new developments in our OEMs which will allow us to increase customer awareness about our brand”.
Marangoni Sales network manager Italia, BU direct retreading and services
“After years of ongoing contractions in volumes, in 2019, the Italian - and in general European – retread market went back to recording a positive sign in terms of sales. A key element for this turnaround and for the recovery of the tire retreading industry was the introduction of anti-dumping duties on imported truck tires from China by the European Union, which became effective in October 2018.
Other decisive factors were the difficulties experienced by tier 2 brands in meeting the market demand for a new low-cost tire, given the shortage of Chinese tires, and the fact that several trucking fleets renewed their vehicles in the last two years, which has produced greater availability of quality casings suitable for retreading.
This year, in Italy, we have seen a confirmation of the positive trend, even if the scenario remains highly volatile as new low-cost tires are being produced on the market, produced in Asian countries that are not subject to European anti-dumping policies. However, we are also observing that customers are now once again interested in retreaded tires, as long as it’s a quality product. In fact, even budget tires can be found also among retreads, customers want tires whose performances are comparable to new tires, capable of satisfying the needs of an increasingly demanding market which is starting to pay attention also to environmental issues.
Much has been said about circular economic models, but not much has been done, at least in Italy. However, this represents a vital aspect for the retreading industry and the future of our planet. New European regulations tend to reward sustainable energy policies and the reuse of products: in this context, tire retreading is a virtuous and sustainable model. In general, road haulage companies are increasingly moving not only towards principles involving a circular logic, but also towards competitive fleet cost management, with the tire being a key element in determining the final cost/km. In fact, customers require a simplification of the offer and a complete management of the tires, rather than just the sale. Even Marangoni, with the opening of a Fedi Gomme store in Calenzano (Florence), increased its 360-degree offer of assistance and product management services with the conviction that offering a package aimed at maximizing the useful life of a tire is the best way to cut costs and reduce a company’s carbon footprint”.
sales GM consumer Goodyear Dunlop Italia
"In 2019 we witnessed the confirmation of a number of trends such as a constant growth of the All-Seasons market as well as tires for 17" wheels and above. In addition, we noticed a declining sell-out, especially in the first six months, with expectations for a substantial stability in the last three. The sell-in market was affected by the sell-out trends and the changes that took place in the distribution channel with some operators going out of business and consolidation strategies through a series of acquisitions.
Goodyear responded to the growth of the All-Seasons segment with a strategic product, the Vector 4Seasons, able to pass more tests than any of the competing products. The new winter product was also a key element for our customers with a positive pre-booking season and a sell-out at the door supported by strong promotional investments.
But the turning point in 2019 was certainly the introduction of new models and sizes: starting with new winter and light truck tires, up to the new hi-performance Eagle F1 SuperSport range. The launch of our supercar tires is also part of an exciting return to the world of racing as Goodyear made its come back into the Word Endurance Championship.
As far as our distributors are concerned, hefty investments were made in 2019 to promote higher volumes in and out of our retail points and to support the demand of our products. The growth of our business volumes with commercial fleets and the growth of our SuperService network was for us an element of satisfaction and an important test bed for our offer. In 2019 Goodyear also strengthened the SuperService network's team of consultants dedicated to supporting sell-out activities and the diversification of the business.
For the second year in a row, the motorbike-scooter tire market was heavily affected by heavy spring rains that delayed the start of the season. Despite this, Dunlop continued to reap the benefits of its strategy of offering the right product for every rider, further expanding its hyper-sport range and introducing exciting new products in segments such as Adventure, Motocross and Enduro.
Turning to the truck market, we recorded a moderately positive trend, thanks to import duties, which led to a robust growth in the low end of the market. Other segments were stable compared to the previous year, in line with the trend of the main Italian macroeconomic indicators. In this context the Goodyear group consolidated its growth in the premium segment and followed the market trend in the other segments.
For 2020, which we expect to be in line with the current tendency, Goodyear's strategy will follow the “better-to-best” philosophy (improving in what is already distinguishing us), expanding a range that is already at the top in terms of depth and quality. Moreover, our return to racing will only be the beginning of a process of greater brand visibility bound to continue in different areas”.
Commercial Director Michelin Italia
"As in recent years, the particularly unpredictable weather favoured multi-purpose products and rewarded the All Season market segment. As a direct consequence the winter market, which accounts for about a quarter of the total, showed signs of slowing down despite confirming its importance especially when premium brands are involved. In this context, Michelin confirmed its position thanks to the recent renewal of its entire offer. In the premium segment, the situation is stable thanks to the good performance recorded by tires sized 18" and above, as well as the SUV segment.
2019 was not particularly positive for two-wheelers but Michelin still managed to confirm its position. Expectations are good for 2020, though, as the global two-wheeler market is expected to recover slightly, and Michelin is ready to respond by updating its products for motorcycles and scooters.
Talking about trucks, this was a very positive year for the ETRMA market, both new and retreaded. We also estimate a significant shift in extra-European import volumes, with the main origin moving from China, a country subject to anti-dumping policies by the European Commission, to other countries such as Thailand and Vietnam. In this context, the Michelin Group confirms its leadership position, thanks to the consolidation of a well-structured brand strategy. Another winning element for the Michelin brand was the expansion of its X Multi range. We aim to grow further in 2020 by consolidating our new and rebuilt proposals and strengthening our multi-brand policy. In an increasingly competitive environment, growth continues in the field of fleet services with Michelin Services&Solutions, confirming its leadership in this sector by expanding its range of services".
CEO Pirelli Italia
"Pirelli's relentless growth continued during 2019, thanks to high-end products and a healthy positioning in a market that is paying an ever-greater attention to technology, specialisation and tire customisation. Our Perfect Fit strategy, which stems from close and ongoing collaborations with leading car manufacturers to develop products capable of offering the best performance for each vehicle, is evident by our competitive offer of OEM tires, technologically advanced, such as our well known run-flat self-supporting technology or the newest PNCS (Pirelli Noise Cancelling System) technology. In response to the needs of new electric vehicles, Pirelli has developed a new tire technology which features an Elect marking for immediate identification.
At the same time, Seal Inside self-sealing technology is growing in popularity, which allows motorists to take a "peace of mind" approach for small-medium cars and new CUV / urban SUV, while maintaining the leadership in winning technologies (run flat and PNCS).
With the automotive market in a transitional phase, new technologies with reduced environmental impact and the growth of electric or hybrid vehicles, are enabling the tire segment to follow the market trends that were already observed, in part, last year.
All-season products have confirmed their growth, essentially for to two main reasons: the first is the increase in the number of consumers who are looking at this solution to meet their needs for reduced mileage and purely urban mileage; followed by the first significant effects of mass replacements as customers who were already in possession of All-season tires changed their “shoes”. Pirelli was quick to respond to the changes in the market through an expansion of its All Season range, the main protagonist being our Cinturato All Season Plus tread with Seal Inside self-sealing technology.
Another important growth factor in 2019 was the higher demand for 18-inch tires and above, which has always been Pirelli's excellence, also driven by the growing popularity of SUVs and mini SUVs in segments B, C and D, in Italy.
In addition, the search for winter products remains deep-rooted. In this context, the ability of the tire specialist in coming to the aid of the motorist is crucial, thus expertise and training become fundamental tools that Pirelli makes available to its partners, in a coordinated effort to respond to the challenges of a market that will be increasingly dynamic and certainly full of satisfaction in 2020. Technologies, All Season products, the strong growth of larger tires and the ability to cope with specific demands represent the cornerstones for a successful new year".
Commercial Director Yokohama Italia – Magri Gomme
"The political and economic instability of 2019 triggered negative trade dynamics and has significantly affected the already low purchasing power of the end consumer. Rising margin and credit tensions, coupled with unfair competition, are not helping the industry specialists to look to the future with greater confidence by accelerating the process of professional growth through network affiliations.
Our commercial policy in 2020 will follow the market trends trying to pursue a "customer-oriented" approach in which the customer must be considered the most important asset of the company. As far as the car segment is concerned, past trends are expected to continue in 2020: increasing tire sizes, a growing All Season segment to the detriment of Summer and Winter tires (both in the car and light transport segments), tier 2 and 3 offers increasingly complete.
The truck segment should consolidate itself. Chinese manufacturers have solved the production problems related to anti-dumping and will implement everything necessary to make up lost ground".
Giovan Battista Vecchi CEO B.I.S.
"Distributed in Italy by B.I.S., CST Tires was finally able to capitalize on a truly complete car tire range and offer after introducing new Summer products and - particularly towards the end of 2018 - a complete range of All Season and Winter tires.
The PCR range has been present in our country since 2015 (first of all European countries), but it was during 2018 - and then, of course, in 2019 - that it was completed joining a range dedicated to Off-Road two-wheelers, Quad/ATV and bicycles already widely established in Italy where CST Tires has been present for over two decades. The completion of the car range has given a further boost to the company’s turnover, which experienced a strong acceleration in 2019, after scoring significant results also in 2018, thanks to All Season products that are proving particularly “appealing” to the final consumer due to a very interesting quality/price ratio.
Last year opened with a new challenge; an initiative aimed at promoting loyalty in the most important stores by creating a network of affiliates, the CST Orange Point. The program’s target was to attract about 200 affiliates within 2020 and to date, CST brand loyalty stores amount to 80, which are enjoying a range of benefits such as direct and indirect promotional strategies. Thanks in part to this new initiative, B.I.S. is certain that in 2020 will bring a further consolidation and expansion of the network of important local wholesalers and high potential retailers. Furthermore, the arrival of many new products throughout the PCR range will inevitably lead to a higher turnover".