High fuel prices and soaring input prices wear away revenue growth
Melbourne, Australia (PRWEB) December 23, 2012
Tyre retailers have fared well over the past five years, compared with other automotive industries. Domestic demand for tyres has been strong due to increased incomes, which have spurred motor vehicle sales. However, tyre retailers have faced a few hurdles. Soaring rubber prices have wreaked havoc on the cost of manufacturing and purchasing tyres. High fuel prices have also led to less distance travelled per vehicle, lessening demand for new tyres. As such, the Tyre Retailing industry’s revenue is expected to grow by an annualised 0.2% over the five years through 2012-13. According to IBISWorld industry analyst Kosta Lev, “Growth in the volume of tyres sold has propped up revenue, driven by an increase in the number of motor vehicles in stock”. Rising incomes and population expansion have supported demand for both new and used vehicles. This has provided sales growth for the industry, with the majority of sales coming from passenger vehicles. However, the global economic downturn resulted in a decline in revenue in 2008-09 and almost stagnant growth the following year.
IBISWorld classifies the Tyre Retailing industry as having a medium level of concentration, with the major companies – Goodyear Australia Pty Limited, Bridgestone Australia Ltd, Tyrepower Ltd, Wesfarmers Limited and Bob Jane Corporation Pty Ltd – accounting for a significant share of revenue. “The level of concentration has been increasing over the past five years”, says Lev. Larger players have looked to increase their store numbers, while there has been a diminishing number of non-employing establishments, which could mean that smaller players are leaving the industry.
Tyre retailers will face better conditions over the next five years, as the price of rubber is expected to be less volatile. In addition, incomes are forecast to rise, which means consumers and businesses will be more likely to spend money on vehicles and fleets. The major hurdle is forecast high fuel prices. This will encourage Australians to drive less, which will hamper demand for new tyres. The long-term trend towards small cars with smaller, lower price tyres will also wear away at industry revenue.
For more information, visit IBISWorld’s Tyre Retailing report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies in the industry sell motor vehicle tyres to the public. Tyres retailed in this industry are either new or re-conditioned and are used in cars, utes, SUVs, vans, buses and trucks. Companies in this industry do not sell motorcycle tyres. Tyre retailers do not retread motor vehicle tyres, but often carry out smaller and minor repairs on tyres. Carmakers do not source tyres from this industry, but from manufacturers directly.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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