New car sales will dampen and the price of inputs will remain mostly flat.
Los Angeles, CA (PRWEB) July 17, 2014
Automobile and light truck tires have a buyer power score of 2.8 out of 5, indicating a lack of negotiating power for buyers in the market. Short-term economic fluctuations do not usually affect the tire market because the use of tires around the world generates exceptionally stable demand. Tire sales have grown steadily despite the cyclical growth patterns shown by many other automotive industries. “Additionally, easy access to multiple suppliers allows buyers to compare prices in their local marketplace and ultimately gain a deeper discount,” says IBISWorld business research analyst Scott Winters.
Heavy regulations imposed on tire manufacturers guarantee a minimum level of quality for all tires sold in the United States. Most automobile and light truck tires are sufficiently functional regardless of supplier. “As such, buyers do not need to dedicate very much time to locating a high-quality product; rather, they can focus their search on finding the best price,” says Winters.
While the market share concentration is high, there is still an ample selection of suppliers in the market. These include hundreds of secondary suppliers, such as distributors and retailers. Competition among these types of suppliers is fierce, pushing prices downward and creating room for negotiation. In fact, it is common to see special discounts and promotions on certain tires, giving buyers the opportunity to achieve extremely low prices. Furthermore, the presence of discount suppliers and tire warehouses places even more downward pressure on tire prices.
Tires are highly commoditized and there are no substitutes available on the market today. This creates a steady source of demand and prevents prices from falling, even during downward economic cycles. Additional demand from emerging economies continues to boost prices and hinder buyer leverage in the global tire market. However, there are numerous negotiating opportunities available for buyers, ensuring good value on their tire purchase. Overall, the lack of substitutes and steady market demand creates a favorable environment for suppliers, leaving buyers at a disadvantage in negotiations. Major vendors include American Tire Distributors Inc., Bridgestone Corporation, Compagnie Generale des Etablissements Michelin and Contnental AG. For more information, visit IBISWorld’s Automobile & Light Truck Tires procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of automobile and light truck tires. These are new pneumatic tires for passenger cars and sport utility vehicles, as well as trucks no heavier than 6,000 pounds. Manufacturers and distributors worldwide supply automobile and light truck tires to original equipment manufacturers and the aftermarket. This report includes tires intended for new vehicles and replacement tires for existing vehicles. This report does not cover tires for heavy-duty vehicles, commercial trucks or motorcycles. Additionally, this report does not focus on retreaded or recycled tires or automobile or light truck wheels or rims.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.