Cheap imported tyres have been popular, due to weak retail conditions.
Melbourne, Australia (PRWEB) January 28, 2015
Operators in the Tyre Retailing industry in Australia have rebounded strongly over the past five years. While demand for tyres fell at the onset of the global financial crisis, the essential nature of tyres for road transport ensured the industry subsequently benefited from pent-up demand. According to IBISWorld industry analyst Andrei Ivanov, “there has been an influx of cheap tyres into the market, largely coming from low-cost Chinese manufacturers.” Such tyres have been popular, as weak retail conditions have driven consumers to purchase cheaper tyres rather than no tyres at all. An appreciating Australian dollar early in the period made imports even cheaper. While price competition at the wholesale and retail levels of the supply chain has forced industry operators to pass on cost savings, cheaper prices have led to greater demand over the past five years.
As the negative effect of cheaper tyre prices is outweighed by the positive effect of demand growth due to lower prices, industry revenue is forecast to increase by a compound annual rate of 3.1% over the five years through 2014-15, to $4.8 billion. However, revenue growth has been impeded by rising petrol prices, as consumers have decreased the number of kilometres they drive to minimise running costs. “Fewer kilometres driven means that tyres wear down more slowly, reducing demand for the industry,” says Ivanov. The collapse in oil prices in late 2014 and a consequent decline in fuel costs are yet to have an effect on the industry. Further, plateauing demand in the mining and construction sectors is forecast to result in more subdued revenue growth of 1.0% in 2014-15, although improved retail conditions are expected to benefit the industry. The industry has a medium level of market share concentration. Major players include Goodyear Australia Pty Limited, Bridgestone Australia Ltd, Tyrepower Ltd, Bob Jane Corporation Pty Ltd and Wesfarmers Limited.
Consumers are expected to continue to drive fewer kilometres over the next five years, although the added benefit of more fuel-efficient cars may partially offset this trend. The Australian dollar is projected to depreciate, driving up the price of imported tyres. With price competition already strong throughout the supply chain, much of the increased costs will be passed on to consumers. Tyre Retailing industry revenue growth is expected to stagnate due to the subsequent decline in demand.
For more information, visit IBISWorld’s Tyre Retailing industry in Australia report page.
Participants in the industry are engaged in retailing tyres. Industry firms sell new and re-conditioned tyres for passenger cars, utility vehicles, SUVs, vans, buses, trucks and motorcycles. Tyre retailers do not retread motor vehicle tyres, but often carry out smaller and minor repairs on tyres. The retailing process can also include fitting services like wheel balances and alignments.
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