The global automotive retread tire market is characterized by the presence of many global, regional, and local vendors. The regional market is highly competitive, with all the players continually competing to gain a larger market share. The vendors compete based on reliability, cost, product quality, and aftermarket services. Therefore, vendors must provide cost-effective and efficient products to survive and succeed in a competitive market environment.
The growth of the vendors is dependent on market conditions, government support, and industrial development. Thus, the vendors should focus on expanding their presence and improving their services. Bridgestone Corporation, The Goodyear Tire & Rubber Company, Inc., Michelin, and Marangoni S.p.A are some of the key players operating in the global market. These companies compete in terms of availability, quality, price, and technology. They consider acquisition as a key strategy in the global automotive retread tire market. Although the international players dominate the market, regional and local players with small market shares also have a significant presence.
Furthermore, the companies follow organic and inorganic strategies to strengthen their presence in the global market. They are focusing on product development and expansion to expand their product portfolio and enhance their customer relationships. Additionally, the companies are investing in the development of new and advanced systems with more safety measurements.
Threat Of New Entrants
The global automotive retread tire market is capital intensive, and the level of technical expertise required for product development and manufacturing is high. The presence of well-known tire companies, such as Michelin, Bridgestone Corporation, Pirelli, and Continental AG, with their strong brand image, make it difficult for the new entrants to create a brand value and achieve economies of scale. Moreover, established tire manufacturers have vast distribution networks and geographic reach, which gives them a competitive advantage over others. Furthermore, the established market players are venturing into new regions through strategic partnerships and joint ventures with local suppliers to increase their market share, reducing the potential profit margins for new entrants. Thus, the threat of new entrants in the global automotive tire market is expected to be low during the forecast period.
Bargaining Power of Suppliers
Automotive tire retread manufacturers procure both raw materials and additives from suppliers. The raw materials required for manufacturing tires include natural/synthetic rubber, silica, fabric, and steel, while the additives include fillers and chemicals. There are several natural/synthetic rubber, and fabric suppliers operating in the global market. However, the availability of suppliers is limited for other essential materials, such as silica, carbon black, fillers, chemicals, and other reinforcing materials. Established tire manufacturers procure these raw materials in high quantities, which reduces the bargaining power of suppliers to a certain extent. However, tire manufacturing companies cannot easily switch suppliers due to the risks involved in the timely delivery of the required quantity and quality of materials and additives from new suppliers. Hence, these manufacturers tend to have long term contracts with their suppliers. Thus, the bargaining power of suppliers in the global automotive tire market is expected to be moderate during the forecast period.
Threat of Substitutes
Automotive retread tires have no direct substitutes that match their specifications and features. However, off-road tires are the only alternative to conventional tires, especially in developing countries and regions. The limited awareness regarding the advantages of off-road tires and limited government initiatives to increase the adoption of such products are some of the factors restricting the adoption of off-the-road tires over conventional retread tires. Hence, the threat of substitutes is expected to be moderate in the global automotive retread tire market during the forecast period.
Bargaining Power of Buyers
Automotive retread tire buyers are aftermarket buyers. The concentration of buyers is high, as the product is used in various vehicle applications. The buyers prefer purchasing from existing tire providers due to the potential risks associated with the product quality and replacement services of new tire manufacturers, making the impact of brand identity moderate. However, the switching costs for the buyers is low.
Many automotive OEMs generally tend to have strategic contracts with tire manufacturing companies to develop tires retread specific to vehicle requirements, enabling them to purchase the product in large quantities and gain high bargaining power. On the other hand, aftermarket buyers purchase retread tires in small numbers and have low bargaining power. Thus, the overall bargaining power of buyers in the global automotive retread tire market is expected to be moderate during the study period.
Intensity Of Rivalry
The intensity of rivalry in the global automotive retread tire market is high as the tire manufacturing companies are developing multiple new material combinations and designs to improve the operational efficiency of the product. Moreover, market players are strategically investing in research & development for offering advanced products. The global market is dominated by top players, such as Michelin, Bridgestone Corporation, Pirelli, Hankook Tire, and Continental AG. These players continuously compete to increase their respective market shares, while the rest have an intense rivalry, owing to their presence in the unorganized aftermarket.
Thus, the low threat of new entrants, moderate bargaining power of buyers, moderate threat of substitutes, and moderate bargaining power of suppliers contribute to the high intensity of rivalry in the global automotive tire market during the forecast period.
