How are the latecomers going?
The golden period of China's autos has benefited the downstream components industry, and the tire industry bears the brunt. However, Chinese domestic tire companies are not really beneficiaries. According to statistics, foreign brands already have a market share of at least 70% in the tire market. They are the only ones. The real winner of the golden period.
The top three tires in the global tire industry have been led by France's Michelin , Bridgestone Japan, and Goodyear's three giants. With their strong capital and advanced technology, they have been in the domestic market for passenger cars, radial tires, and high-grade rubber for more than a decade ago. Arranged in formation, from the high-end to the low-end cut in, to maximize its market share.
It is worth mentioning that unlike the traditional international tire giants, the Korean tire industry, which emerged with the expansion of Korean automobiles, has moved from the bottom up to the high end, and its share in the Chinese market has gradually expanded.
On August 8, Hankook Tire , ranked No. 7 in the world, announced its performance in the first half of this year - global sales reached 3.55 trillion won (3.136 billion U.S. dollars), a year-on-year increase of 17.8%. With the first phase of production of the Chongqing plant in China and the high-end facilities entering the harvest period in the second half of the year, Hankook’s sales in 2012 are expected to exceed the set target of 7.23 trillion won.
“From the history of the tire industry, the world-renowned brands are all from the traditional tire giants of Europe, the United States and Japan. If new brands can become high-end brands, then only Hankook.†Hankook Tire Chief Strategy Officer and Chief Financial Officer Official Zhao Xianfan said in an interview with this reporter.
Hankook ranks fifth in global production, but ranks seventh in total profit. This shows that its brand value is below the industry average, and along with the expansion of Korean cars and the road of globalization, the value of retail terminals driven by high-end strategies has increased. It is the core of its development.
Fourteen years ago, apart from supplying Hyundai and Kia which were produced in South Korea, Hankook said that the so-called overseas support is just a spare tire for a Ford model, and that Hankook has also provided OEM for other brands. From the year 2000 onwards, with the expansion of supporting businesses, Korea and Thailand have also undergone substantial changes, starting with a leap from 11 in the world to 9th in the world and up to the current 7th.
Today, Hankook's supporting companies include Ford, General Motors, Volkswagen, BMW, Audi, Mercedes-Benz commercial vehicles, and Mercedes-Benz cars and Porsche and many other projects are also being promoted.
Increasing the proportion of high-end facilities is the focus of Hankook's next development. The value of high-end supporting businesses for Hankook lies in the improvement of stable sales, product quality and technical capabilities. "Now automotive manufacturers are not just demanding tires for automotive products they have developed. We must continue to develop and design new technologies." Deputy General Manager Rui Bingyi, who is in charge of Hankook's supporting business, told reporters.
At present, China does not seek profits
In fact, the price war in the Chinese auto market has already put pressure on Hantai. “Auto manufacturers are constantly expanding and increasing sales by depressing the price of parts suppliers. Cooperation with auto makers to supply original tires can hardly create profits, and the support is investment work,†said Yan Bingyi.
However, this does not hinder the rapid development of Hantai over the past fifteen years. In the past 15 years, the average annual growth rate of international tire giants such as Michelin, Bridgestone, Mabi, Pirelli, etc., was 5% to 5.5%, while the growth rate of South Korea and Thailand exceeded 13%, from the 7th to the 5th. Thai needs to cross Sumitomo Dunlop and Pirelli, and the current differences in sales are very small.
"We are not concerned about whether we can achieve the fifth goal in 2015, but how to reduce the gap with the top four countries through the rapid growth of the national model economy after the target is reached," said Zhao Xianfan.
Facing the fifth and seventh difference in sales between Hankook and South Korean media, Zhao Xianfan believes there are two important reasons. First, the proportion of high-traffic card and passenger car tires in Hankook is relatively low. In addition, when Hankook sells, the proportion of wholesale sales through agents is relatively large, and the wholesale price is lower than the terminal retail price.
This also fully explains the insufficient construction of Hankook's terminal. At present, Michelin's terminal sales network and service model is the most mature in China and even in the global market. This is also an important reason for maintaining its high-end status in terms of price and brand.
Hankook Tire entered the Chinese market in 1996 and was the first foreign tire company to enter the Chinese market. At present, Hantai Tire's annual production capacity in China has reached 30 million tires, accounting for about 20% of China's passenger vehicle tire market share, supporting more than 20 automakers such as Shanghai Volkswagen, FAW-Volkswagen, Ford, GM, and Beijing Hyundai. .
At present, Hankook's latest high-end product, the Ventus S1evo2, is already equipped with the new Audi A6L made in China. Next year, this tire will also be launched into China's retail market. With the assurance of safety, handling, rolling resistance, comfort noise, etc. The performance is an important criterion for judging the quality of tires. With the upgrading of this product, the upgrading of brands and networks is equally urgent.
As of the end of last year, Hankook had 980 car-tire brand service franchises in China, 320 card-car franchise stores, and a total of 1300, but such figures are far from meeting market demand.
In the Chinese market, Hankook will change the wholesale-dominated sales model based on agents, and the next step will expand the proportion of end-to-end sales of specialty stores.
"Beginning this year, HankookMasters, a new global retail terminal project, is advancing in China. We plan to add 300 companies each year. We will start with big cities and then gradually spread to second, third, and even fourth-tier cities." Zhao Xianfan finally said.
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