Automotive market growth and inflation expectations are driving demand for passenger car tires
The growth of the car market and inflation expectations are stimulating the demand for tires for passenger cars. In January-August, sales in units increased by 18%, and in money by 28.9%, to 90.2 billion rubles. Manufacturers note an increase in demand for new standard sizes for cars of Chinese brands and expect market growth of 5–6% by the end of the year.
Sales of tires for passenger cars in Russia in January-August increased by 28.9% year-on-year, to 90.2 billion rubles, reported the CRPT (operator of the “Honest Sign” labeling system). Unit sales increased by 18%. The company does not provide absolute figures. At the end of August, sales of passenger tires in units increased by 6% and by 20% in money, to almost 10.6 billion rubles. The passenger tire segment is the largest in the market in terms of volume. In the first eight months, this category accounts for 85.5% of all tire sales.
Ikon Tires and Pirelli report an increase in passenger tire sales. Pirelli attributes the positive dynamics to the increase in the new car market in the country. “People buy cars with summer tires and then buy sets of winter tires. We see growth in the car market, and this will also affect us,” the company explains. In September, according to Avtostat data, sales of new cars exceeded the August figure, and some dealers expect increased demand to continue in October (see Kommersant on October 1). The performance of the new car market has finally reached the level of 2021, which promises tire manufacturers “a good season,” Cordiante says.
Ikon Tires CEO Andrey Pantyukhov clarifies that the fleet in the Russian Federation is noticeably changing due to cars from Chinese brands, which leads to demand for new standard sizes. “The average tire size is increasing because the share of crossovers and SUVs in car sales is now quite high,” he says. According to a Cordiant representative, the market is also stimulated by the realization of pent-up demand and the development of domestic tourism.
Dmitry Babansky from SBS Consulting explains the growth of the market by an increase in the production of Russian tires, including for Chinese cars, and an increase in the purchasing power of the population. The increase in sales in monetary terms is also associated with the rise in price of the tires themselves, he adds. Ikon Tires cites price fluctuations and consumer inflation expectations as one of the factors driving demand growth.
According to the CRPT, average prices for passenger tires at the end of August increased by 5.2% year-on-year, to 6.2 thousand rubles. Most noticeably, the cost of studless winter tires increased by 6.8%, to 6.1 thousand rubles. Summer tires on average increased in price by 5.5% year-on-year, to RUB 5.56 thousand.
Cordiant expects prices to rise by 5–8% by the winter season. “Like all market participants, tire manufacturers cannot avoid inflation. In addition, the industry continues to adapt its raw material base to new realities,” the company notes. According to a Cordiant representative, the problem of a limited selection of rare sizes remains, although the supply situation is gradually improving.
The overall supply of passenger tires on the market is growing. The production of all types of passenger tires, according to the CRPT, in January-August increased by 20.2%, to 22.99 million units, in August - by 10.8%, to 2.97 million units. Imports for eight months increased by 21% year-on-year, to 18.09 million units. In August, imports decreased by 5.5% year-on-year, to 2.02 million units. Ikon Tires notes the growth of Chinese brands in the Russian passenger tire market from 11% in 2019 to 37% by 2024, which, according to the company, carries risks for local players.
By the end of 2024, Ikon Tires expects the passenger tire market to grow at 5–6%. Pirelli also expects the trend towards increasing demand to continue. Cordiant estimated the Russian passenger car tire market at the end of 2023 at 45.7 million units, which is 16% more than in 2022. Cordiant says that now the market will have to go through the process of choosing a new brand by car owners who have lost access to familiar brands: “It will take several years until all consumers go through the tire replacement cycle.”
