Trend To Low Price Segment For Tires Now Stopped In Germany.

Online, August 16, 2010 (Newswire.com) - Budget tires still nearly a third of market.

A broad spectrum of industries has experienced the significance of the "low price" segment over the past years. The resulting increase in expenditures in this segment is often staggering. In German domestic air travel alone discount carriers have already captured over 40% of the market. It is, therefore, of little surprise that the trend is also quite evident in the market of passenger car tires. Over the past few years massive numbers of tire offers from the Far East have inundated Germany. A prime example and indicator of this trend is the increased participa-tion of international exhibitors at the tire fair in Essen, Germany 2010. 2hm & Associates GmbH, Strategy and Management Consultants/Market Research in Mainz, has followed this trend and has analyzed the development of the price segments in the passenger car tire replacement market.

Consider these facts the lower price segment has now attained a third of the summer tire market, and a fifth winter tires. After years of disappearing shares the premium could stabilize his position in the last twelve month. Good tire test results and new green tire products are reasons for better car driver preferences. Legal regulation for tires with S-marking has lead to reducing the stocks with cheap tires.

Discount tires dominate with TR-tires.
While the share of budget summer tires has doubled over the past ten years, the share of the premium segments has decreased by from 50 % to 39 % over the same period. The development was distinctly evident with TR-tires, where the importance of the high-price brands has been more than halved; a drop from 37 % to 24 %. Market growth for all-season-tires had a stabilizing effect on the upper price classes. The trend to discount tires, especially with smaller vehicles, is also a consequence of the aging car park, which rose in the last 10 years from 6.8 on an average value to now 8.2 years.

High-speed tires remain the domain of premium brands.
A distinct development gap is visible within the V/W/Y/Z tire Segment. Share of the mid-price class has decreased, while a simultaneous increase of low-priced tires at 14 % is evident. Premium brands maintain a stable 54 % share. The posi-tive development of the high price segment is primarily affected by the newer European cars; in particular by business car drivers. In this case original equip-ment brands are preferred. The gradual evolution to new tire dimensions as well as to RunFlat versions has also stabilized the premium segment. Inexpensive offerings from the Far East could profit from the market growth (+ 60 %) and from the older car park.

Low-price tires have more than one fifth of winter tire market.
Within ten years the low-price segment within winter tires has grown by over 400 %, equivalent to approx. 4 million tires. Premium brands dropped effortlessly in their share from 43% to 40 %. Similarly, as with the summer standard tires (TR), the low-price class achieved the highest share with 23%. In the winter high-speed range there are no signs of substantial change in the price segment mix. This was evident in particular with the consistent growth in the demand for RunFlat versions. Premium brands were able not only to maintain in the last two year but also to increase their position in 2009. .

No let-up in competitive pressure by budget segment continues.
Both informal and in-depth views into these trends point to a development which will most probably continue in the near future. The rising average age of the vehi-cles as well as raising the price of the vehicle maintenance will continue to lead drivers to purchase low-price offers. At the other hand businesses will most probably place even more focus on gross profit. Opportunities for new innovative products, fuel-savings tires, will become significant areas for research and devel-opment in order to win over discerning customers. Hans Herrmann, Director of the Competence Center „Mobility" within 2hm & Associates GmbH notes that research indicates purchase criteria of „low rolling friction "and fuel savings will take on a growing importance for car drivers. For the retail tire trade it is one of the few chances to distinguish oneself; not only as an assembly partner, but also as a competent tire and car service shop.