Domestic PCR market: TBR trend gradually emerging

With the rise of China's tire industry, the strategic contraction of foreign brands has become a foregone conclusion. From the collective withdrawal of foreign capital in the truck and bus tire (TBR) market to the undercurrent in the passenger car tire (PCR) market, an industry reconstruction led by local enterprises is taking place.

However, behind this seemingly victorious localization process, there is a deep crisis of price system collapse, profit margin compression and market disorder.

1. TBR market: "no man's land" after the withdrawal of foreign capital

The closure of Chinese TBR factories by foreign brands such as Japan's Yokohama and Dunlop has marked the complete loss of foreign capital's competitiveness in this field. These foreign companies, which once occupied the high ground of technology, left the market sadly under the dual pressure of cost advantages and channel penetration of Chinese local companies.

However, the TBR market after the withdrawal of foreign capital has not ushered in the expected healthy development. Although the leading enterprises occupy a dominant position, the barbaric growth of small and medium-sized manufacturers has led to disorderly competition in the market.

According to industry research, there are more than 200 existing brands in the domestic TBR market, and the price war of homogeneous products is fierce. The profit margin of some specifications of tires has fallen below 3%. A Shandong tire dealer revealed: "The profit from selling a 12R22.5 tire now is not as good as selling a bicycle tire ten years ago."

2. PCR market: repeating the technological breakthrough of TBR path

Unlike the TBR market, foreign brands still maintain the right to speak in the field of technology in the PCR field. Foreign tires occupy a large share in the high-end market, and their innovative products such as silent cotton tires and self-repairing tires are very popular. However, the catch-up speed of local enterprises is far beyond expectations and is shaking the technological moat of foreign capital.

3. Industry paradox: growth trap after de-foreignization

The industry paradox exposed by the withdrawal of foreign capital is worth vigilance: in the TBR market, local enterprises took 90% of the market share in 10 years, but the average profit margin of the industry also plummeted from 15% to below 5%; in the PCR field, except for the top giants, the remaining tire companies are facing the impact of Chinese tire brands.

Even more serious is the reconstruction of the value of the industrial chain. The withdrawal of foreign enterprises takes away not only the brand premium, but also the upstream material research and development and downstream service standards. 

Although local companies have achieved substitution on the manufacturing end, they have not yet formed systematic capabilities in the high-value links of the industrial chain. This industrial structure of "strong in the middle and weak at both ends" is locking the industry into a low-profit cycle.