The tire market - Italy

1.2 Global Market Analysis

The global market for tires was valued at *** billion USD in ****, and it is expected to reach a value of *** billion USD by ****, growing at a CAGR of *.*% [***]. The following graph shows the increasing trend in the expected size of the market for the upcoming future.

Global Tires Market - Size World, ****-****, in Billion USD. Source: ****

Analysing the global market for tires, it is possible to identify the following trends:

The incremental expansion in the number of vehicles in circulation allows for expecting a continuous global economic growth for the market. Additionally, the increase in luxury and sport cars available in the market is accompanied by an expansion in the sub-sector of high-performance and premium tires; The notoriety of the market has been gained through the wide variety of application of tires, ranging from passenger cars and light trucks, to speciality applications as off-road equipment and aviation; The ever-changing regulation implemented in the sector of transportations and tires allows for continuous innovations in the range of products supplied; Innovation is also driven by the need for adaptation and evolution of tires related to the improvement of fuel efficiency, performance, reliability, durability, and other factors; The sector is now more focused ...

1.3 The Italian Market

According to Federpneus - National Association of Speciality Tire Dealers - the specialist tire business is experiencing a continuous growth in Italy. In ****, the sector generated a value of almost two billion euros, up *.*% compared to the value generated at the end of **** (***) over the previous year.

The graph below shows the segmentation of the Italian tire market based on the type of product sold.

The Tire Market - Segmentation Italy, ****, in %. Source: ****

Naturally, the major share is represented by summer tires. However, such a segment witnessed a slight decrease in favour of that of all-season tires, which increased its share by *.*% compared to ****. Likewise, the winter tire segment incremented its share, going from **.*% in **** to **.*% in ****.

Eventually, analysing the calipers (***) increased, witnessing the latest trend in preferring larger diameter rims [***].

1.4 Import and Export Analysis

Considering HS commodity code **** - new pneumatic tires, of rubber - the following graph shows the trend registered in international trade from and towards Italy.

Tires Market - Import and Export Analysis Italy, ****-****, in Billion USD. Source: ****

From the graph above, it is possible to infer a persistent trade deficit, given that, over the period considered, the values of importations are higher than those of exportations. Therefore, it is worth expecting an average coverage rate for the period below ***% (***).

From the import point of view, the most relevant counterparties for Italy in the tire market are Germany, which in **** covered an amount of ***.* million USD, China, with a value of ***.* million USD, and Czech Republic, representing a proportion of ***.* million USD. The graph above shows the proportion occupied by the main countries that export tires to Italy.

  Tires Market - Import Analysis Italy, ****, in %. Source: UNComtrade   From the graph above, it can be inferred that importations are pretty concentrated on the main * counterparties of Italy, given that, together, represent almost **.*% of the total value of importations. On the other hand, dealing with exportations, the main destinations for Italian tires are Germany, which in **** covered a total value of ***.* million ...

1.5 Covid-19 Impact

The Italian tire market had begun facing difficulties in the early ****, so, before the Coronavirus spread on global scale, recording a decrease in sales numbers due to a mild winter and low rainfall.

The situation got even worse when the pandemic impacted the country: citizens, forced to stay home, used their cars little or nothing, contributing to the slump of the market registered in spring. Comparing the data related to sales and revenues with those of the same period in ****, the contraction of sales was strong, despite the fact that tire shops and garages remained open. However, the impossibility of using the car led many motorists to delay changing their winter tires with the ones suitable for warm seasons, even accomplices of the extensions granted by the government.

And the economic crisis did the rest: those individuals who saw a strong reduction in their income due to the stop of their working activities, had to opt for savings, putting in the queue the expenses considered unnecessary (***). Indeed, according to ETRMA - European Tire and Rubber Manufacturers Association - in **** there was a -**% drop in car tires and -**% in truck tires. Last year's negative trend also affected the replacement segment, ...

2.1 Demand Overview

Considering the demand of tires in Italy, it is worth analysing the quantity of goods produced and sold in the country. The following graph shows the trend that such a demand has witnessed in the last ** years.

Demand of Tyres - Production Value Italy, ****-****, in Million Units. Source: ****

From the graph above, it can be seen that the quantity of goods produced and sold in the market under analysis has been fluctuating during the last ** years. As it will be presented later in the characteristics of the offer and in the analysis of the market structure, in the last years there has been a literal shift of the market from the supply of new tires to the proliferation of the reparation sector. In particular, the shift has been recorder especially in ****, when the number of repairers in the territory has literally exploded, being accompanied by a decreasing trend in the production of new goods. Eventually, the low value recorder in **** can be explained by the impact of Covid-** on the tire market: as presented in the previous section (***), given that people were forced to stay home and could not use their vehicles, the number of tires bought and reparations made ...

2.2 Demand Drivers

Considering the market under analysis, it can be easily understood that one of the main drivers for the demand of tires is the number of vehicles circulating in Italy. The graph below shows the evolution of the number of vehicles in Italy.

Number of Vehicles Circulating Italy, ****-****, in Million Units. Suorce: Istat

The graph above shows an increasing trend in the number of vehicles circulating in Italy in the last five years. Therefore, it is a positive sign of the increasing demand for tires. To develop the analysis further, and understand to what extent the number of vehicles circulating is affecting the demand for tires, it is also necessary to take a look at the sorts of vehicles in circulation, according to which specific types of tire are produced and sold. The graph below shows the proportion of types of vehicles related to the total number of vehicles circulating in ****.

Types of Vehicles Circulating in Italy Italy, ****, in %. Source: Istat  

In particular, the category "Others" is composed by buses, tractors, trailers, and bikes. However, it can be inferred that cars represents the vast majority of vehicles in circulation, covering **.**% of the entire fleet.

2.3 Geographical Distribution of Demand

Another interest point to consider is the distribution of circulating vehicles in the different Italian macro regions, which can help to understand how the demand is being driven from a geographical perspective.

[***]

Macro Regions Number of Vehicles in Circulation Proportion (***) North-West **,***,*** **.**% North-East **,***,*** **.**% Center **,***,*** **.**% South **,***,*** **.**% Islands *,***,*** **.**% [***] From the data presented above, it can be seen that the higher number of vehicles circulating in Italy is concentrated in North-West regions - namely, Piemonte, Lombardia, and Liguria. The geographical distribution of the vehicles in circulation corresponds also to the average monthly expenditures that families sustain for tires. In particular, such a value amounted to €**.** (***) in Northern regions, and to €*.** in Central regions. This data has been collected from Istat, however there are no figures related to the other Italian macro regions. Thus, there is also a match between the higher number of vehicles circulating in Northern regions and the higher monthly expenditures of families. Therefore, from the analysis conducted in the last two paragraphs, it can be inferred that the global number of vehicles circulating in Italy is increasing - presenting a growth rate of *.**% during the period from **** to ****. Moreover, the vast majority of those vehicles are represented by cars, which are ...

3.1 Structure and Dynamics of the Market: Production

Analysing the structure of the Italian market for tires, it is worth making a distinction between the following sub-sectors:

Production of tires: ATECO **.**.** - Manufacture of tires and inner tubes; Reparation of tires: ATECO **.**.** - Repair and replacement of car tires.

Dealing with the production side, the following graph shows the trend in the number of companies specialized in such a sub-sector operating in the Italian territory.

Production of Tires - Number of Entities Italy, ****-****, in Units. Source: ****

Surprisingly, over the period considered, in Italy there are, on average, only **.* entities specialized in the production of tires. However, analysing the sort of legal form that characterizes these entities, it is possible to see that a relevant proportion of them are corporations. Thus, it can be inferred that, dealing with the production of tires in Italy, the market is composed by few entities of large dimensions.

  Production of Tires - Legal Form Italy, ****, in %. Source: Istat   Eventually, dealing with the number of individuals employed in the sector, the following graph shows a decreasing trend even in this figure.

  Production of Tires - Number of Employees Italy, ****, in Average Units per Year. Source: ****

3.2 Structure and Dynamics of the Market: Reparation

Another relevant segment in the sector of tires is that of reparation and replacement. In order to assess the structure and dynamics of this component, we refer to ATECO **.**.**, which is only related to reparation and replacement of car tires. However, recalling the pie chart reported in section *.*, passenger cars represent almost **% of the entire tire market, being the largest segment in the sector. Therefore, it is worth expecting that the data referred to the ATECO code above-mentioned are representative of the general reparation and replacement of any sort of tires.

In particular, the graph below shows the trend in the number of entities specialized in the reparation and substitution of car tires available in the Italian market during the period ****-****.

Reparation and Substitution of Tires - Number of Entities Italy, ****-****, in Units. Source: ****

From the graph above, it can be seen that the number of entities in the segment has literally exploded from **** to ****, more than doubling the quantity of entities located in the territory. According to Federpneus (***) of the obligation to use winter tires in certain periods of the year and in certain areas, an obligation that has generated an increase in demand on the part of ...

3.3 Value Chain - Production of Tires

[***]

3.4 Distribution Channels

Dealing with the distribution channels for the Italian tire market, and given the data related to the structure of the market analysed in the sections before, it can be understood that tire shops and garages represent relevant actors for this sort of good. However, in the last years, the number of online platforms specialized in the sector, as well as the volume of online sales of tires, witnessed an upsurging trend. A relevant example of digital platform is offered by Euroimport Pneumatici, available online for over ** years. In the first part of ****, the website registered a total volume of ** thousand orders, representing a total revenue of over €** million.

The main advantage of a service like this is the fact that it offers a wide variety of products, allowing the customer to find the exact one that suits their needs and specifications. Indeed, the website offers over ** thousand tires of more than ** brands, with free delivery all over Italy. However, the key strengths of the platform are not only represented by variety of supply, but also by the fact that the customer is assisted through the entire purchase process by an assistance service, which guides the customer from the search for information ...

4.1 Typology of the Offer

The different types of tires supplied in the Italian market can be summarized in the following categories.

Summer Tires

The main feature of this category of goods is represented by the speciality of the rubber used in the manufacturing process. Indeed, the sort of rubber used ensures excellent grip and handling qualities on both dry and wet surfaces during the hot season. It also allows for reducing the rolling resistance, which turns into a lower fuel consumption and a reduced noise on the road. From a structural perspective, the tread profile of summer tires is linear, with few grooves for water drainage to optimize the area of contact with the asphalt. Thus, the vehicle is left with a high traction and breaking qualities during the dry months of summer. However, exactly the same features - which make summer tires highly suitable for dry seasons - are totally unsuitable for winter driving conditions.

Winter Tires

These sorts of tires provide exceptional grip on snow and ice-covered roads, as well as on wet roads in cold conditions. The tread characterizing a winter tire contains a higher percentage of natural rubber, which prevents it from hardening when temperatures fall below *°C. It maintains flexibility ...

4.2 Pricing

According to ECOICOP ***** - Tires - the graph below shows the trend in the consumer price index for the market under consideration.

Tire Market - Consumer Price Index Italy, ****-****, in Base Index **** = ***. Source: ****

The graph above shows that the consumer price index for tires has been increased during the last five years, recording a growth rate of *.**% from **** to ****. The table below shows the average prices for the main categories of tire presented in the previous section, estimated for one set of tires (***) and for two dimensions: **", typical of small vehicles, and **", widely used for large and luxury cars.

Type of Tire Price for a **" set of Tires Price for a **" set of Tires Summer Tires €***.** €***.** Winter Tires €***.** €***.** All-Season Tires €***.** €*,***.** Runflat Tires €*** €*,***   [***]

5.1 Regulatory Framework

There are many regulations available with regard to tires.

EU Regulation ****/***

First and foremost, new parameters for the classification of tires in relation to performance have been introduced by the European Union, through the EU Regulation ****/***, published in the European Official Journal. In particular, the label of each tire must be selected according to energy efficiency of the specific type of tyre under analysis. Therefore, apart from reporting external noise, fuel efficiency, and wet braking, as of * May ****, and in order to help consumers choose a product that is increasingly effective, every winter tire will feature a pictogram (***) instead of seven, as a result of the fact that since **** the sale of tires classified with the letter "F" has been prohibited. The new energy and dynamic classification labelling will be compulsory for new and retreaded tires, while tires intended for heavy and industrial vehicles will be exempt.

[***]

Codice Stradale

According to the Italian Codice Stradale, the rule provides that during the period indicated - from November ** to April ** - "vehicles must be equipped with anti-slippery means or have on board winter tires suitable for driving on snow or ice". Although the indication provides for both possibilities, it is recommended to ...

6.1 Segmentation

• Pirelli
• Continental
• Michelin Groupe
• Goodyear
• Bridgestone
• Bridgestone
• Kumho Tire
• Dunlop Tyres