Low price segment for tires surges forward .

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 seg-ment 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 2008. 2hm & As-sociates GmbH, Strategy and Management Consultants in Mainz, has followed this trend and has analyzed the development of the price segments in the pas-senger car tire replacement market.

Consider these facts the lower price segment has now attained a 31% share of the summer tire market, and 21% for winter tires. The brunt of this success of these so-called budget tires is borne by both the premium and standard brands of the mid-class tires. For some time premium brands have attempted to maintain price-levels by resorting to launching secondary or “trade” brands. 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 from 50% to 39% over the same period. The development was distinctly evident with TR-tires, where the impor-tance of the high-price brands has been more than halved; a drop from 37% to 14%.

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 15% is evident. Premium brands maintain a stable 58% share. 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. 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 development 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.