FocusNew EU tyre labelling may encourage tyre sales to rise

13 July 2012 17:40  [Source: ICIS news]

LONDON (ICIS)--New legislation introducing a special labelling system will come into force in Europe from November which may increase tyre sales, sources said on Friday.

The new labelling system, which will apply to car, van and truck tyres, could encourage a rise in sales as consumers will become more aware of how much fuel they can save by buying new, more fuel efficient brand, a tyre producer said.

As part of the new rules, tyres produced from July 2012 and sold in the EU after November 2012 will need to be labelled at point of sale displaying information on wet grip, fuel efficiency and exterior rolling noise. Tyre producers will also need to display the same information on their websites and via promotional material.

Tyres, mainly because of their rolling resistance, account for between 20-30% of a vehicle’s fuel consumption. A reduction of the rolling resistance of tyres, together with optimised tyre pressure, could contribute significantly to the energy efficiency of road transport, reducing CO2 emissions by about 5 grammes per km driven, according to data from the European Tyre and Rubber Manufacturers’ Association (ETRMA).

However, not everybody agrees the new rules will drive sales up.

"[Sales will] not necessarily [increase]. At time of economic constraints, every expense is watched carefully and tyre replacement is costly," Fazilet Cinaralp, the secretary general of the ETRMA said.

"The replacement [of old tyres] will happen at a normal pace when the tyres have to be changed," she added.

Tyre sales have been falling for months in Europe and tyre producers have been cutting shifts and reducing output at plants to balance supply and demand.

Tyre makers have also been affected by high feedstock styrene butadiene rubber (SBR) costs. Tyres and tyre products, including tread rubber, account for the 76% of global consumption of SBR.

SBR prices increased significantly earlier this year because feedstock butadiene (BD) prices went up by €625/tonne ($762/tonne) from December to May. Prices eventually decreased by €750/tonne from June to July.

Nonetheless, the recent price decreases will have little impact on SBR demand because tyre sales are so low. According to industry sources, passenger tyre sales were down by 12-15% and truck tyre sales by 30-41% in May.

Unless car sales go up - which is unlikely in the current climate - or governments start special incentives to help increase demand, SBR and tyre producers will remain under mounting pressure for the foreseeable future.

($1 = €0.82)


By: Janos Gal
+44 208 652 3214



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