According to Robert Simmons, head of rubber and tyre research at LMC International, the replacement ratio dropped to 0.90 in 2009 in the wake of the global recession. There was a slight uptick in 2010-11, but today it has fallen again to about 0.92.
"That doesn't sound like much," Simmons told the second annual ICIS Butadiene & Derivatives Conference on Wednesday, "but it's a big drop."
And it is a drop that the tyre industry -- and petrochemical makers that trade in butadiene (BD) and styrene-butadiene-rubber (SBR) -- should get used to for a variety of reasons, he said.
First off, people are driving less. This is especially true in the EU and the
"From 2001 to 2009, the average annual number of vehicle-miles travelled by young people (16 to 34 years old) decreased from 10,300 miles to 7,900 miles per capita – a drop of 23%," the group said in its study.
"The trend away from steady growth in driving is likely to be long-lasting – even once the economy recovers," said Benjamin Davis and Tony Dutzik, authors of the study.
As economies have slowed around the world, so too has commercial freight, Simmons said during his presentation.
For instance, commercial tyres sales, which account for about 60% of total tyre sales, declined by 20% in the EU in 2012. The same is true for the
Another ominous sign for US and European tyre makers, Simmons said, is the fact that by 2016, replacement-tyre sales in emerging markets will surpass sales in developed markets. Again, it is expected that drivers will, on average, drive fewer miles per year than Americans and Europeans did over the past half century.
"It's a huge shift in driving habits that the tyre makers must factor into future demand," Simmons said.
"Can that trend continue?" Simmons asked. "For replacement vehicles, yes. For [automakers], no. They want tyre suppliers close to the factories."
Simmons expects about 3% annual growth in worldwide tyre sales, but much of it will be in developing markets where it is expected that consumers will drive less, thus replacing tyres less often.
"That is what the industry has to get its head around," he said.