The replacement car tire marketplace in four developing Southeast Asian countries have been attracting new entrants in the past two years, especially at the back of falling raw material prices. Since the beginning of 2015, 22 new brands have jumped onto the bandwagon in the key cities of Thailand, Malaysia, Philippines and Indonesia—the four key markets where GfK conducts Point of Sales tracking for car tires in ASEAN.
The intensifying competition in the marketplace has consequently also led to weaker players being forced out of the scene. This year, Malaysia and Philippines reported the greatest number of replacement car tire brands at 61 and 59, while players in the Thai market stood at 51. Car owners in Indonesia had the least number of options, with only 24 car tire brands availed to them.
In the first eight months of 2016, two of the markets—Thailand and Malaysia exhibited healthy growth in sales volume of replacement car tires by eight and three percent respectively, when compared to the same period in 2015. Meanwhile, slight declines in demand were experienced in neighbouring Philippines and Indonesia and by three and two percent respectively.
“Thailand’s thriving market has been due to the implementation of first-time car buyer scheme in 2012 which stimulated car sales substantially, resulting in demand surges for replacement car tires in the subsequent years,” highlighted Jasmine Lim, Account Director for New Business at GfK in Asia. “In Malaysia, the growth in car tire volume sales ia largely attributed to the post-GST syndrome, but the substantial dip in prices of replacement car tires due to aggressive brand promotions had inadvertently brought down the overall value of the market this year.”
According to GfK reports for Central Malaysia, the intensive promotional efforts by manufacturers to woo back consumers post implementation of GST in April 2015 caused a substantial 24 percent dip in car tire average selling price from the previous year. Competitive price adjustments continued into 2016, which caused its average price to decline a further 26 percent compared to a year ago. Similar downtrends in replacement car tire prices have also been witnessed in Thailand and Philippines, although to a lesser extent.
“Across the region, manufacturers are progressively offering more affordable price tiers to cater to a wider spectrum of consumers,” noted Lim. “Such a strategy could act like a double-edged sword where they risk diluting their brand equity and value over time while consumers benefit from being able to choose from a widening range of products at various price levels,” she highlighted.
GfK findings revealed a general declining price trend of replacement car tires across the region in recent years. Indonesian car owners have been, and continue to enjoy the most affordable tires which currently cost an average of USD48—down from USD52 in 2014. In comparison, those in Thailand are paying nearly twice as much at around USD90—although this is already a reduction from the USD98 average price two years ago, and USD94 last year. The greatest fluctuation is reflected in Malaysia where tire prices have dropped from USD91 in 2014, to USD72 a year ago and reaching a substantially lower average price of USD54 in the first eight months of 2016.
“Each market is different and there can never be a one size fits all marketing strategy that can be applied to every country. However one thing is for sure—it has become more challenging than ever for manufacturers to differentiate themselves and make their products stand out amongst its growing pool of rivals,” Lim said. “This makes it all the more vital that they actively keep abreast of industry trends and demands to help them maintain a strong focus on their target segments while strategizing their every move to increase their share of the market,” she concluded.
• Countries covered in the survey include
- Indonesia: Jakarta, Surabaya, Medan, Bandung, Botabek and Makassar
- Thailand: Bangkok and Vicinity
- Malaysia: Central Malaysia
- Philippines: National Capital Region (NCR)