Linglong Tyre to Join Ranks of Top 10 Car Tire Manufacturers

    Linglong Tyre currently ranked #12 globally; forecast to be #10 by 2019, replacing Kumho Tyre

    Will be the first domestic Chinese company to enter the PCLT (passenger car and light truck) tire top 10, ranked in terms of unit sales

    Kumho has seen its volumes and global market share decline since 2010 whilst Linglong has doubled its PCLT tire unit sales

    Whilst several China-based producers are prominent amongst the top tier of truck tire manufacturers, collectively they rank lower in the passenger car and light truck (PCLT) tire market.

    According to the latest findings from Astutus Research, four companies headquartered in mainland China feature amongst the twenty largest players in the PCLT tire sector based upon their unit sales – Linglong Tyre, Zhongce Rubber, Sailun Jinyu and the most recent entrant, Sentury Tire.

    The positioning of China-based manufacturers amongst the world’s PCLT tire leaders is on the increase, however. In early 2018 a group of creditors agreed to sell their stake in Korea-based Kumho Tire to a consortium led by Doublestar, the Chinese tire producer. Meanwhile Linglong Tyre is poised to join the industry’s top tier, surpassing Kumho as the tenth largest manufacturer.

    Linglong set to be first domestic Chinese manufacturer to join the global PCLT tire top 10
    Linglong set to be first domestic Chinese manufacturer to join the global PCLT tire top 10

    After a period of rapid capacity growth, a highly leveraged Kumho Tire was placed under joint management control by a group of its creditors in 2010. Kumho was then the world’s seventh largest PCLT tire manufacturer by volumes. Plans for further capacity expansion were immediately put on hold and then a scandal in China severely affected sales in its most important market. Kumho lost market share and subsequently fell to tenth place in the global rankings.

    Even though the company has since invested in capacity, opening a new plant in the US and relocating a facility in China, by 2017 Kumho’s global PCLT tire unit sales were 20% lower than in 2010. Over the same period its two Korean rivals have seen their global PCLT tire volumes increase rapidly.

    Whilst Kumho has been able to maintain its position in the Global Top 10, analysis by Astutus Research suggests that Linglong Tyre is on course to take that place. In doing so, Linglong will be the first domestic Chinese manufacturer to enter the rankings of the leading PCLT tire manufacturers.

    Linglong was the fifteenth largest PCLT manufacturer in 2015; it moved up one place in 2016, and a further two places by the end of 2017. Between 2010 and 2017 the company more than doubled its global unit sales. We now expect that Linglong will move ahead of Cheng Shin (owner of the Maxxis brand) during 2018, to take eleventh spot. Based on its expansion plans, Linglong is also likely to surpass Kumho in 2019.

    Both Kumho and Linglong rank lower in terms of PCLT tire revenues, reflecting their lower average selling price (ASP). Although prices at Linglong are in line with its domestic Chinese rivals they are substantially lower the global average for the major manufacturers from Japan, Europe and North America. This reflects a differing sales mix in terms of tire sizes, sales channels and geographies, but importantly, also highlights the stronger branding power of the larger competitors.

    A key challenge, and opportunity, for Linglong is to raise its brand profile. With its recent agreement to sponsor Italian soccer club Juventus, the company has shown that it intends to make the Linglong brand known on a global scale. And if Linglong can combine low manufacturing costs with higher selling prices it will become a more formidable competitor.

    Notes:

    Astutus Research tracks the revenues and unit sales of competitors in the PCLT tire market on a quarterly and annual basis

    In this article, volumes refer to global units sold (rather than production)

    Rankings are based on consolidated entities. For Linglong this reflects its operations in both China and Thailand.

    Although ChemChina retains a significant stake in Pirelli, the tire manufacturer is firmly headquartered in Italy. Giti Tire and Cheng Shin have much of their PCLT tire manufacturing capacity located on the mainland however their headquarters are based in Singapore and Taiwan respectively.