High inventory and low sales China's replacement tire market chill

First of all, it will take time for inventory to accumulate. Last year, the tire prices gradually declined, and retail sales were relatively deserted. Because of the large amount of liquidity used by the dealers, the dealers have a lot of liquidity and the cash flow is difficult, which causes them to feel more pressure. Some of them not only store tires in the warehouse to the prescribed height limit, but also pile tires on the road. At the same time, dealers’ debts have increased, the safety factor of funds has decreased, and the sales of goods have been slowed down. This has led to the formation of bad debts and increased risk of capital loss. At present, the primary task of the distributor is to destock, and according to the purchasing psychology and behavior of the user, it takes a long time to digest the inventory.

Second, market competition has become more intense. The production capacity of China's tire companies has been continuously released, structural overcapacity has been exceeded, and homogeneity of products has been severe. This has made domestic tire manufacturers enter into competition in the replacement market. Some of the major products purchased by dealers had to be reduced in price, and the purchase price and the selling price formed a spread. Some brand regions have large spreads and the phenomenon of “ stocking ” is more serious.

In addition, foreign brands and tires of major domestic brands continue to increase promotion efforts. For example, quarterly awards, full-year contract redemption awards, designated promotional specifications, one-stop pricing, and buy-gift activities are all measures that put pressure on domestic companies. The competition among tire companies bears the brunt of the first-tier tire dealers. Big agents are eager to withdraw their funds due to pressure from inventory, and they have also taken measures to cut prices. However, terminal retailers do not buy it, and it is rare for them to bulk up the stock, but instead focus on sporadic replenishment.

Again, the new sales model shock wave. In addition to facing fierce market competition, some new sales models have also brought impact to dealers. One is direct sales of products and the other is online sales. The situation has forced domestic manufacturers and distributors to make timely transitions and improve their rapid response capabilities. It is understood that some companies and distributors have already stepped up efforts to build direct-operated stores. In order to improve their survivability, some dealers have also adopted measures such as expansion of storage capacity, tire distribution, and after-sales services. In fact, it is for production companies to “ save and deposit ” , to facilitate the direct delivery of goods from warehouses, and to deliver them to end users.

In addition, brand competition is emerging. Although no-name brands, unknown brands, and tires with unstable quality are still flooding the market, sales are still stable, and those are mainstream, well-known brands. As these brands have good quality tires and relatively high customer loyalty, they are endorsed by end users. At present, most rational users of tire consumption concept began to form, more and more favored well-known brands, so the current competition has been transformed into brand building based on the overall strength of competition.

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