Intensive release of price increase letters! This industry has set off a tide of price increases, and small and medium-sized enterprises have "suffered from the enemy"

Author 丨 Yu Changhuan Intern Nie Wei

Editor 丨 Zhou Shangqi

Figure Source 丨IC

Liang Junfeng is a tire agent in Qingdao, and his company sells products of more than a dozen tire brands at home and abroad. "Since the second half of last year, we have frequently received price increase letters from tire companies, and we have received more than a dozen in the past month." Liang Junfeng told the 21st Century Business Herald reporter.

In fact, since last year, price increases have become one of the keywords in the tire industry. Under the rising pressure of raw materials, the tire industry has set off round after round of price increases. At the end of the year, a new round of price increases in the industry has followed.

The 21st Century Business Herald reporter combed and found that recently, Youdao, Giti, Zhengxin, Kumho, Goodyear and other tire industry leaders have successively issued price increase notices, and due to the continuous increase in raw material prices, these companies have decided to adjust the price of products again from January 2022. In the context of continuous price increases, the upstream and downstream industry chains of tires are under greater pressure.

Intensively released price increase letters

Yang Lin is a long-distance truck driver in Changsha, Hunan Province, often traveling between Changsha and Guangshen and other places. Due to the general distance, tires need to be changed basically every few months. "Since the second half of 2021, it is obvious that the price of tires is rising, and the same brand of tires, about 800 yuan in the first half of the year, now needs at least 1,000 yuan."

Indeed, since the second half of last year, the tire industry has carried out at least three rounds of price increases, and just ushered in the new year, the industry price increase tide has struck again.

Recently, youdao, Giti, Zhengxin, Kumho, Goodyear and other major tire leaders have joined the price increase army, and decided to adjust the price of products again from January 2022, with an increase of 3% to 6%. Driven by leading enterprises, the curtain of price increases in the tire industry has inevitably opened again, and small and medium-sized enterprises have also followed up with price increases.

"Since the second half of 2021, the price increase letters of various brands in the market have been frequently released, and the prices of our company's tire products have increased by 8%-9%, which is indeed a rare situation." Wang Yunwei, market channel manager of Shuangqian Group (Anhui) Huili Tire Co., Ltd., told the 21st Century Business Herald reporter.

Industry insiders said that since the second half of last year, the price of tires has not only continued to rise, but also the number of price increases has not been seen for many years. The reason for the price increase, on the one hand, is the continuous high price of tire raw materials such as rubber, steel, carbon black, and chemical accessories, and on the other hand, the price of energy such as industrial electricity and natural gas has risen, which has pushed up the manufacturing cost of tires.

The crazy rise in raw material prices has directly soared the procurement costs of tire companies. Some tire companies said that in the third quarter of 2021, the comprehensive procurement cost of five major raw materials such as natural rubber, synthetic rubber, carbon black, steel cord cord, and cord fabric increased by more than 20% over the same period last year.

The data shows that in 2021, the monthly cost of all-steel tire raw materials is 1-40% higher than that of the same period, and the average cost of tire raw materials in 2021 increased by 26% year-on-year, while the average price of all-steel tires increased by less than 10% year-on-year.

"In 2021, raw materials rose to 30% at their peak, and now they have fallen a bit, but overall, price increases have been rare in the past 20 years." Zhao Guang, chairman of Chaoyang Huaxing Wanda Tire Co., Ltd., said helplessly.

On the other hand, since last year, coupled with the continuous rise in maritime costs, the capacity has continued to be tight, which has also formed a thrust on the price increase of the tire industry.

Some tire companies said that the reason why the performance is under pressure is mainly due to the continuous rise in raw material prices and the inability to synchronize the rise in product sales prices, the tight international transportation capacity restricts tire exports, and the sharp increase in export sea freight rates.

Talking about the price increase of the company's tire products, Wang Yunwei told the 21st Century Business Herald reporter, "On the one hand, the cost of raw materials is rising, on the other hand, the oil price is at a high level, resulting in high costs such as transportation and warehousing, so it has to rise." ”

Grab the "outlet" of new energy vehicles

In 2021, for tire companies, especially small and medium-sized enterprises, on the one hand, they are facing the "rising" sound of raw materials, on the other hand, the shrinking market demand. It can be said that tire companies are facing the dilemma of "belly and back".

The person in charge of a small tire company told the 21st Century Business Herald that the price of tire companies' products has risen, but the time transmitted to the terminal market will be delayed. "Judging from last year's market situation, because the dealers' hoarding in the first half of the year was not digested, after the arrival of the price increase tide, the enthusiasm of dealers to buy goods became lower, and the market could not synchronize the price increase."

The above-mentioned person in charge said that under normal circumstances, tire companies increase prices by 5%, and terminals only dare to increase by 2%, while tire factories if the price is reduced by 5%, the terminal is often about 7%. "The current situation is that the price of some tire factories has risen by 5%, but due to the shrinking demand in the terminal market, the price increase transmission chain is not very smooth."

Linglong Tire previously said that in 2021, due to the rise in raw material prices, the company has raised prices many times, but the supporting end cannot be fully transmitted due to the shortage of chips and the rise in the price of materials such as steel used in automobiles.

It can be said that in the entire price increase cycle, tire companies are under greater pressure than the terminal market, and slow price increases are difficult to offset the impact of costs. The poor performance of the terminal market makes them dare not rush to increase prices sharply, and they can only rely on compressing profit margins to digest the operational pressure.

Zhao Guang introduced to the 21st Century Business Herald reporter, "Small and medium-sized tire enterprises are now squeezed by both upstream and downstream, and are in a very difficult situation. Upstream raw material prices have been rising, downstream demand is relatively poor, our company's current survival has been more difficult, the entire 2021 is in a state of loss. ”

Talking about this year's market situation, Wang Yunwei frankly said, "As far as the current market situation is concerned, raw materials and oil prices are fluctuating at a high level, so the cost of raw material procurement of enterprises is still relatively high, and the pressure on enterprises this year is still very large." ”

In the face of operational pressure, many tire companies are also actively seeking the road of transformation and upgrading, and achieving breakthroughs through technology research and development and product innovation. In the view of industry insiders, in recent years, driven by favorable policies, domestic new energy vehicles have exploded, and the demand for new energy tires has become higher, which is a major positive for many tire companies.

The 21st Century Business Herald reporter combed and found that domestic tire companies have increased investment in research and development for the needs of new energy vehicles or special vehicles, and produced new categories of tires with higher profit margins, which has also become a new "outlet" in the tire industry.

Qingdao Shuangxing previously said that at present, the company has established cooperative relations with major domestic new energy vehicle manufacturers and is gradually realizing tire matching for major new energy vehicle brands. Guizhou Tire also said that new energy vehicles have put forward higher requirements for the wear resistance and energy saving of tires. The company's newly developed new products are in line with the development trend of new energy vehicles and can meet the needs of new energy vehicles.

In addition, under the strategic goal of double carbon, more and more stringent environmental protection policies are also testing tire companies, and enterprises must tap the potential of reducing energy consumption and achieving low-carbon development.

"We believe that in addition to the challenges and tests, there are also some new opportunities in the industry, and we hope that we can seize this round of opportunities." Zhao Guang said.

This issue is edited by Li Yutong Intern Zhan Huinan