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Tire dealers worry about end-user demand

Tire prices have grown a lot in the past few months across China, leading to a much higher operation rate of tire makers. 

However, tire dealers and retailers found the end users’ demand for replacement tires has not grown much and therefore they are worried about the market of 2017.

The rest of this article demonstrates interviews with three tire dealers.

Tire dealer A: not optimistic on 2017 market

 Tire sales were satisfactory in October and November of 2016 but became slack in December, just like the trend of car sales.

 “Actually, the tire consumption mainly came from new cars last year, while the demand for replacement tires for old cars was weak.”

 Some factories and mines shut down or suspended production on environmental concerns at the end of November 2016, leading to a lower demand for tires.

 “Although the tire price is growing, we have no plan to stock up tires as the profits are not growing as much as the sales volume.”

Tire dealer B: tire sales decline on shrinking trailer market

 In December 2016, trailer makers stopped accepting new orders because production meant loss, after raw material prices surged sharply.

 Some trailer makers could lose up to 1 million yuan a month from execution of contracts signed previously. A few makers even canceled the earlier contracts.

 Thus, tire sales slowed down in December. “And we are in fierce competition because there are too many dealers in our region. So we do not see an obvious price increase here.”

 Tire dealer C: higher stockpiles under weak end-user demand

 It is indeed a good time for tire makers, with higher operation rate, fewer stockpiles, higher tire prices and more orders from dealers.

 However, it is not easy for the dealers to digest a higher stockpile.

 “We dare not lift the price much for the market would not accept a sharp price increase.”

 Basically, demand from the end users is not good at all.

 “I expect the market would return dull after the booming market ends soon, and it could even go worse.”

 “This round of price increase could be caused by overdraft consumption. We should keep a cool head now.”