Michelin gains from homegrown distrust in China

European and U.S. sales of cheap Chinese tires are growing fast, but a lack of trust from consumers in the world’s largest car market has given a big boost to Western suppliers such as Michelin in China.

“What you don’t know, you don’t trust, especially in China with so many fakes,” Michelin’s director of car and van tires, Florent Menegaux, told me at the company’s recent Challenge Bibendum conference held in Chengdu, central China.

Because of that distrust, premium tire makers command 40 percent of China's market compared with about 35 percent for mature markets such as Europe and the U.S, Menegaux said.

Michelin sold 98 million passenger car and light van tires in Asia in the first half of 2014, more than double its European volume, according to company figures.

There is another possible reason for the preference shown for premium tires: Cars in China are far more expensive to consumers there as a proportion of their average earnings, said Rob Simmons, head of rubber and tire research at LMC Auto. “A lot of vehicles are luxury products and they’re fairly big so they have decent tires,” he said.

China also has a smaller and younger overall car parc than the U.S., which means there are many cars on the road with high-quality original fitment tires and fewer with aftermarket replacement tires, Simmons said.

Confusion about tire quality in the country extends to the Chinese government, which considered banning tires measuring 14 inches and smaller as a way to improve safety, Menegaux said. The ban didn’t happen. “In China big is beautiful,” Menegaux said. “But we explained to them you can be very safe on 14-inch Michelin tires. Small can also be beautiful.”