The healthy development of the Chinese automobile segment and the proliferation of passenger vehicles in operation have buoyed prospects for the passenger vehicle tires aftermarket in the country. Growth in Chinas passenger vehicle sector has been dramatic over the past few years, maintaining a stable double-digit growth rate from 1999 to 2007. The global market experienced a slackening of sales; nonetheless, passenger vehicle sales in China rose to 7.3 percent in 2008. The Chinese Government has unleashed strategies to offset the negative effects of the financial crisis and revitalize the automobile industry. The revitalization plan will stimulate the demand for cars and provide a fresh impetus for the tire aftermarket. "The tire aftermarket is anticipated to be driven by the high utility rate of passenger vehicles," notes the analyst of this research service. "For instance, the utility rate of passenger cars in Beijing is three times higher than that in Tokyo." Due to this higher utilization and increasing driving miles for Chinese vehicle owners, the average period of tire replacement has decreased from five years to two and half years. In some developed regions, this period is only two years. This change is likely to trigger a unit shipment rise in the aftermarket. Road conditions in China do not compare with that of Europe and America and are responsible for greater wear and tear of tires. Inadequate road infrastructure has led to faster replacement cycle of tires, thus creating a demand upswing for tires in the aftermarket.

Although market prospects look upbeat, there are some restraints clouding the market landscape. The prices of important raw materials have followed an upward trajectory, and this trend is expected to continue. Natural rubber, carbon black, nylon chords, fiber chord, and other raw materials have witnessed a considerable spike, thereby making the price hike inevitable. Rising prices have had a deep impact on the tire aftermarket. As it is still a fledgling market, awareness of tire replacement is low among vehicle owners in China. Moreover, during the first replacement, vehicle owners tend to stick to the brand of tire that the vehicle was equipped with at the time of purchase. Thus, cooperating with OEMs and seeking the biggest part of the original package tire market is vital to tap the potential of the tire aftermarket.

The economic slowdown cast its shadow over the Chinese vehicle market, and the tire market felt its repercussions. Aside from the tight economic predicament, the plunging stock market, salary cuts, and job layoffs have made customers cautious about their spending. This has contributed to postponements in tire replacement. These developments have reined in market progression; however, prospects are expected to brighten after economic recovery gets underway. Participants in this space must fully exploit the opportunities provided by government initiatives. "The market is characterized by fierce competition, and participants are obliged to decrease prices to derive the cutting edge and gain market share," says the analyst. "In addition, participants must optimize their product portfolios to synchronize with evolving market requirements and resort to aggressive pricing strategies through cost reductions and economies of scale."