Development of Key Customer Sectors

The most important market segment for Continental is the global supply business with the manufacturers of passenger cars and commercial vehicles, accounting for 71% of sales in fiscal 2019.

The second-biggest market segment for Continental is global replacement-tire business for passenger cars and commercial vehicles. Because passenger cars and light commercial vehicles weighing less than 6 metric tons make up a considerably higher share of vehicle production and replacement-tire business, their development is particularly important to our economic success.

Continental’s biggest sales region is still Europe, which accounted for 48% of sales in the year under review, followed by North America with 26% and Asia with 22%.

Development of new passenger-car registrations
Preliminary figures show that global demand for passenger cars fell by 5% in 2019, in particular because of a slump in demand in China and India. In China, the trade conflict with the U.S.A. weighed on consumer sentiment in the year under review, and, according to preliminary data from the German Association of the Automotive Industry (Verband der Automobilindustrie, VDA), demand for passenger cars fell by almost 10% as a result. In India, the credit crunch experienced by shadow banks resulted in a sharp decrease in sales volumes of around 13%. In the U.S.A., sales volumes of light vehicles fell, in particular due to the sharp decline in demand for sedans, by more than 1%. The European car market (EU-28 and EFTA) exceeded the previous year’s level by 1%; in Russia, on the other hand, passenger-car registrations fell by 2%. In Japan, the sales volume of passenger cars was down by 2% year-on-year. Demand in Brazil developed very positively with a rise of around 8%.

Development of production of passenger cars and light commercial vehicles
Due to the decline in demand in the major markets, the production of passenger cars and light commercial vehicles weighing less than 6 metric tons decreased by approximately 6% to 88.9 million units in 2019 on the basis of preliminary figures.

In Europe, the production of passenger cars and light commercial vehicles decreased in 2019 by 4% on the basis of preliminary figures. In particular, plants in Germany, France, Italy and the United Kingdom posted significantly lower levels of utilization.

In North America, the production of passenger cars and light commercial vehicles decreased by 4% to 16.3 million units in the reporting year on the basis of preliminary figures. In the U.S.A., Canada and Mexico, production declined. Due to the strike at American manufacturer General Motors and the resulting production standstill, there was a decline in volumes, particularly in the fourth quarter.

In Asia, the production of passenger cars and light commercial vehicles also decreased in the year under review. In China, production fell due to a slump in demand by around 8% year-on-year according to preliminary data. Other countries also saw significant declines in production, such as India, Iran and Thailand. By contrast, Japan and South Korea each posted only slight declines in production. On the basis of preliminary figures, Asia recorded an overall year-on-year decline in production of 7% in 2019, which was primarily due to the decline in China.

In South America, the recovery in demand from previous years stalled in 2019, and the production of passenger cars and light commercial vehicles fell by 4% as a result. Production growth in Brazil was unable to offset the decline in the other South American countries.

Development of production of medium and heavy commercial vehicles
The reduced demand in many countries led to a decline in global production of medium and heavy commercial vehicles of 6% in 2019 according to preliminary figures.

In Europe, the slowdown in economic growth led to a decline in demand for trucks in 2019, particularly in the second half of the year. Production of commercial vehicles weighing more than 6 metric tons declined by 9% year-on-year in 2019 on the basis of preliminary figures.

In North America, the production of medium and heavy commercial vehicles was expanded in the year under review. However, declines in order intake led to lower plant utilization levels in the fourth quarter of 2019. For 2019 as a whole, preliminary figures show that the production of commercial vehicles weighing more than 6 metric tons in North America increased – as a result of the strong first nine months – by 1% compared to the high prior-year figure.

In Asia, the production of medium and heavy commercial vehicles was around 8% below the previous year’s level in the reporting year, based on the information currently available. In China in particular, there was a significant decline in the production of medium-weight commercial vehicles.

In South America, Brazil’s ongoing economic recovery in the reporting year led to rising demand for trucks and an increase in the production of medium and heavy commercial vehicles of more than 20% compared to the prior-year basis, according to preliminary data.

Development of replacement-tire markets for passenger cars and light commercial vehicles
According to preliminary data, global sales volumes of replacement tires for passenger cars and light commercial vehicles weighing less than 6 metric tons grew by 1% year-on-year in 2019.

Global market growth was curbed in particular by the weak development in Europe, Continental’s most important market for replacement tires. Particularly in Germany, Russia and Italy, sales volumes were markedly lower than the previous year’s level. Preliminary figures indicate that the decline in Europe came to 2% over the reporting year.

After a relatively strong first half of the year, the growth in sales figures of replacement tires for passenger cars and light commercial vehicles in North America slowed considerably in the second half of 2019. Preliminary figures indicate that sales volumes over the reporting year as a whole increased by a further 2% compared to the strong prior-year basis.

In Asia, demand for replacement tires for passenger cars and light commercial vehicles rose by 3% in the reporting year on the basis of preliminary data and estimates. The most important driver was the positive development of the Chinese market, with growth of 4%.

In South America, following subdued demand in the first half of 2019, there was a significant rise in demand for replacement tires for passenger cars and light commercial vehicles in the second half of the year. Overall, sales volumes for 2019 as a whole remained at the previous year’s level according to preliminary figures.

Development of replacement-tire markets for medium and heavy commercial vehicles
Worldwide, preliminary data shows that global demand for replacement tires for medium and heavy commercial vehicles fell by 1% year-on-year in 2019.

In Europe, preliminary figures indicate that demand for replacement tires for commercial vehicles weighing more than 6 metric tons rose by 1% in the reporting year.

According to preliminary data, demand for replacement tires for medium and heavy commercial vehicles in North America, our other core market for replacement commercial-vehicle tires alongside Europe, fell by 11% in 2019. The primary reason for this strong decline was the high comparative basis from the previous year, in which purchases were brought forward due to the introduction of import tariffs.

In Asia, sales volumes of replacement tires for medium and heavy commercial vehicles were up 1% in 2019 according to preliminary figures and estimates. China and Japan in particular recorded an increase in demand.

In South America, preliminary figures indicate that sales volumes of replacement tires for commercial vehicles fell by 2% in the reporting year. This was primarily due to the decline in demand for replacement truck tires in Brazil compared to the high comparative basis from the previous year.

Sources:
Vehicle production: IHS Inc. (Europe with Western, Central and Eastern Europe incl. Russia and Turkey; Asia including Kazakhstan, Uzbekistan, Middle East and Oceania with Australia).
Tire replacement business: LMC International Ltd.
Preliminary figures and own estimates.