By Katherine Clarkson
Michelin tyres is slicing its capital expenditure by 50% to cope with a slump in sales – but is optimistic replacement tyres sales will begin to lift demand and revive its fortunes.
While slower spending is flattening the tyres business, the French manufacturer is holding out hope that demand for replacement tyres will offer a vital life-line for the industry.
For while original equipment sales plummeted 39.1% year on year in December, the replacement tyres figures brought good news in the form of 7.6% growth in this market.
Michel Rollier, Michelin’s chief executive told Forbes: ‘We plan to reduce our investment to 700.0 million euros or 50.0% of our average 1.8 billion euros annual capital expenditure, a move that will help us protect our cash position during this crisis.’
Michelin forecast the market for tyres to remain depressed in the first half of this year, but said demand might pick up after that.
Mr Rollier said: ‘Tyre markets will remain well below prior-year levels in the first half, before firming up as replacement market inventories are replenished and business activity begins to recover.’
Etyres is experiencing 30% year on year growth in the demand for tyres, as consumers turn to the internet for the best deals and chose its mobile fitting service for absolute convenience.