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Aeolus Perspectives 11th Edition: Digitalization is real in tyre business too, and it promises (or threatens) to change everything.

26-02-2020

Bridge with lights of cars at speed

New products and solutions, new ways to sell and tell the tyres: digitalization is going to dramatically transform the sector fixing new “must-do” as well as giving big opportunities and also some challenges that, however, can be really relevant for competing at the best on the market. Tyre business is more and more digital. The digital transformation is acting as a real massive disruptive wave in the sector. The new technologies strongly impact the overall flow and on how projecting, producing, selling, managing the tyres. Following the increase in smart and autonomous vehicle production, the intelligent tyres market is expected to have meaningful growth over the next few years. In the innovative mobility ecosystem where cars and trucks are more and more digital hubs collecting and sharing data everywhere and anytime, tyres will do the lions' share. Equipped by sensors and usually connected to the web, digital networks, cloud databases, and advanced management systems too, the smart tyres identify and measure changes and threats occurring on their way and then notify all them to the drivers and also to the actors moving on the road or managing the infrastructure. The smart tyres can also prevent many possible dangers and damages and also anticipate the vehicle’s maintenance needs through complete knowledge and even more efficient management of the single vehicle as well as of a wide fleet. Thus, while they are projecting technologically advanced tires, big companies are also developing specific applications and digital systems for getting, storing and elaborating the collected data and then making the info really useful for enhancing both road safety and vehicle efficiency. Before all these, artificial intelligence and smart technology are already being incorporated into tyres production. Just as robots are increasingly in force along the production lines, in the same way, Big Data concretely contribute to better head several different operational aspects. Through a wider view of the supply chain, for example, it gets optimization of raw materials purchases, also normalizing production cycles. A better management of the supply of raw materials can result in major competitiveness on the market. And in a “commodity” market – such as the tyre one -, a good “value-for-money” usually wins. Beyond, predictive analysis and machine learning in tyre production can prove strategic in a context characterized not only by strong fluctuations in the prices of raw material but also by a "time-stressed" market demand. Further evidence of the increasing digitalization of tyre business is given by the explosion of e-commerce in this market too. Online retail tyres sales are reaching an impressive market share. According to what in a recent report by TechSci Research, the global online tyre market is expected to grow at a CAGR of over 7%, in value terms over the next five years on the back of growing vehicle sales, increasing internet penetration, low pricing strategy, and multiple online offers. Report by TechSci Research also points to an upward trend in online searches for tyres. Web indexes (Yahoo, Google and so on), for example, are most usually utilized for examination and increase early data, while tyre brands websites are regularly for products' data and highlights. So, while the way to sale tyres is changing, also the mode to communicate with consumers needs to evolve digitally. Digital transformation is a big challenge and opportunity too for tyre business. Opportunity is given by advanced products and smart solutions contributing to a safer, more efficient and sustainable overall mobility ecosystem. Data-driven companies can count on leaner manufacturing and supply chains translating in strategic competitive advantages caught on the market. Finally, online retailing helps in reaching out to a lot of consumers without the expensive efforts need for launching physical stores and with benefits that can ultimately be passed on to the same customers. On the other hand, the challenge is going to be if and how tyre companies adapt themselves to all this. There are new and different audiences to acquire and to talk with, new market needs to satisfy, new proficiencies and emerging job roles that have to be found out and insert in the organizations, new costs centers to consider and, last but not least, new business models to realize with both new and old assets that must be integrated one each other. Digitally, rather. Sources: “Global Online Tire Market, By Vehicle Type (Passenger Cars, Commercial Vehicle, Two Wheeler and Three wheeler), By Company and By Geography, Forecast & Opportunities, 2024”, TechSci Research.

TAGS: Aeolus perspectives, Tyre industry, Digitalization
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