Highlights 
 

• Market shift from premium to mid-tier brands
 

• Profit vs volume strategy hurting premium brands
 

• Mid-Tier brands expanding globally

There is a lot of uncertainty around the ongoing tire demand and supply situation. The first thing to note is that while demand is growing slightly, the distribution of sales between premium tire makers and less well-known brands is changing. The transfer of market share away from the premium tire makers is rapid and appears to be accelerating.
 

In general, the premium tire majors are losing share. If you listen only to commentaries from Michelin or Goodyear, you will hear tales of difficult trading conditions and falling sales – at least in terms of the number of tires they can sell.
 

Suppliers of materials to these premium brands have noticed that their order books are no longer growing along a 5-year trend line – or growing at all in many cases.
 

Premium tire makers losing market share 
 

It is not only that those premium tire makers are making fewer tires; they have been reporting lower revenues and profits over a five-year period, although the decline in profitability has eased in the last couple of years.
 

Meanwhile, revenues at some of the less well-known tire makers such as Sailun, Balkrishna Tyres, Ceat Ltd and even Kumho are rocketing upwards. Sailun, for example, more than doubled revenue in the period 2019-2024, whereas both Bridgestone (corporate) and Michelin (tire activities) have lost around 9% of revenue in the same period.
 

In terms of profits, Sailun tripled in the five-year period and BKT has increased by 67%. Profits at Michelin tires have dropped 20% in the same period, while profits at Bridgestone tires have dropped by 10%.

This is not a temporary or cyclic change, as the premium brands would have you believe: it is structural.

The drivers for this change are around price and performance. The premium tire makers are pricing themselves out of many markets. Meanwhile, the performance of some of the lesser-known brands is increasing, so that the technology/performance gap is much smaller than the price gap. In summary, the value proposition from a lesser-known brand is becoming better than from a premium brand.
 

Value addition weighing on profitability 

Across the key markets of North America and Europe, consumers and logistics businesses are facing severe pressure on incomes. While some buyers remain loyal to the top brands, a large slice of mid-range customers are looking to improve the value proposition they can get from their tire purchases. And they are finding that those premium brands no longer offer the best value package.

This is explained by looking at added value. The cost of a basket of materials used to make a tire is more or less constant – at US$2/kg – across the world. It’s slightly lower in China and slightly higher in Europe, but the variation around the world is limited to around 10%.

When we look at the cost of materials as a percentage of total revenue, the picture is very different. Michelin spends about 21% of total revenue on materials; Pirelli and Goodyear are at 30%, Apollo is 47%; Sailun and Linglong about 55%, but MRF (India) is 64%, JK Tyre (India) is 62% and Ceat (India) also 62%.

You can interpret this as added value. Michelin increases the value of the materials by a factor of four. Meanwhile MRF and JK and Ceat can only add around 60% to the value of the materials. Many people would argue that the high added value in a Michelin tire is a good thing.

But there is a downside to that. Take an average size passenger car tire weighing 10kg. For each of the tire makers, it costs them around USD20 to buy the materials. Ceat can sell that tire into the distribution network at USD32 and make a decent profit. Michelin has to charge around USD97 to maintain its current level of profitability.

That is the so-called ‘sell-in’ price. The wholesalers, retailers, logistics chain and fitters have to make a bit of profit, which increases the price paid by the end-user, the so-called ‘sell-out’ price. Ceat can afford to give that wholesale chain some decent reward for their efforts. A figure roughly the same as the sell-in price is not unusual, leading to a sell-out price of around USD65.

If Michelin did the same, the sell-out price would be close to USD195. That is simply too high for a mass-market tire in almost every market in the world. Even if Michelin gives the value chain the same absolute profit as they get from Ceat, the sell-out price is still around USD130 per unit. Double the price of the Ceat product. Some people will continue to buy the Michelin brand – even at that price – on its reputation, but increasing numbers in the mass-market end of the business want better value for money.

So Michelin and other premium tire makers have priced themselves out of many markets. 

In their presentations to analysts, those premium tire makers say – truthfully – that they are prioritising profit over volume. It is a common theme at Bridgestone, Michelin , Goodyear, Continental, Pirelli and others. 

The downside of focussing on profitability is that by strategically withdrawing from the mass-market tire sizes, they are losing volume; and that volume offsets overheads and fixed costs. Reduced volume means – as we have seen – the need to close factories.

Michelin has announced the closure of plants in Cholet (France), Queretaro (Mexico) and Guarulhos (Brazil) in the last few months. Goodyear has announced closures in South Africa and also substantial cut-backs in the United States. Other premium tire makers have also announced closures.

Meanwhile, Sailun, Linglong and others are adding capacity around the world, to overcome trade barriers and to fill the gaps left by the majors as they withdraw from markets they view as unprofitable.

It is this transfer of volume from the majors to other brands that is distorting the picture of supply and demand. Those analysts who have not understood this dynamic continue to say that global tire markets are in a bad way. We disagree.

Having said that, the true supply and demand picture is surprisingly hard to define clearly. Historically, most of the useful data has come from regular reports from Michelin and Pirelli about their respective views of sell-in to global markets, alongside data from tire federations in Europe the United States, Canada, Japan and a few other countries.

The major brands have all been affected by the downturn in vehicle (OE) manufacture over the last couple of years. This has not had anything like the same impact on other brands, because the top brands still have a huge share of the OE market. When vehicle sales drop, so do their OE sales and revenues.

All of those traditional data sources are biassed toward the major companies and have, in general, been on the pessimistic side over the last couple of years, partly due to the decline in the OE business and partly because of the transfer of volume in mass-market replacement tires, which is often interpreted (incorrectly) as a consequence of shrinking markets. 

Furthermore, the sell-in data ignores the distorting effects of inventory held by large wholesalers. Wholesalers filled their warehouses in 2024, but slowed their purchases sharply after about April 2025, but the volume of tires on the water and the longer shipping routes meant tires continued to arrive at ports in the United States, Europe and Africa, distorting the picture even more. We estimate total global capacity for inventory to be around 75% to 80% of total annual global demand, so the difference between warehouses being half-empty and completely full corresponds to around five months-worth of world-wide sales. 

There is some limited information on tire production in China and India and exports from those countries.

Most of the data coming out of China is open to interpretation, while the data from India is mostly sourced from the tire federation there, ATMA.

Sell-out data is almost impossible to get, because so much of it is in the hands of large family-owned tire wholesale companies and they will either lie or remain tight-lipped about the real situation.

There is also data on vehicle-kilometres travelled, and some commentators use that figure as a proxy for tire sales. We think that using this data as a proxy for tire consumption will tend to over-estimate total tire sales because tires are steadily improving in terms of wear performance, under pressure from environmental lobbyists and governments concerned about micro-plastic emissions.

Global tire outlook 

Currently, USTMA is forecasting a record year for tire demand (in the United States), but the group’s headline figure conceals very modest growth over 2024. ETRMA says demand (in Europe) has picked up a bit in the last few months, but total demand is below 2022 sales.

Michelin says volumes are flat round the world in 2025. Strong growth in passenger car replacement volumes in Europe in 2024 has flattened off in the middle of 2025, but replacement demand for truck tires in Europe continues to be growing at a healthy rate from a very low base. Markets for replacement car tires and truck tires in China are growing. Otherwise markets are flat or declining – at least according to Michelin.

On the other hand, Production and exports from China continue to hit record levels. Tire production (all types) in China in the first eight months of 2025 is up by 10% on the same period in 2024 at 788 million units and has maintained the same growth trend over the last five years. Zero growth in 2022 was off-set by strong growth in both 2021 and 2023.

Exports of car tires from China had been growing at around 15% until 2024, but by early 2025 inventories were full, so wholesalers slowed down their purchases. As a result, exports in 2025 have been running at similar levels to 2024 and the annualised rate will be around 350 million units in 2025. Exports of truck tires have been growing steadily at single-digit percentages each year and that has been maintained in 2025. We expect the total in 2025 to be around 130 million unts.

Tyre production in India has been growing steadily as companies there expand their exports. India, however, is small compared to China, with total car tire production in India at about 60 million units. Nevertheless, overall tire production in 2024 was around 5% higher than in 2023, with construction tires and scooter tires being the fastest-growing sectors, according to ATMA data.

Putting this together, we think that the estimates from Michelin, ETRMA and USTMA are a little on the pessimistic side, and note the healthy percentage growth in China and India that tends to be under-valued in some of the estimates coming out of the Western hemisphere. We therefore estimate global tire demand growing by a couple of percentage points in 2025 over 2024. This is in line with the long-term global trend.

Supply, however, is growing a bit faster as those mid-range tire makers add capacity and within China, old factories in the suburbs are moved with government support to new chemical parks far outside the city boundaries. The new factories are larger and more productive than the older ones being closed. Additionally, those same tire makers are building new capacity in Cambodia, Vietnam and elsewhere in SE Asia, to get around anti-dumping and anti-subsidy actions by their key trading partners. Overall, this extra capacity is much greater than the closures within the premium brands, and the consequent growth in global capacity is leading to increasing over-capacity in the mass-market segment, which is driving down prices, and accelerating the withdrawal of the premium brands from those segments.

Meanwhile, the supply-demand balance in the premium segments of the market is still in slight under-supply, but we expect that to change in the coming year or two.

Helixtap Technologies has teamed up with Tire Industry Research, based in the United Kingdom, for this article. Tire Industry Research produces industry-leading analysis and commentary on the global tire industry.