Global demand for replacement car tires is plunging
Generally speaking, December to February of the following year can be regarded as the hot season for snow tires. In the first quarter reports of 2023 and 2024, Toyo, Sumitomo Rubber, and Nokian Tires all mentioned that the surge in snow tire sales saved their performance. So what about the first quarter of 2025? Judging from global retail data, it seems a bit subtle.
Data shows that even in overseas markets where snow tires are "hot selling", sales in the fourth quarter did not pick up - in November 2024, retail tire sales increased by less than 1% month-on-month.
A mess of tire retail in the fourth quarter
According to statistics, in November 2024, the average sales growth rate of independent tire dealers was 0.7%. Based on the sales performance in October and November, the fourth quarter is not the worst period for sales performance (the trend in the third quarter of 2024 is a steady decline). However, the sales performance in the fourth quarter is definitely not good, why?
Except for the Northeast and Midwest, where transaction volume showed single-digit growth, sales in other regions of the United States are declining. The market performance in the Mid-Atlantic region of the United States was the weakest, with sales falling sharply by 7.5% year-on-year.
An important factor driving the increase in sales in the Northeast and Midwest was that some rain and snow occurred in the Northeast and Midwest in November, prompting many car owners to replace snow tires.
However, since December is the off-season for tire sales (retail sales in December 2023 increased by 1% year-on-year), it can be roughly predicted that tire sales in the fourth quarter of 2024 will be at best the same as last year's sales performance.
Tire sales are not picking up as driving mileage plummets
It is particularly noteworthy that such sales decline seems to have spread to 2025. Under the economic downturn, car mileage began to shorten, and the longer replacement cycle made it difficult for tire stores to obtain sales opportunities.
In 2024, not only the tire supporting market was depressed, but also the demand for tire replacement was also difficult to describe. In November 2024, there was no significant change in the mileage of the United States - the mileage driving power index even fell by 0.3% year-on-year in November (the mileage driving power index had increased by 5.5% in October 2024), and the driving opportunities of car owners were declining.
Experts speculate that snowfall is the reason why many people give up driving: the heavy snow in the Great Lakes region at the end of November had a negative impact on the trend of mileage driving. But in fact, if car owners have spending plans for snow tires, they will not give up driving. This also means that under high inflation, car owners around the world have shown a consistent cautious attitude towards tire replacement.
From 2021 to 2023, although the wallets were also deflated, car owners chose not to change cars but to change tires to save money. In 2024, after three years of economic downturn, car owners are more cautious about spending, almost to the point that they have to carefully consider whether to replace tires.
It is no wonder why some tire companies complain that 2024 is the most difficult year in the past decade - both the supporting market and the replacement market are not doing well. What is even more troubling for global tire companies is that not only are passenger car tires being replaced cautiously, but light truck and truck tires are also being replaced cautiously.
Price reduction has become a global trend
In addition to reducing mileage and extending tire replacement cycles, global car owners have almost always chosen high-quality-price ratio tires as a money-saving option.
In the winter tire sales season that officially began in November 2024, car owners continued the trend of 2023 in their tire replacement choices - continuing to turn to secondary and tertiary tires (different brands from car-matched tires, with high quality-price ratio tires). The product sales of tire companies in the first echelon of traditional brands continued to be weak.
However, foreign-funded tire companies have long been prepared for this sales situation. In October 2024, most foreign-funded companies lowered their full-year sales expectations when they released their third-quarter reports. However, these companies did not lower their profit expectations, which also means that at least for now, foreign-funded tire companies are still unwilling to participate in price wars with Asian tire companies for profits.
However, the current choice of the market is cheaper tires. Overseas dealers have made it clear that the tertiary tire market has been the best-performing market for seven consecutive months in November. In fact, the sales of brands that dominate the tertiary tire market have even surpassed those that have been popular in the secondary market for more than a decade.
This is why the overseas market has become a more important component of revenue in the past five years. Data shows that some tire companies have reached nearly 80% of their overseas market share. Almost all passenger car tire markets around the world are showing such a trend - the lower the brand, the cheaper the tire, the better it sells!
