Global tire industry shows signs of underlying change

Last year saw modest gains and losses among the world’s largest tire makers across the different end-product and regional markets.

Group Michelin remained the top tire maker in the world for the fifth year in a row, based on estimated fiscal 2023 tire sales revenue.

The Clermont-Ferrand, France-based group generated $27.5 billion in revenue last year to lead all tire makers, finishing about $2 billion ahead of Tokyo-based Bridgestone which had estimated sales of $25.5 billion.

Tire-manufacturing-related revenue declined as a percentage of overall sales in 2023 and 2022 versus earlier years for both companies due to more detailed accounting of their respective business units.

Michelin, which has traditionally focused almost exclusively on tires, now anticipates deriving up to 20% of its revenues from other activities by 2030 – helped by “value-accretive” M&A activity.

In fiscal 2023, Michelin generated around 5% of its annual sales of $30.6 billion from polymer composite solutions – mainly via its Fenner belts and engineered rubber products-making unit – and 11% from connected solutions, retail, wholesale distribution, and lifestyle businesses.

Goodyear again ranked third, despite reporting a $600-million drop in annual tire-related revenues of $17.3 billion. Sales will likely continue to decline as the Akron-based company divest certain assets as part of its Goodyear Forward plan.

For instance, sales will be impacted by as much as $675 million after the pending sale of its off-the-road tire business to Yokohama Rubber Co., which is expected to close by early next year.

Goodyear’s sales are likely to fall further once it divests the North American and European rights related to the Dunlop brand. Goodyear disclosed plans for this in early 2023 but has maintained silence on the matter since. Sumitomo Rubber Industries owns the Dunlop brand rights in nearly every other region globally.

Hanover, Germany-based Continental retained no. 4 slot in the rankings with a slight increase in sales over the previous year to $12.5 billion last year. Tire sales account for less than a third of Continental’s total revenue – versus 85% or greater for other top-ranked companies.

Pirelli edged by Sumitomo Rubber Industries to take fifth place, though the two companies’ sales revenues were nearly even –$7.19 billion versus $7.17 billion. The swing can be attributed largely to the currency exchange rate changes between the dollar and the yen and euro, which favored Pirelli.

Nearly half of the tire makers ion the Top 75 ranking are based in China, and 17 advanced their positions on this year’s list. Here’s a look at some notable companies:

Sailun Group entered the Top 10 for the first time, with tire sales last year of $3.6 billion. It was an increase of over $300 million for the company that has risen consistently since 2020, when it ranked as the no. 17 largest tire maker in the world.

Sailun moved past Toyo Tire Corp. and Cheng Shin Rubber/Maxxis International despite double-digit growth by Toyo. Cheng Shin’s sales sank for the second straight year.

Dongying City, China-based Sailun has been aggressive in the North American market over the last few years. Through its North American headquarters near Toronto, the company has been working to establish itself as a dependable, low-cost and high-margin tire maker.

OTR and truck/bus tire maker Triangle Group of Shandong, China, moved up four spots in the rankings to No. 21 after increasing tire sales by more than $100 million. Triangle was followed by Shanghai-based Double Coin Holdings Ltd., which moved to no. 21 from no. 22.

Prinx Chengshan (Shandong) Tire Co. rose four spots to No. 24 with sales of $1.38 billion last year. It was an increase of nearly $150 million compared with the year before thanks in large part to efforts to establish itself in the North American market.

Ranked at no. 25, Guizhou Tyre, based in Guiyang City, Guizhou, China, jumped five spots with $1.35 billion in sales – an increase of $300 million over the prior year.

Shandong Jinyu Tire made the largest leap this year, jumping up 12 spots. The Guangrao, Shandong-based tire maker moved to no. 33 from no. 45, thanks to an increase of $300 million in tire sales for a total of $953 million in revenue.

Also of note, Tianjin Wanda Tire Group of Tianjin, China, jumped to no. 56 from no. 60 on $340 million in tire sales, an annual increase of more than $200 million.

Three Chinese tire makers – Shandong Yongsheng Rubber Group, Tercelo Tire Group  and Shandong Xinghongyuan Tyre made their debut in the Global Tire Report rankings this year.

Shandong Yongshengen, which mainly markets its Doupro-brand TBR tires, landed at no. 36 based on 2023 tire revenue of $856 million. Tercelo Tire Group of Qingdao, Shandong, China, ranked no. 45, and Shandong Xinghongyuan Tyre of Linyi, Shandong, China, ranked no. 57.

The fourth new company is India’s Mahansaria Tyres, which entered at no. 70 with sales of $163 million.

The Global Tire Report Top 75 rankings include 33 tire makers based in China; nine in India; four each in Japan, Taiwan and the US; three in South Korea and Turkey; two each in Italy, Russia and Vietnam; and one each from Argentina, Finland, France, Germany, Iran, Pakistan, Singapore and Sweden.

Notable moves

Kumho Tire Co. Inc. jumped up three spots to 13th position, as tire sales rose above $3 billion for the first time. Kumho jumped Apollo Tyres, MRF and Giti Tire, which dropped to positions 14, 15 and 16, respectively.

Italian tire maker Prometeon Tyre Group moved to no. 20 on the list from no. 26, despite generating $200 million less in tire sales than in the prior-year.

Sun-Tire & Wheel Systems moved to no. 26 in the rankings after more complete information was supplied by the Indian tire maker: its $1.25 billion in tire sales substantially above previous estimates.

Nokian Tyres dropped seven spots with tire sales last year of $1.1 billion, as it lost $500 million or more in revenue due to its decision to withdraw from Russia. The company should rebound next year as it moves into the next phase of ramping up production at its new tire plant in Romania.

Titan International Inc. fell significantly in the rankings – by 10 spots to no. 31. This was because tire sales were overestimated in previous GTR rankings. Titan makes around half of its revenue from wheels and heavy-vehicle undercarriage assemblies.

Titan will bounce back next year as it consolidates the Carlstar Group business it acquired earlier in 2023. That business generates more than $600 million annually, although like Titan, it derives a portion of its sales from wheels.

Looking ahead

Yokohama Rubber is poised to move up the rankings noticeably due to its recent and pending acquisitions in the off-highway tire and wheel sector.

In addition, starting with the 2024 Global Tire Rankings, there will be some new names to consider in the Top 75, most notably related to Russia and the withdrawal of western tire makers Bridgestone, Continental and Nokian in the wake of Russia’s invasion of and continuing war with Ukraine.

Most notably, Russian energy giant PJSC Tatneft has created a new company Ikon Tyres Co. to operate the plant in Vzevolozhsk, Russia, that it purchased from Nokian.

Ikon started commercial-scale production of Ikon-branded tires at the plant in late 2023 in preparation for putting the brand on the market in Russia this past spring. The product range will cover premium Ikon Autograph tires and the mid-priced Ikon Nordman tires, which will be rebranded Ikon Character in the near future.

Opened by Nokian in 2005, the plant has a rated capacity of 17 million radial passenger car and light truck tires a year. Nokian’s Russian operations generated $378 million in revenue in 2021.

At the same time, JSC Cordiant – backed by S8 Capital Holdings, a Russian diversified holding company – took over Bridgestone’s seven-year-old tire plant in Ulyanovsk, Russia, and Continental’s 10-year-old factory in Kaluga, Russia. The acquired plants are rated at 5 million and 3 million passenger and light truck tires a year, respectively.

Financial viability

Industrywide, tire companies enjoyed a relatively healthy fiscal year in 2023, recording a 10.8% pre-tax operating ratio, based on the financial results of 30 leading tire makers that publish their results. On a case-by-case basis, four companies reported operating ratios above 20% — Barez Industrial Group, PT Gajah Tunggal, Balkrishna Industries and Pirelli.

For the first time in many years there were no companies in the red on an operating or net basis, the data show. The companies reported an industrywide net earnings ratio of 4.9%.

Collectively, the companies tracked for this report devoted 4.9% of their sales in 2023 to research and development activities, although that figure is skewed to a degree by Continental’s R&D spending, which includes expenditures devoted to vehicle components and systems. Otherwise the average is closer to between 2% and 3% for most companies.

The industrywide average sales per employee were $232,570 last year, up 4% from the industrywide average of fiscal 2022. Topping this benchmarking figure was Toyo Tire Corp. at $378,624, ahead of Nokian Tyres at $337,986 and JK Tyre & Industries at $320,179.