Michelin expects weak first quarter volumes as OE demand falls

Clermont-Ferrand, France – Michelin Group’s first-quarter performance is set to be weighed down by weaker-than-expected volumes, as the group navigates the implications of Donald Trump’s tariffs on its operations.

In a 9 April ‘pre-close’ call, the French group confirmed that its first-quarter volumes are expected to come in within a -6% to -8% range compared to 2024, driven by depressed OE demand in the wake of the final quarter of 2024.

In the passenger car/light vehicle tire segment, OE markets were “down sharply” in Europe and North America during the first two months of the year, Michelin said.

Meanwhile, sales of replacement PC/LT tires “are holding well,” especially the Michelin brand in the Americas and Europe.

In the truck tire segment, OE tire demand was depressed in the first two months, with Europe and North American markets down double digits compared to last year.

This, Michelin said, was consistent with its expectations.

In the replacement market, Michelin said it is focusing on ‘added-value’ markets and its connected services in Europe and South America as sell-in markets decrease slightly.

The specialties unit, which includes mining, off-road, aircraft, and two-wheeler tires, remains “penalised” by off-road OE markets, mainly agricultural and construction tires.

Despite that, Michelin said it expected mining tire volumes to remain close to prior-year levels, while aircraft tires are set to “post some growth.”

On a positive note, Michelin said it expected growth in its mix, particularly Michelin-branded sales in the PC/LT replacement segment, especially in sizes 18 inches and higher.

The price effect, too, is expected to be positive, partially helped by the favourable impact of its raw material indexation clauses that took effect on 1 Jan.

Michelin expects currency to be “slightly positive” over the quarter, despite current US dollar-to-euro trading levels.

On the other components of revenue, non-tire and scope are expected to remain close to stable for the quarter, Michelin said.

Commenting on the looming US import tariffs, Michelin said the topic was “evolving by the day, and what we understand might be proven wrong in a week.”

Michelin expects its local-to-local strategy to prove “very valuable when it comes to dealing with high and volatile tariffs.”

In the US, around 70% of the group’s tire sales are manufactured domestically, with the remainder made up of 15% from Canada, 5% from Mexico, and the rest coming from Europe and Asia (Indonesia, Thailand).

Breaking down the imports, Michelin said shipments of finished products from Canada and Mexico to the US, which are compliant with the USMCA agreement, are exempt until further review, scheduled for 3 May.

This, the group noted, applies to “most of our trade within the North American region.”

The shipment of finished products from other regions to the US could be impacted by the 25% tariff that applies to auto and auto parts, but Michelin said it remains unclear whether all tires fall under this tariff.

For Michelin, the most significant flows are from Europe to the US in agricultural tires and from Indonesia to the US in tier-2 passenger car tires.

As regards raw materials, natural rubber is not affected by any of the latest tariffs.

As for synthetic rubber, the group has factories in the US, Europe, and Asia and therefore sees itself as ‘self-sufficient’ in the US, with “limited intercontinental flows.”

In view of the “current highly volatile context,” Michelin said it has not developed any forward-looking view and will keep it for its first-quarter sales release later in the month.

“Our general message at this point is that we are confident that Michelin is equipped to navigate these turbulent times,” the group concluded.