Michelin sees weak fourth-quarter tire markets as China slows

Clermont-Ferrand, France – Michelin expects global tire markets to remain weak in the fourth quarter of 2025, with demand remaining subdued in most regions and segments. 

In a full-year 2025 pre-close call 12 Jan, Michelin said it expects global OE market for passenger car, light truck and two-wheel tires (SR1) to be “flat or slightly negative” in the fourth quarter.

Growth in China is expected to “slow significantly” after strong government-backed demand in the second half of 2024, said Michelin.

Meanwhile, Europe and North America remain on a “downward trend amid an uncertain macroeconomic environment”.

Replacement tire sell-in in SR1 is also expected to be “flat or slightly negative.”

Here, growth in China is being offset by a decline in Europe, which is facing “a softer winter demand than in the third quarter” and high uncertainty over possible EU anti-dumping duties on passenger car tires from China. (ERJ report)

In truck tires and connected fleet services (SR2), Michelin expects OE markets outside China to remain negative over the final quarter of 2025, while Europe is continuing to recover from a low base.

North America remains under pressure with the market expected to stay in “double-digit decline”.

Michelin linked the fall in North America partly to the collapse in Class-8 truck production amid economic uncertainty and an oversupply of new vehicles.

The group went on to add that an uptick in December, in Class-8 preliminary order book, still needed to be confirmed over time and reach the truck OEMs’ production schedule.

Replacement markets in SR2 are expected to be broadly flat.

In North America, demand remains weak as freight activity is subdued, while in South America, growth is “mostly mechanical compensation for the decline in the OE market”.

In speciality tires and Polymer Composite Solutions (SR3), ‘beyond-road’ markets are expected to remain negative overall, but “sequentially getting better”, particularly in Europe.

Here, Michelin noted “less negative variation” in European fourth-quarter OE demand for farm tires, while construction tires displayed growth.

Mining and aircraft tire demand should remain “well-oriented, although probably not at the third-quarter level that was particularly high ,” said Michelin.

In PCS, Michelin said destination markets were “overall stable, balancing each other.”

Conveyor investments remain low, but industrial belting is being supported by “an acceleration in aeronautics demand and a good rebound in power generation.”

Coated fabrics, meanwhile, also show “a good outlook.”

On trade measures, Michelin said the tariff environment has “improved slightly versus October,” mainly because Canada dropped its tariffs against US imports, cutting the full-year impact by €50 million.

The French group described distributor inventory levels as “correct” for Michelin brands, but said it was “still high in tires imported earlier in the year” in both Europe and North America.

Looking ahead to 2026, Michelin expects OE tire markets to show “limited change on a full-year basis,” while replacement markets should post “low single-digit growth across business segments.”

Sales, pricing and cash generation

Turning to group sales, Michelin said fourth-quarter tire volumes will remain negative year on year, “around the middle of the range provided in October”. (ERJ report)

In SR1, volumes are expected to show a relative stabilisation compared with the fourth quarter of 2024.

OE sales will remain negative overall, but China will make a positive contribution, while Europe and North America remain penalised by weaker markets.

Replacement sales in SR1 are expected to be positive.

In North America, Michelin said the transition impact from its new wholesale strategy – including the end of business with ATD – is now over, with the group having “successfully adjusted our competitive positioning where necessary”.

China continues to deliver “significant sales growth”, Michelin added, although tier-2 volumes are being hurt by “intensified competition from massively imported tires, on both sides of the Atlantic.”

In SR2, fourth-quarter sales will still show a significant volume drop, driven mainly by weak OE demand in North America.

Replacement sales are also being weighed down by “the weak level of freight activity in North America”.

In SR3, sales volumes are expected to be broadly stable year on year, with ‘beyond-road’ benefiting from more supportive markets and improved operational performance.

Mining and aircraft activities should continue to post some volume growth.

Looking into 2026, Michelin said that, based on market assumptions and its commercial strategy, it expects total tire volumes to “come back to black figures”.

Price-mix remains supportive

Michelin said the price-mix contribution in the fourth quarter should be close to the third-quarter reference level.

The price effect is expected to remain positive, with a “limited impact of indexation clauses,” it said.

The mix effect could improve slightly versus the third quarter, supported by a favourable geographic mix, helped by strong Chinese sales and less depressed volumes in North America.

Non-tire activities are expected to post soft growth, in line with the third quarter and with expectations.

Foreign-exchange is expected to be a negative factor, with a mid-single-digit impact, reflecting an euro-dollar rate of around 1.16.

Second-half profitability

For profitability in the second half of 2025, Michelin said raw material costs are expected to be slightly positive, reflecting lower spot prices seen earlier in the year.

Industrial performance was broadly stable year on year.

Michelin said it was still “penalised” by low plant utilisation rates, but said its performance improved versus the first half, helped by to lower inflators and restructuring benefits.

SG&A also improved compared with the second half of 2024.