Michelin sees weak first quarter tire markets as OE demand declines

Clermont-Ferrand, France – Michelin expects global tire markets to remain weak in the first quarter of 2026, with original equipment (OE) demand declining across segments.

In a pre-close call held 8 April, the French group said market trends are developing “in the expected directions,” with OE demand negative year-on-year and replacement demand “close to flat,” albeit with “strong regional specificities.”

Market trends

In the consumer segment (passenger car, light truck and two-wheel), Michelin said it expected OE markets to be “negative over the quarter,” continuing a decline seen earlier in the year.

Chinese demand is expected to “slow down materially” as incentives for new vehicle purchases become less attractive than in 2025.

In Europe and North America, Michelin said OE markets remain on a “downward trend amid an uncertain macroeconomic environment.”

Replacement ‘sell-in’ is expected to be “flat or slightly negative,” with growth in China offset by declines in Europe and the US.

Michelin said this reflected “the gradual reduction of the inventory surplus of Asian tires that built up in 2025,” with the US also impacted by “difficult weather conditions in January and February.”

In the ‘truck tires and connected fleet services’, OE markets excluding China are expected to remain “negative over the quarter,” with North America still in a “double-digit” decline year-on-year.

In the US, Michelin noted that Class 8 truck order books have improved since December last year but added that inventories remain “very high,” requiring “a few more months to come back to normal.”

In South America, the group said, the Brazilian market remains “severely hampered by a difficult economic situation that is limiting investment by carriers and increasing competition from Asian truck makers.”

Replacement demand in the segment is expected to be “flattish overall,” but “sharply negative in North America” due to lower imports, weak freight activity and adverse weather.

By contrast, Europe and South America are posting growth, “mainly reflecting an increase of imported tires.”

In speciality tires, which includes mining, agriculture, construction and aircraft tires, Michelin said its ‘beyond-road’ markets are expected to remain “slightly negative” compared to the year before.

The markets, it said, are dragged down by agricultural OE demand in North America, particularly in high-power tractors where Michelin is “over-indexed.”

Mining and aircraft segments, however, are expected to remain “well-oriented” over the quarter.

Michelin noted that its Polymer Composite Solutions (PCS) activities are not assessed against a single market trend, due to their exposure to “numerous market verticals,” and will instead be reflected in sales performance.

Volumes, price-mix and forex

Turning to group sales, Michelin said first quarter tire volumes will be negative year-on-year.

This, it said, is in line with the full-year outlook for “a slight growth [for] the full year, with second half better than the first half.”

Within the first half, the group expects a “negative first quarter (low-to-mid single digit)” followed by a “slightly positive second quarter.”

In the consumer segment, volumes are expected to decrease slightly due to weaker OE demand, while replacement sales should post “modest growth,” supported by Michelin-branded products.

This is expected to offset continued pressure on tier-2 segments from “highly stocked cheap imported tires.”

In truck tires, volumes remain under pressure following the fourth quarter of 2025.

Here, Michelin said, OE demand in the Americas acts as a “strong headwind,” while replacement demand should remain close to stable.

In speciality tires, volumes continue to be “heavily penalised by OE markets,” particularly in agriculture, although mining and aircraft activities should post some growth.

Michelin went on to add that it expects the price effect to be negative in the quarter, mostly driven by “indexation clauses which have turned negative,” as raw material costs became favourable in 2025.

The mix effect remains “structurally positive,” supported by “a richer product mix” in passenger car tires and a favourable business mix across regions, brands and activities.

In PCS, sales are expected to be “overall stable,” with growth in sealing solutions and coated fabrics offset by softer demand in belts and conveyors.

Here, Michelin said ‘the scope effect’ should be “slightly positive,” with the integration of US-based Cooley Group offsetting the carve-out of bias tire activities.

Foreign exchange is expected to be a “strongly negative” factor, at a level comparable to the fourth quarter of 2025.

M&A and Middle East exposure

Michelin also provided an update on recent acquisitions aimed at expanding its PCS business.

The acquisition of Cooley Group (coated fabrics) was completed on 22 Jan, while the deal for Flexitallic (sealing solutions) closed on 1 April.

The acquisition of Tex-Tech Industries is expected to close “around mid-year.”

On the Middle East, Michelin said its direct exposure remains limited, with the region accounting for “less than 1%” of group sales in 2025 and no manufacturing presence in Iran.

Some shipments have been disrupted, with tire containers “stuck in the Strait of Hormuz,” although alternative logistics solutions are being arranged.

At this stage, the group said it has not experienced supply shortages but remains “especially vigilant” as the situation evolves.

Potential financial impacts linked to raw materials, energy and freight costs will depend on how long the disruption lasts, Michelin added, with further detail expected at its first-quarter sales release on 29 April.