Inventory is full, market is weak, and tire companies are working overtime to produce

On the big stage of industry, various tire companies are performing a puzzling drama. On one side, there are piles of tires in the warehouse, which are like silent guards, arranged neatly, telling the fullness of inventory; on the other side, the market demand is as weak as frost-bitten eggplants, and consumers' desire to buy new tires seems to be covered by a layer of frost, and it has not warmed up for a long time.

According to common sense, facing such market conditions, companies should shrink their fronts and reduce production to avoid more product backlogs. But the reality is surprising. Not only did tire companies not reduce production, but they worked overtime, and the roar of machines continued day and night, playing a different song of production.

Tire dealers' inventory exploded
It is known that China is the world's largest tire producer. In addition, various capitals have poured in in recent years, and new factories have sprung up like mushrooms after rain. This has led to a serious oversupply in the tire market.

It is understood that data from January 2025 showed that the capacity utilization rate of large tires was 56.56%, a decrease of 3.41 percentage points from the previous month. The average inventory turnover days of large tire companies was 44.92 days, an increase of 0.73 days from the previous month.

When you walk into some tire factories, you can see that the warehouse is full of backlogs of tires, from the ground to the ceiling, densely packed, like a tire fortress that never sees the sun. These tires take up a lot of money and storage space, but it has been difficult to find buyers. In order to save sales, tire companies are raising prices while promoting rebates, stimulating sales growth in a way that increases and decreases in secret.

The overall tire market is weak

How is the current market? How is the current market after the terminal store survey?

Shop owner: How should I put it? The "customer order" is okay, but the "customer price" cannot go up. Overall, it is still not good!

Especially the business after the New Year, it is even more deserted. No one buys in the store, but the tire manufacturers are still producing non-stop, which leads to the explosion of the warehouses of manufacturers and dealers.

The latest data from the First Commercial Vehicle Network shows that in February 2025, my country's heavy-duty truck market sold a total of about 80,000 vehicles (wholesale caliber, including exports and new energy), an increase of 11% month-on-month and a substantial increase of 34% year-on-year. In the past eight years, 80,000 vehicles are second only to February 2021, and the sales volume is higher than that of February in other years. Therefore, February this year is a February with "high gold content".

In January and February this year, my country's heavy-duty truck market sold a total of 152,000 vehicles, and the year-on-year decline narrowed to 3%. Whether it is the replacement market or the original equipment market, the entire tire market is undergoing severe tests.

Tire companies work overtime to produce
Unlike the overflowing inventory of tire dealers and the sluggish terminal tire market, many tire companies have released the latest situation of working overtime to produce tires.

Hubei Yuexin Rubber produces 20,000 tires per day: Recently, Hubei Yuexin Rubber Co., Ltd. is busy with production and impacting the annual target. According to the relevant person in charge of Yuexin Rubber, the factory currently has more than 150 employees and is operating at full capacity. In 2024, the company invested 30 million yuan to carry out fully automatic upgrading and transformation of production equipment.

The daily production capacity of tires has increased from 10,000 to 20,000.

Ruisilife Tire welcomes large overseas orders: Recently, reports show that Chongqing Ruisilife Tire Co., Ltd. has received a large order of 41 cabinets from customers in Tunisia and Morocco. This important breakthrough marks that Ruisilife motorcycle tires have significantly improved their competitiveness in the international market, and also means that the company's business in the African market has been further expanded.

It is not difficult to see that the market where dealers survive does not seem to be the same as the market where manufacturers survive. Why are tire companies still peaceful when dealers' inventories have exploded?

Going against the current, if you don't move forward, you will retreat.

Why do tire companies work so hard when their inventories are full and the market is weak? There is a complex business logic behind this.

First of all, tire production has its own cost structure. From the purchase of raw materials to the final molding of a tire, many links and cost expenditures are involved. For enterprises, fixed costs such as equipment depreciation and factory leasing must be spent regardless of production or not.

If the output is reduced, the fixed cost per unit product will increase significantly, which will undoubtedly increase the burden on the company. For example, if 100 tires are originally produced, the fixed cost is 10 yuan per tire. If the output is halved, the fixed cost per tire may soar to 20 yuan, which will make the product lose its price competitiveness in the market.

Secondly, the market competition in the tire industry is extremely fierce. Companies are worried that once production is reduced, their market share will be seized by competitors. In this business world where the strong prey on the weak, market share is the lifeline of the company. Even if the market is temporarily sluggish, we must grit our teeth and insist on production, maintain market supply, and keep our brand in the eyes of consumers.

Once the market is out of stock due to production cuts, consumers are likely to turn to other brands. When the market picks up, it will be difficult to regain the lost share.

Furthermore, companies often have optimistic expectations for the future market. Although the current market is weak, they firmly believe that the economy has its cyclical fluctuations and there will always be a turnaround in the future. Today's full inventory may be only a temporary phenomenon. Once market demand recovers, these piles of tires will become best-selling products and bring huge profits to the company. Just like a person waiting for dawn in the dark, although the eyes are dark, the heart is full of expectations for light, so be prepared in advance.

However, this overtime production mode is not without hidden worries. A large amount of inventory backlogs occupies a lot of funds of the company, and the capital turnover is like being put on a yoke, becoming slow and difficult. Moreover, long-term and high-intensity production can not be underestimated. The loss of equipment should not be underestimated, and the cost of equipment maintenance continues to rise. Once the market does not pick up as expected in the future, the company is likely to fall into a deeper predicament.

Tire companies work overtime to produce when the inventory is full and the market is weak. It is like a dance on a tightrope, full of risks and challenges, but they have their own reasons for doing so. They struggle and make choices in difficult situations, trying to find a balance between survival and development, which is also a vivid portrayal of the complexity and changeability of the business world!