Michelin Q3 2025 Performance Mixed Results
On October 22, 2025, Michelin Group released its third-quarter earnings report, showing a 4.4% year-on-year decline in sales for the nine months ending September, with total revenue reaching €19.3 billion (approximately RMB 159.596 billion).
This data reflects a stark dichotomy in the global tire market: emerging markets, represented by China, have grown against the trend, while traditional core markets in Europe and the United States continue to weaken. This, coupled with the impact of cheap tires in Southeast Asia, has collectively undermined Michelin's performance.
Notably, while third-quarter sales improved quarter-over-quarter compared to the second quarter, the recovery was far weaker than market expectations, leading to a 4.5% plunge in the group's stock price following the release of its earnings forecast, hitting a six-month low.
Regional Dilemma: The Double Hack of European and American Contraction and Policy Shadows
The North American market was the hardest hit, with third-quarter sales down nearly 10% year-on-year. Demand from original equipment manufacturers (OEMs) in the truck and agricultural sectors plummeted, with the truck tire market plummeting by 20%.
This decline stems from three factors: high inventory levels are suppressing immediate purchasing demand, uncertainty about future tariff policies has dealers adopting a wait-and-see approach, and the uncertain prospects of the new US Environmental Protection Agency regulations in 2027 have further dampened fleets' long-term investment appetite.
The European market also performed poorly, with the passenger car tire market continuing its downward trend. While the truck tire market showed signs of recovery in the third quarter, this was primarily based on an extremely low base compared to the same period last year, and has not yet materialized.
More seriously, the EU's anti-dumping investigation into Chinese passenger car tires is ongoing, with a preliminary ruling expected by the end of 2025, potentially taking retroactive effect from October. This policy threat not only disrupts the stability of the European supply chain but also indirectly limits Michelin's room for price adjustments.
Business Segments: Core Business Setbacks Offset by Some Bright Spots
(I) Passenger Car Tires: The Chinese Market Provides Key Support
The core passenger car, light truck, and two-wheeler tire business achieved sales of €10.504 billion in the first three quarters, a year-on-year decrease of 2.5%. The strong performance of the Chinese market provided a significant buffer – benefiting from a surge in new car subsidies, Michelin's passenger car parts business in China grew 9% year-on-year, directly driving a 2% increase in global sales for this category.
In the replacement market, despite facing competition from low-priced tires in Southeast Asia, Michelin maintained stability thanks to its premium brand, achieving a 4% increase in the European market and a modest 1% growth in the Chinese market. However, the two-wheeler tire business saw sluggish growth due to the impact of US tariffs.
(II) Truck Tires: Sharp Decline in Global Parts
The truck tire business was the hardest hit segment, with sales down 8.1% year-on-year to €4.51 billion. Excluding China, the global truck tire market contracted by 4% overall, with the South American market also declining by 8%. Only the Chinese market achieved 3% growth, but this was unable to reverse the downward trend due to its limited market share.
The replacement market showed regional differentiation: North and Central America saw 6% growth in the first three quarters, driven by pre-tariff stockpiling; Argentina saw a 27% surge driven by its open import policy, while the Brazilian market declined by 8%.
(III) Specialty Tires: Uneven Demand
Sales of the specialty tire business declined by 5% to €4.261 billion, presenting a mixed picture. Aircraft tires benefited from the recovery of commercial aviation, with continued positive sales, and the general aviation market has returned to pre-2020 levels. Demand for mining tires also saw steady growth. However, demand for agricultural and construction tires declined sharply, with construction tires down 9% year-on-year in the first nine months, showing only a slight recovery at the end of the second quarter.
Performance Under Pressure: Multiple Negative Factors Impacting Performance
In addition to weak market demand, multiple external factors further exacerbated performance pressure. Regarding profitability, the declining linkage effect of the raw material price index, coupled with price competition from cheap tires in Southeast Asia, led to a continued weakening of the positive contribution of Michelin's "price mix" to revenue. Exchange rate fluctuations also had an impact.
The weakening of the US dollar against the euro in the third quarter had a negative impact of 2.3%. Furthermore, the US dollar exchange rate was lower than expected (US$1.17 to 1 euro), which directly dragged down the group's free cash flow.
