Tire exports enter purgatory mode

In 2024, mainland China manufactured more than 1 billion tires; in the first 11 months of 2024, mainland China exported 620 million tires. More than 60% of tires manufactured by Chinese factories are exported.

The main reason for the export proportion of more than 60% is that many tire companies mainly supply overseas markets. At the beginning of 2024, many Dongying tire companies announced that they would only supply overseas markets. Even for China's leading tire companies, overseas sales accounted for 48% to 78% of their main revenue.

So is the good news that the annual export volume increased by more than 10% in 2024 enough for tire companies to celebrate with champagne? The fact is just the opposite! In 2025, when it comes to exports, all tire companies are worried.

China's export road is getting harder and harder
Under the pressure of the double anti-hammers in the overseas market and the construction of overseas factories one after another, China's tire exports are entering an unprecedented "purgatory mode".

If 2024 is the most difficult year for countless tire companies in the past 30 years; then facing the dual pressures of overseas penalties and domestic runs, 2025 has become an even more difficult beginning for the next 30 years.

Global blockade of tire exports, 80% of tire companies' business affected
It is said that everything is difficult at the beginning, but for Chinese tire companies, the beginning of tire exports is not that difficult!

In the 1990s, labor costs, operating costs, and transportation costs were one-tenth of what they are now, but the opportunities given by the market were 10 times what they are now. Freight and car sales are in a rapid climbing stage. As long as the tires can be made, the market will rush to buy them.

At the same time, low costs also give Chinese tires global market competitiveness, allowing Chinese tire products to quickly seize overseas market share. It can be said that Chinese tire companies 30 years ago had no worries about sales and profits. But such a "good life" was suddenly broken 15 years ago!

Starting from the US tire "special protection case", China's tire business has upgraded from "simple mode" to "medium difficulty" mode.

Although after 2009, the anti-dumping and countervailing duty rate of more than 100% caused the price advantage of Chinese tires to drop sharply. Almost overnight, some Chinese tire brands were "liquidated" in the US market. Now China is no longer among the top ten sources of imported passenger car tires in the US market. Tire companies can no longer sell in the world's second largest tire market. Under the sharp decline in export volume, the previous aggressive expansion has further aggravated the inventory backlog.

Since then, the markets in Europe, South America, and South Asia have also followed the US approach, using anti-dumping and countervailing duties of thousands of yuan per tire to directly cut into the main artery of China's tire exports. Under the repeated anti-dumping and countervailing pressure for nearly 7 years, the price advantage has regressed, and tire companies that cannot recover their investments have started the first round of bankruptcy after 2015.

Even Haoyou Tire, Yongtai, and Shengtai, which were honored to be on the list of the top 75 in the world that year, all failed under this wave of tires and went bankrupt and reorganized, and disappeared.

Of course, the wave of bankruptcies of Chinese tires did not stop there. Under the pressure of anti-dumping and countervailing every year, the wave of bankruptcies of Chinese tire companies is even higher than the other!

The United States imposes anti-subsidy duties of 21% to 63.3% and anti-dumping duties of 9% to 22.6% on Chinese truck tires, and anti-dumping duties of 19.17% to 36.26% on passenger car tires; the UK recommends a 1,000 yuan fee for each Chinese truck tire; the EU imposes an anti-dumping duty of up to 35.74 euros (271 yuan) and an anti-monopoly tax of 21.12 euros to 61.76 euros (160 to 469 yuan) on Chinese truck tires;

Brazil imposes anti-dumping duties of $1.12 to $2.59 per kilogram on Chinese truck tires, and the anti-dumping duty rate on passenger car tires may be increased to 25%, and recently launched an anti-dumping investigation on motorcycle tires; if calculated by the weight of truck and bus tires, the maximum tax paid by China for truck and bus tires exported to Brazil is 950 yuan per tire.

In addition, on October 1, 2024, Mexico will directly impose an anti-dumping duty of up to 32.24% on passenger car and light truck tires from China. Although Argentina officially lowered the import tariff on tires from January 1, 2025, after the third round of adjustments, tires exported to Argentina still have to pay a 16% tariff! Argentina's tariff reduction is not for tire manufacturers, but to reduce the burden on tire importers.

Fines of more than 500 yuan have reduced the price advantage of Chinese tires in overseas markets year by year. In order to maintain their advantages, many tire companies have begun to lower prices, which has also led to the export profits of tire companies beginning to be compressed as in the domestic market. Faced with trade barriers that have been rising like crazy since 15 years ago, tire companies that do not want to reduce prices can only think of other ways out. Some tire companies choose to outsource tire factories in Southeast Asia (such as Taiwan's tire company Taifeng), but more tire companies directly build factories overseas.

Environmental protection, labor rights, overseas markets are challenging Chinese factories
According to incomplete statistics, as of December 2024, China has 22 tire factories in operation or under construction overseas. In 2024 alone, Chinese tire companies have planned 160 million production capacity. These production capacities are only for overseas markets.

More and more Chinese tire companies want to solve the double anti-dumping challenges by building overseas bases, especially Southeast Asian factories with lower operating costs. If it was before 2020, this road seemed to work. But starting in 2021, the road to developing exports from overseas bases has also been blocked.

In 2021, the United States began double anti-dumping on Southeast Asian passenger car tires; in 2024, the United States determined double anti-dumping on Thai truck tires. In addition, in 2024, the South African International Trade Administration Commission also issued a case filing announcement, announcing the launch of an anti-circumvention investigation on new pneumatic rubber tires that jumped from China to Cambodia, Thailand and Vietnam to circumvent anti-dumping duties.

In just three years, China's tire factories in Southeast Asia have been hit twice. Southeast Asian exports to overseas countries are no longer advantageous. Tire companies are beginning to consider building factories in Europe, America and Africa to achieve global tire operations.

On December 23, 2024, a document from the Brazilian Ministry of Labor put BYD's Brazilian factory in crisis. BYD officials responded quickly, saying that the accusation was completely false, and said that it would cooperate with the relevant Brazilian departments in the investigation, and called on everyone to look at the incident calmly.

Such accusations were also sent to the factories of automotive aftermarket suppliers. In fact, as early as a month before the incident, the European Council finally passed the "EU Market Prohibition of Forced Labor Products Regulation". The regulations clearly prohibit the sale, import and export of goods made with forced labor in the EU market, covering all industries and products at all stages of the supply chain.

This also means that if a factory is built in Europe and is accused of corresponding accusations, the company's supporting and replacement businesses will be seriously affected-the shutdown seems to be just a "drizzle".

Due to the cultural differences between Europe and the United States and Asia, the continued "involution" of Chinese tires will lead to a dead end for the operation of European and American tire factories. Is this aimed at Chinese tire companies? Of course not. There are reports that a foreign-funded tire company factory in Silao is also being accused of labor human rights and is restless.

Turning the ship back to China, the internal struggle of Chinese tire companies begins
Exports face trade barriers, and there are many rules and regulations for building factories overseas.
Can Chinese tire companies pack up and return to China? Not at all! If there is only domestic tire business, it is likely that Chinese tire companies will have a worse time!

Imagine what it would be like if tire companies moved all overseas sales back to China. Let's not discuss Dongying tire companies whose business is 100% exported.

But what if 20 giants sell tires that should have been sold overseas to China? According to the data released by tire companies, overseas market sales basically account for 50% to 80% of the company. At present, the production capacity of Chinese tire giants is basically 50 million to 100 million.

Even if it is roughly calculated based on the production capacity of 50 million, if only 20 leading tire companies bring their products back to the domestic tire battlefield, the domestic tire supply will increase by at least 250 million tires out of thin air. Can it be digested? If it can't be digested, what will happen when supply exceeds demand? A new round of unimaginable fierce price war!

All roads are blocked, and 50% of factories are in the countdown of "life"
Small and medium-sized enterprises whose brands cannot beat the leading enterprises, once faced with the big price cuts of the leading tire enterprises, the final outcome can only be a dead end! And what about the leading tire enterprises?

They will never give up the export market. The average gross profit margin of Chinese tire enterprises can reach more than 20% now, all relying on the high gross profit of overseas factories and export markets. If Chinese tire factories only do domestic business, the gross profit margin is only 5% to 10%. To make domestic business, 50% of tire companies will have to enter a dead end.

Therefore, even in the face of the risk of factory shutdown, even in the face of a fine of 1,000 yuan for each tire, Chinese tire companies still have to bite the bullet and rush to the overseas market.

In 2025, there are only two ways for tire companies - integrating into overseas culture, continuing to fight in overseas markets, or selling factories.