Tire Industry: Crisis & Transition

The tire industry, which occupies a leading position in the rubber industry, showed a bleak trend of "slight increase in revenue and sharp drop in profits" in the first quarter of 2025. The industry is undergoing drastic changes and has become the focus of attention of the entire industry chain.

Demand is cold: sluggish car sales inhibit the growth of the tire market

The decline in new car sales hits the original equipment market: the global automobile market growth has slowed down. In some regions such as Russia, new car sales plummeted by 45% year-on-year in March 2025, and a total decline of 26% in the first quarter, which directly led to a shrinking demand for original equipment tires.

The expansion of the replacement market is hindered: the growth of car ownership is weak, and the penetration rate of new energy vehicles has increased (the replacement cycle has been extended from 4.5 years to 6.1 years), and the growth rate of demand in the replacement tire market has slowed down significantly.

High costs: Soaring raw material prices have squeezed corporate profit margins

Natural rubber prices hit a 7-year high: Since the first quarter of 2023, the increase has exceeded 55%, reaching 17,855 yuan/ton at the beginning of 2025. The suspension of harvesting in the main production areas in the first quarter further exacerbated the supply tension.

The cost of auxiliary materials has risen simultaneously: the prices of raw materials such as carbon black, steel wire, and additives have continued to rise. Taking the 12R22.5 tire as an example, the cost of a single raw material has increased by about 55 yuan.

Price increases cannot resist cost pressure: Although companies generally raised tire prices (2%-10%), the cost increase far exceeded the adjustment of selling prices, and the profit margin was severely squeezed.

Policy impact: US tariffs have become the "Sword of Damocles" for global tire companies

"Double anti-dumping" tariffs increase export costs: The United States has imposed tariffs of more than 40% on some tires. Although there is a 90-day suspension period, the policy direction is unclear after July 20, and the export orders of Chinese tire companies have been significantly affected.

Market uncertainty under trade barriers: Although the joint statement on May 12 prompted a brief return of US orders, the tariff haze continues to loom, and the future export prospects are full of variables.

Regional differentiation: Asian companies "increase revenue but not profit", and European and American companies' sales suffered setbacks

Asian companies' profits collectively declined: The total net profit of China's listed tire companies in the first quarter of 2025 decreased by nearly 700 million year-on-year, and the profit of most companies decreased by 70%; the operating profit of Korean and Japanese companies decreased by more than 10%.

European and American companies face sales and layoffs: Continental Group has laid off more than 10,000 employees in 2025, and its tire sub-group's Q1 global supporting orders fell by 18% year-on-year, and the growth rate of replacement demand fell to 1.5% (lower than the historical average of 3.2%).

Solution: R&D innovation and global layout are the key to transformation

Technology upgrade drives cost reduction and efficiency improvement: Zhongce Rubber's R&D expense rate is stable at 4%, and it has invested 500 million yuan to build a "factory of the future". Through 5G, AI and other technologies, it has achieved a 70% reduction in labor costs, a 300% increase in production efficiency, and a reduction in the defect rate to 0.01%.

Global layout to avoid trade risks: Some companies are accelerating the establishment of overseas factories, reducing tariffs and transportation costs through localized production, and optimizing the supply chain structure.

Industry Outlook: Under the changes, innovation and resilience determine the survival space
Under the multiple challenges of the sluggish automobile market, high costs and changing trade policies, the global tire industry is in a critical period of transformation.

Companies need to focus on technological innovation, optimize cost structure, and flexibly respond to market fluctuations in order to break through and be reborn in the industry reshuffle.