Tire Industry Downtrend in Second Half

In the first five months of 2026, China’s passenger vehicle market presented a typical structural divergence characterized by sluggish domestic demand and robust export growth, with overall production and sales registering year-on-year declines.

Official data released by the Ministry of Industry and Information Technology (MIIT) shows that China’s cumulative passenger vehicle output reached 10.349 million units from January to May 2026, down 6.6% year on year, while cumulative sales stood at 10.318 million units, a year-on-year decrease of 6.2%. The downward trend of the complete vehicle market has been fully transmitted to upstream and downstream supporting industries. 

As a core supporting component of automobiles, the tire industry achieved a slight overall output growth during the period, yet it faces prominent challenges including weak terminal demand, high inventory backlogs and slowing production and sales momentum. Overall operational pressure continues to rise, and the market outlook remains cautious.

The market showed obvious structural segmentation in the first five months of 2026, leading to imbalanced demand for tire supporting products. According to calculation data from Longzhong Information, demand for semi-steel tires matched with passenger vehicles dropped 6.62% year on year, with supporting orders shrinking continuously.

Although demand for all-steel tires for commercial vehicles saw a mild increase, the growth momentum was insufficient to offset the demand decline in the passenger vehicle tire segment. Domestically, consumer purchasing willingness for new passenger vehicles remained weak, dragging down orders for original-equipment tires.

Meanwhile, replacement demand in the automotive aftermarket also entered a sluggish cycle, further restricting tire end-market shipments. Despite the strong export performance of Chinese automakers and the rising export proportion of new energy vehicles, the incremental supporting demand for exported tires is limited. In addition, exported tires adopt differentiated specifications and performance standards, which cannot effectively absorb excess domestic production capacity.

The marginal output growth of China’s tire industry has masked the true weakness of terminal market demand. Industry statistics indicate that China’s cumulative tire output exceeded 500 million pieces in January–May 2026, rising 1.9% year on year, with both semi-steel and all-steel tire outputs registering positive growth.

Most tire manufacturers maintained regular production schedules in the early stage of the year to ensure stable operation of production lines, yet market consumption failed to keep pace with expanding capacity, resulting in widening supply-demand mismatch. Recent field investigations covering a number of mainstream tire enterprises reveal that industry production and sales have shown a clear downward trend.

Most manufacturers predict continuous declining production and sales performance in the second half of 2026, with both all-steel and semi-steel tire segments facing severe market pressure.
The two mainstream tire categories are both trapped in weak end-market circulation.

Semi-steel tires, mainly supporting passenger vehicles, suffer from slowing shipments due to sluggish new vehicle sales and weak replacement demand in the private vehicle market, with low inventory replenishment among retail and wholesale distributors.

For all-steel tires matching heavy-duty trucks and buses, the recovery of domestic logistics demand is slower than expected, and low profitability in the freight industry has reduced fleet willingness to update vehicles and replace tires. The insufficient rigid market demand has kept the all-steel tire market in a prolonged downturn. The entire industry is facing a common dilemma of easy production but difficult sales, featuring insufficient terminal purchasing power and low product circulation efficiency.

Excess capacity and concentrated inventory pressure in distribution channels have become the most prominent industry pain points in 2026. Restrained by weak terminal digestion capacity, tire manufacturers have accumulated large finished product inventories. To relieve factory storage pressure and optimize capital turnover, producers have accelerated goods delivery to distributors.

This has reshaped the industry’s inventory structure: factory-side inventory pressure has eased temporarily, while warehouses of distributors at all levels are fully stocked. Massive tire products are stranded in circulation links without reaching end consumers. Faced with high inventory risks, distributors have sharply reduced purchasing willingness, focusing mainly on destocking existing goods rather than placing new orders. This has formed a vicious cycle that further suppresses manufacturers’ production and shipment rhythms.

Fluctuations in raw material costs and intensified market competition have further squeezed industry profit margins in 2026. Prices of core tire raw materials including natural rubber, carbon black and steel wire have fluctuated upward, raising overall production costs for tire enterprises. Although many manufacturers have adjusted ex-factory prices upward by 2% to 5% during the year, weak terminal demand has blocked price transmission.

Fierce market competition prevents distributors from raising retail prices synchronously, resulting in untransferable cost pressures. Both manufacturers and distributors are facing shrinking profit margins, driving up overall operational risks across the industry.

Based on current industry fundamentals, the Chinese tire market is unlikely to achieve a substantial recovery in the second half of 2026. The weak domestic passenger vehicle demand and insufficient commercial vehicle rigid demand will remain unchanged in the short term, keeping tire supporting and replacement demand at a low level. Coupled with high channel inventory, intense market competition and sustained cost pressure, tire manufacturers will face continuous production and sales challenges.

The industry will enter a key adjustment cycle dominated by inventory destocking, capacity optimization and price stabilization, and the overall market will maintain a weak operating trend for the rest of the year.