Tire Industry's Q2 2025 Anxiety
In the second quarter of 2025, the upstream and downstream of the tire industry chain seemed to be trapped in a quagmire of anxiety. Under the seemingly calm market appearance, there are actually undercurrents and crises.
From the market data, the situation is not optimistic. According to relevant statistics, commercial vehicle sales in 2025 fell by 10.3% year-on-year, and heavy truck sales plummeted by 32%, which directly led to a sharp drop in tire replacement demand.
At the same time, exports have also suffered a heavy blow. The EU has imposed high anti-dumping duties on truck tires, and the United States has launched a "double anti-dumping" investigation on Southeast Asian tire bases. Some tariffs exceed 40%, which has severely restricted China's tire export channels. Domestic demand is insufficient and foreign demand is blocked. The overall demand in the tire market has shown a clear shrinking trend.
In such an environment, the profits of most tire industry companies and suppliers have fallen sharply. The soaring prices of raw materials have become a mountain weighing on companies. In 2025, natural rubber rose by 31.83% year-on-year, and synthetic raw materials such as styrene-butadiene rubber rose by more than 25%, and corporate cost pressures increased sharply.
In order to maintain their market share, many companies have to fall into the vortex of price wars. Since April 2025, Shandong manufacturers have launched a price war, and the wholesale price of mainstream tires such as 205/55R16 has fallen below 100 yuan. The industry has entered a state of "zero profit" or even "negative profit", and companies can only survive on cash flow. This vicious price war and zero profit model has plunged the entire industry into a "death spiral".
As an important link in the industrial chain, dealers are also facing a huge survival crisis. In order to clear inventory, agents extended the payment period to 90 days, resulting in a 5-fold surge in bad debt rates, doubling storage costs, and continued erosion of profits. The terminal market is also in chaos, with e-commerce platforms dumping at low prices, some selling prices lower than the purchase price, and physical stores forced to get involved in price wars, and store profits are difficult to cover rent and labor costs.
However, in this bleak situation, some tire companies have increased their profits by more than 50%. The reason why these companies can stand out is mainly through technology upgrades and global layout. For example, some companies focus on the research and development of special tires for new energy vehicles, large-size high-performance tires, etc., and meet the needs of specific markets through product differentiation, thereby obtaining a higher profit margin.
In terms of global layout, they rationally plan production capacity, avoid trade barriers, reduce production costs, and enhance the overall competitiveness of enterprises. Taking Sailun Tire as an example, its 6 million semi-steel tire project in Mexico, 3.6 million radial tires in Indonesia, and 37,000 tons of off-road tire projects are scheduled to be put into production in 2025.
Combined with the continued expansion of factories in Cambodia and Vietnam, it is expected that the contribution of overseas production capacity in the second quarter may increase to more than 65%. Cost advantages and tariff avoidance capabilities keep their gross profit margin high.
However, from the perspective of the entire tire industry chain, the success of these few companies cannot cover up the collective anxiety of the upstream and downstream of the industry chain. The anxiety of the upstream and downstream of the tire industry chain was vividly demonstrated in the second quarter of 2025. Most companies are struggling in the cold winter of the market, and the breakthrough of a few companies has only brought a glimmer of hope to the industry.
In the future, if the tire industry wants to get out of the predicament, the entire upstream and downstream of the industry chain need to work together to rebuild the competitive order and achieve sustainable development of the industry through various means such as capacity clearance, technological innovation, and channel optimization.
