The global market has seen its fair share of challenges in the past few years, but manufacturers anticipate a stable future of demand. According to current estimates, the global tire market is projected to grow at an average rate of 4.5% over the next seven years, reaching nearly 3 billion units by 2027- more than double what it was just ten years ago. However, with the cost of tires continuing to rise, many manufacturers are warning that prices will continue to rise in 2022.
Largest Tire Makers Announcing Additional Price Upsurges
Greenville, S.C. based tire manufacturer Michelin North America has announced that the majority of their trucking tires will increase in price from around 5% to 12% starting from June 1, 2022. They stated that prices would rise according to the type and functionality of the products. This is the fifth time Michelin has increased its prices since 2021, most recently on April 1.
Likewise, In March, Bridgestone came forward with a price hike of 10% on non-winter brand passenger and light truck replacement tires in the U.S. and Canada.
Expensive Operational Costs
Many tire manufacturers are increasing prices due to rising operational costs. The cost of production, materials prices- everything adds up. For example, the previous year saw many companies increase rates by five times (or more) which was a big blow for the freight industry.
President and CEO of Yokohama Tire said in a statement that “With respect to our industry’s supply chain dilemma, I believe those projecting a return to normalcy in 2022 might be a bit too optimistic,”
Factors Affecting the Rise in Prices
Many factors have contributed to the surge in tire prices, which include:
- Plant shutdowns causing problems with production capacity.
- A surge in raw materials like rubber has risen by ~80% since 2020.
- Driver shortages make it hard to deliver goods on time, including shipments from abroad.
- Labor unrest within port communities causing delays.
- ‘Container complexities’ create additional challenges.
Lack of Raw Material
The lack of an uninterrupted and stable raw material supply led to a price hike for tires, influencing multiple sectors. The industry has experienced a significant setback in petrochemicals, steel, and other materials.
Rising Consumer Demand and Better Supply Chains
During the pandemic, the number of miles that cars/trucks were traveling on an average basis dropped drastically. Despite this, demand for tires has continued to rise continuously.
Tire Retread Technology is Improving
The financial benefit of retreads is appealing for most companies because they can reduce the operational maintenance costs of a truck significantly. It’s estimated that 44% of the tires on the road are retreads.
Compared to new tires, retreading offers a cheaper solution with prices around 30 and 50 percent of the comparable new tire price.
Noiseless Tire Market
The global market for noiseless tires is expected to grow significantly during the next few years. One primary reason contributing to the growth can be contributed to public awareness of noise pollution and the desire to have a more peaceful ambiance in trucks and for pedestrians using the road.
The majority of consumers want their tires to be as quiet and smooth-riding as possible, which explains the rising demand.
Perspectives for the Future
On one hand, the tire market is improving with the advancements in technology. Specifically, the improvements have mainly been in manufacturing, monitoring, supply chain optimizations, and more awareness about the different wear patterns and how to get the most out of tires.
On the other hand, supply chain limitations are causing delays in manufacturing and increases in prices. Companies should anticipate developments in the production processes used to make tires and look for the best deals available for their fleet.