Looking at the global tire market, the United States is undoubtedly the largest demand country outside China. The number of cars in the United States is about 270 million, and there are 84 cars per 100 people. According to the American Tire Manufacturers Association, the total tire deliveries in the United States will reach 334.2 million in 2023. However, the huge US market is changing dramatically. In recent years, the United States has continuously set up various import barriers to restrict the export of Chinese tires to the US market.
Based on premium brand strategies that include increasing the proportion of high-value-added products and securing the sales of tires exclusive to electric vehicles (EVs), the sales and operating profit of Hankook Tire achieved growth despite a context of difficult business conditions, such as the global economic downturn, intensifying competition and more. This performance was supported by the increase in supply of original equipment (OE) tires with the stabilization of semiconductor supply and the rise of global sales of replacement tires in regions like Europe.
Judging from the U.S. tire import data in the first quarter of this year, compared with the first three months of 2022, the import volume of passenger car and light truck tires in this quarter decreased by 10.8% and 22.5% respectively, while the import volume of truck/bus tires volume fell by 5.2%. Many people think that this is caused by insufficient demand in the US market, but in fact, it may be that the US has increased local production and no longer needs to import more tires from other countries. Because the American Tire Manufacturers Association predicts that the overall deliveries in 2023 will increase.
The cake in the US market has not shrunk, but why is the number of imported tires decreasing?
We know that since 2013, the production footprint of American companies has been slowly shifting outward from mainland China. Since 2019, the growth of domestic manufacturing in the United States has exceeded the growth of imports from low-cost Asian countries or regions for the first time. By 2022, the manufacturing return index will turn from negative to positive.
The tire manufacturing industry is no exception, especially since the Russia-Ukraine conflict, various tire manufacturers have shifted their focus to the North American market. Moreover, many foreign-funded tire companies around the world are optimistic about the US market.
For example, Pirelli’s financial report for the first three quarters of 2022 shows that revenue in North America has increased by more than 40%. To help support its growth plans in North America, Pirelli announced a $113 million investment in its Mexican plant last November.
In March of this year, Neeraj Kanwar, vice chairman of India’s Apollo Tires, also said that the company was refocusing on North America, and even hinted at opening a tire factory there.
The most enthusiastic investors are Japanese and Korean tires, followed by European tire brands
Hankook Tire invested 1.6 billion US dollars to increase the production capacity of its Clarksville plant in Tennessee, USA. After the expansion is completed, the annual output of passenger car tires and light truck tires can reach 11 million units. At the same time, after the expansion, the plant will produce truck tires for the first time, with an estimated annual production capacity of 1 million units.
Sumitomo Rubber started the expansion of its factory in Tonawanda, New York, USA last year. According to reports, the company plans to invest 129 million US dollars in the next two to three years to increase the factory’s production capacity by 50%.
Goodyear plans to invest $125 million (about 880 million yuan) over five years to upgrade its 77-year-old tire plant in Topeka, Kansas, to modernize production of truck and off-highway tires.
Bridgestone invested $550 million to expand its truck and bus tire plant in Tennessee, USA. In addition, Bridgestone will also invest $60 million in the expansion of its Bandag tread rubber manufacturing plant in Abilene, Texas, which can increase the plant production capacity by 16%.
