2025 All-steel Tire Market: The Battle for Survival Officially Begins

In April 2023, the decline of the truck transport business directly caused the all-steel tire business to fall to the bottom from the upcoming carnival period.

In April 2024, the 25% month-on-month decline in heavy truck sales once again dealt a heavy blow to the large tire market! Since then, in the past 8 months, the tire business has plummeted, the average operating rate of all-steel tires has been less than 60%, and the turnover time of inventory has exceeded 40 days in the past 8 months. 

The sales of heavy trucks have "retreated step by step", and the large tire production lines, large tire dealers, and large tire stores are under great pressure.

01 Heavy trucks have fallen for 3 years, and the replacement market
China's heavy truck sales in 2024 have shown an "electrocardiogram" - it can rise to nearly 120,000 units in March, or it can plummet to only 87,000 units in April, and it has generally shown a downward trend since May. Institutional data show that from January to November, the cumulative sales of heavy-duty trucks in the terminal market only exceeded 830,000 units, a year-on-year decrease of more than 5%.

This is the third year of silence in heavy-duty truck sales since July 2021. This also explains why the operating rate of all-steel tires has been lower year by year in the past three years. The vehicles running for transportation cannot be sold, let alone replacement tires.

02 Domestic all-steel tire market, starting work means losing money
In 2024, the average operating rates of China's all-steel tire sample companies in the four quarters were 57%, 61%, 59% and 58% respectively. It can be seen that even with the support of the stockpiling conference, the operating rate of all-steel tires this year has not reached the profit level (it is generally believed that the operating rate must reach 70% to achieve profitability). Even in the last quarter, the operating rate of all-steel tires has dropped to the level of the first quarter.

Compared with 2023, the performance of all-steel tires in 2024 is even more unimaginably poor, with an average year-on-year decline of 3%, 4% and 2% in the second, third and fourth quarters respectively. It is conceivable that without the support of exports and semi-steel tires, the tire factory business this year can only end in a loss. Why is the operating rate so low? On the one hand, it is related to the sluggish sales of heavy trucks in 2022 and 2023 mentioned above (the decline in heavy truck sales has been transmitted to the tire replacement market), and on the other hand, it is also related to the inventory backlog in the large tire replacement market in the past three years.

In June 2024, I chatted with a passenger tire dealer in the northwest. He was very glad that he did not set foot in the large tire business: "Although the passenger tire replacement business in second- and third-tier cities has declined in the past two years due to the outflow of population for work, it is still much stronger than the truck tire business. This year, the dealers I know who are doing truck tire business feel that the business is not worth watching." Such business situations are not only happening in the northwest, but also in Hebei, where traditional logistics are strong.

Some dealers told us that this year's sales volume is rare and has not increased at all. "In previous years, (sales) were more or less going up, but this year's sales have really not changed at all." Institutional data show that the inventory turnover of large tires in 2024 is worse than in 2023 - the inventory turnover days for more than 240 days are all above 41 days.

03 Large tire inventory is high, and the digestion capacity in 2025 is more questionable
In mid-July 2024, the inventory days of large tires reached the peak since December 2022, 47 days, which directly drove large tire dealers crazy. "In 2022, it was not as bad as this year. Although it was not very good after April 2023, it recovered in the third quarter, but in 2024, it was higher every month."

From January 15 to February 15, 2024, the inventory turnover days of large tires stayed at 45 days for almost a whole month. After June 2024, the inventory turnover days of large tires stayed at 45 days for almost a whole month. Although the number of days of turnover of large tire inventory has improved after August, this improvement is not determined by the market.

The real reason for the gradual decline in inventory is that some tire dealers only replenish stocks but do not purchase them. However, Chinese tire dealers only place fewer orders, while overseas dealers are more troublesome for tire factories. 

The sluggish market has caused overseas dealers to prepare not to even settle accounts! ATD, the world's largest tire dealer, simply entered bankruptcy protection in the fourth quarter-the tire factory did not pay for the goods! It is reported that the overseas dealer ATD directly owed a Chinese tire factory 373 million yuan in payment. Perhaps in the eyes of the boss of this dealer, the market in 2025 is no longer possible to support him to pay off his debts.

The interest rate cut announced by the Federal Reserve in September 2024 has made more businessmen foresee a new round of inflation; the geopolitical crisis has not been improved, and the increasing trade barriers are also exacerbating the increase in the cost of the tire business, and it is possible that the tire business will enter a new round of downward cycle; therefore, large dealers simply cut off their tails to survive, and may not purchase goods in addition to not paying!

04 Exports turn negative, where can large tires be sold
Since September, China's tire exports have begun to "fail". In September, China's tire exports returned to "5", with a total export volume of only 54.27 million tires for the whole month, the second lowest export volume this year, only 11 million more than February, when the Spring Festival holiday was held this year. In addition, starting from September, the average export unit price of tires has also been declining.

When the price of natural rubber soared to nearly 20,000 yuan per ton, the average export price of Chinese tires fell month by month. In November 2024, the unit price of Chinese tire exports had fallen to 232 yuan per tire. The decline in the average price of exported single tires is often affected by two factors: price combination and product combination. In terms of single tire weight, in November 2024, the weight of a single tire was about 13 kilograms. Based on this calculation, all-steel tires account for a relatively light proportion in the export product portfolio. 

The overseas market is still dominated by passenger car tire imports. And the import data of overseas markets also confirms this. In the first half of 2024, European truck tire imports fell 5% year-on-year; in the first three quarters of 2024, U.S. truck tire imports from China fell 9.6% year-on-year. In 2024, the demand for all-steel tires has entered a frozen mode in both the domestic and overseas markets. Will the market get better in 2025? Dealers don't expect it, and neither do tire factories. Almost all tire companies are lowering their sales expectations.

05 The truck tire market has entered a battle royale mode
Not only foreign tire companies have lowered their sales expectations, but Chinese tire companies of all sizes can be said to no longer have hope for all-steel tire sales. As early as 2023, Chinese tire companies' overseas and domestic base investments were almost all centered on semi-steel tires. Even Guizhou Tire and Jinyu Tire, which have been deeply cultivating all-steel tire production capacity for many years, have begun to test semi-steel tire production capacity at overseas bases.

The global all-steel tire market has become so calm that "it is impossible to splash water even if you throw a brick down." Foreign capital has withdrawn from the Chinese all-steel tire market, and many Chinese tire companies have stopped the construction of all-steel tire bases. It can be said that the decline in market expectations has caused the leading companies to collectively suspend their internal competition in the all-steel tire market. 

Will the market reopen in 2025? Most likely not. Refer to the three consecutive years of slump in heavy truck sales mentioned at the beginning of the article - without a supporting foundation, it is difficult to increase sales in the replacement market. In 2025, it is expected that the large tire replacement market will still be a battle royale mode dominated by "price wars".