Introduction
In 2023, the OTR tire market was a hot topic of discussion regarding its investment potential, capturing the attention of industry experts and investors alike. However, by 2025, it appears to have faded from the spotlight, raising questions about its viability. This blog will explore the current state of the OTR tire industry, delving into market dynamics, analyzing the performance of leading companies, and evaluating the challenges they face. We will assess whether the OTR tire sector still holds promise for investors or if it has truly become a risky gamble in a competitive landscape. Understanding these factors is crucial for anyone considering the future of this industry.
2024 OTR Tire Market Analysis
- Titan International Tire
Titan International only achieved a 1.3% sales growth after acquiring another off-road tire giant, Carlstar tire, in 2024, which is enough to illustrate the sluggish market for engineering tires, industrial tires, and agricultural tires. The combined profits of the two companies still showed a huge loss – a net profit loss of US$5.6 million, which further illustrates the bleak operation of the off-road tire market. This is Titan International’s worst year in the past four years (In 2022, the manufacturer’s operating profit once reached US$205.8 million).
- Michelin OTR Tire
Similarly, Michelin OTR Tire experienced a 9.1% drop in sales across its industrial, construction, and agricultural tire segments, resulting in a 9.4% decrease in revenue and a 23.5% reduction in operating profit. Bridgestone also reported a 1% decline in sales for this business segment.
- Bridgestone OTR Tire
Bridgestone OTR Tire reported a 1% decline in sales in the OTR market of industrial, off-the-road and agricultural tires.
OTR Tyre Manufacturers Responses — Plant Closures and Production Cuts
In light of these disappointing forecasts, OTR tyre manufacturers have begun drastically cutting expenditures related to OTR operations.
Bridgestone OTR Tire announced capacity reductions at its agricultural tire plant in Des Moines. While Yokohama OTR Tire, after several years of aggressive acquisitions in the specialty tire sector, abruptly announced closures of multiple plants, including those in Israel, the Czech Republic, and South Carolina.
Goodyear OTR Tire, known for its strength in mechanical engineering, opted to sell its OTR tire business entirely. In 2023, this segment generated $678 million in revenue, representing only 4% of its total tire sales. By selling the business to Yokohama tire for $905 million, Goodyear tire no longer has to contend with this relatively small share.
Key Challenges Facing the OTR Tire Industry
1. Slumping Demand from OEMs
The downturn in construction, mining, and agriculture machinery sales has hit OTR tire demand hard:
XCMG (a top Chinese machinery manufacturer) saw revenue drop 3.21% YoY in H1 2024, worsening to 4.11% by Q3.
This trend reflects broader sales challenges within the construction and agricultural machinery industries, which are experiencing unexpected downturns. Fluctuating orders in these sectors are unlikely to provide the OTR tire market with the revitalization it desperately needs.
2. Rising Competition from China OTR Tyre Manufacturers
As these companies capitalize on their high-quality, cost-effective products, foreign brands are increasingly feeling the pressure. This trend, which began in the passenger and truck tire markets, is now evident in the OTR tire sector as well.
Competitors aren’t low-tier players but top-tier Chinese tire manufacturers with growing brand recognition.
- Zhongce Rubber:
Currently produces approximately 5 million OTR tires annually. In July 2023, Zhongce’s Tianjin tire plant increased production of agricultural radial tires by 80,000 units. In March 2024, a project to upgrade the high-end green tire manufacturing industry chain will commence, aiming to create a production base capable of annually producing 400,000 engineering tires (150,000 tons) and 85,000 tons of high-end supporting materials, with expected production starting in 2025.
- Sailun Tires:
Sailun Group’s MAXAM tire brand currently has factories in China with an annual production capacity of 160,000 tons of OTR tires, along with 100,000 tons in Vietnam. There are also plans for a 37,000-ton annual OTR tire project in Indonesia.
- Triangle Tires:
Triangle Tires is a core supplier for engineering machinery in China. Major international manufacturers such as Volvo, Komatsu, Hyundai, and Liebherr are also important partners of Triangle. Reports indicate that Triangle tire has the capacity to produce 230,000 bias engineering tires, 150,000 radial engineering tires (covering eight types of construction machinery), and 2,000 radial giant engineering tires (with a maximum size of 63 inches).
Forlander OTR Tires emphasize safety performance, featuring lower puncture rates, longer service life, and superior traction. As a leading domestic tire manufacturer, Forlander Tire has consistently performed well in the OTR tire market, with significant production capacity.
Future Outlook
Despite the ongoing challenges, some tire manufacturers remain optimistic about the OTR market. The high technical barriers to entry mean that few competitors can easily disrupt established players, and the potential for profit is still significant.
Michelin Tire reported an impressive operating profit margin of 14.6% in its OTR tire segment for 2024. Similarly, other domestic tire companies have acknowledged that this market is a vital contributor to their overall profitability.
On August 6, 2024, Bridgestone announced plans to invest ¥25 billion (approximately $123 million) to upgrade production equipment at its mining and bulldozer tire plant in Kitakyushu, Japan. This investment aims to enhance the value of its OTR tire business, indicating a commitment to this segment despite market challenges.
Conclusion
Despite the challenges faced by the OTR tire industry, including declining sales and increased competition from emerging players, there remains a silver lining. The ongoing demand for high-quality, specialized tires continues to offer lucrative profit margins, prompting established companies to invest in technological advancements and production upgrades.
As we move forward, the resilience of tire manufacturers in adapting to market conditions will be critical in determining whether the OTR segment can recover and thrive in the coming years. For those willing to navigate the complexities, the potential for profitable returns still exists
