Michelin Says Global Tire Demand is Rebounding
The Michelin Group's sales through the third quarter of 2020 totaled 15 billion euros, down nearly 17% from the same nine-month period in 2019.
Although Michelin reports that it experienced a 17% decline in volumes through the end of 3Q 2020, the company says global tire demand picked up "more strongly than expected" during the third quarter.
The COVID-19 pandemic and related lockdown policies "applied by governments in most countries around the world led to an unprecedented slowdown in economic activity in the first half of the year, resulting in a steep plunge in tire demand in every geography and most business segments," say Michelin officials.
"Markets turned around in the third quarter, with a clear recovery in demand compared with the previous three months."
Demand for replacement tires in North America "rebounded by 7% year-over-year in the third quarter, with a steady improvement over the period led by advanced purchases ahead of the possible introduction of new duties on Asian imports."
During the third quarter, North American "automaker inventory rebuilding lifted demand to the point that it ended the quarter unchanged from the prior year."
In the replacement commercial truck tire segment, demand rebounded by 2% in North America, which Michelin officials call "a sign of economic recovery." However, OE commercial truck tire demand "has remained very low" in the Americas.
The ag tire segment "maintained the rebound that began late in the first half" of 2020, led by recovery of both OE and replacement demand.
However, the construction tire segment, which Michelin says is "more sensitive to the economic slowdown, continued to contract."
Overall, Michelin reports that it generated a 1.7% price-mix improvement based on the "strength of the Michelin brand," continued market share gains in the 18-inch and larger consumer tire category and "disciplined price management, notably in response to declines in certain currencies, which off-set the negative impact of raw materials-based price indexation clauses."
Looking forward to full-year results, Michelin believes that the global passenger and light truck tire market will have declined by 13% to 15%, year-over-year. Truck tire markets are expected to decline between 12% and 14%, while the specialty tire markets will decline by 15% to 19%.