Europe Specialty Tire Market - 2024-2031

Overview

Europe Specialty Tire Market reached US$ 3.2 billion in 2023 and is expected to reach US$ 4.4 billion by 2031, growing with a CAGR of 4.0% during the forecast period 2024-2031.

The advancements in commercializing new tire technology will be key to ensure the growth of the European specialty tire market. For instance, in recent months, manufacturers have been integrating pressure monitoring sensors in the tires to comply with upcoming European Union (EU) guidelines about vehicle safety.

The European tire industry is currently facing a prolonged crisis which is reducing its competitiveness. Government subsidies and aid to cover rising energy costs have been inadequate and Europe risks permanently outsourcing specialty tire production to North America and Asia-Pacific if the industry problems continue to remain unaddressed.

Dynamics

Rise in Defense Procurement Among European Nations

When Russia started the war in Ukraine, many European nations donated their military equipment to Ukraine. Much of the equipment stockpile in reserve has also been sent to Ukraine to aid its war effort. To prevent a potential shortfall in their inventories, leading regional powers such as Germany, France, Spain and Poland have started placing orders for new generation military vehicles.

In August 2023, when Poland signed an agreement with the state-owned Polish Armaments Group (PGZ) to procure nearly 700 armored infantry fighting vehicles and 400 wheeled armored personnel carriers. It comes on the back of another deal signed in February 2023, to procure nearly 1,400 domestically produced Borsuk infantry fighting vehicles. A rise in military procurements will shore up demand for specialty tires in Europe during the forecast period.

Shift in Tire Production

A range of factors including bureaucratic red tape, rising energy costs and supplier difficulties is prompting tire manufacturers to shift production to newer countries. Increasingly, most manufacturers are shifting from western to eastern Europe, where lower labor costs and better integration in the regional automotive industry. Poland, Hungary and Slovakia are some of the most preferred destinations for tire manufacturers.

Foreign manufacturers are increasingly selecting eastern Europe as their base for manufacturing operations in Europe. In March 2024, South Korean specialty tire manufacturer Kumho announced plans to invest US$ 750 million to build a new production facility in Hungary. Similarly, in November 2023, Hankook Tires, another South Korean manufacturer, expanded production capacity at its plant in Raclamas in central Hungary.

High Energy Costs

Europe has been in the midst of an energy crisis ever since Russia began its war in Ukraine. With access to cheap natural gas cut off, European countries have been forced to import expensive LNG to fulfill its domestic and industrial needs. The steep increase in energy costs has forced tire manufacturers to close factories and layoff workforce. Some are even contemplating moving factories to North America or Asia-Pacific.

According to data from the German rubber industry association WDK, tire production fell by 6% in 2023 to 470 kilo tons, with high energy costs and bureaucratic hurdles being described as the main factors behind the decrease. Without immediately addressing core issues, high energy costs will likely cause European tire producers to become uncompetitive on the global market.

Segment Analysis

The global multi-head filling machine market is segmented based on type, distribution channel, application, end-user and region.

OEMs Will Continue to Remain the Most Popular Distribution Channel

Original equipment manufacturers (OEMs) will continue to remain the most preferred distribution channel for the industry, especially as specialty tires are installed by default on industry and utility vehicles. With vehicle manufacturers looking to raise production in eastern Europe, OEM demand is likely to rise over the next few years.

The aftermarket is another distribution channel that has witnessing growing popularity in recent years. The aftermarket historically had muted demand, since tyres were only replaced when worn out. However, with a lot of customized options available, vehicle owners are using the aftermarket to seek out the best possible tires for their fleet.

Geographical Penetration

The German Market is Likely to Witness Challenges to Growth

Germany will continue to account for the largest share in the European specialty tire market, since it is the hub of automotive production in the region. However, German manufacturers are currently struggling with high energy prices, which have led to a sustained decline in the country's industrial output. In November 2023, Michelin announced plans to close a few factories and lay off 1500 employees in Germany.

Most of the specialty tire manufacturers are shifting to eastern European countries like Slovakia, Poland and Hungary, which have slightly lower production costs. Even as the European tire industry battles growth headwinds, Germany is likely to continue holding the top position, simply because of its extensive supply chains and strategic location in the middle of Europe. However, future growth is likely to be lower than historical trends.

COVID-19 Impact Analysis

The COVID-19 pandemic had a markedly muted impact on the European specialty tire market. Although automotive production declined as a result of pandemic-based restrictions, they were lifted relatively quickly. In the initial months of the pandemic, the European Union (EU) had formulated extensive rules and regulations which allowed most companies to continue production without major disruptions.

To mitigate the financial impact the European Union had also instituted a wide-ranging stimulus package for industries and businesses in the post-pandemic period. However, the biggest challenge in the aftermath of the pandemic was the volatility in energy prices, which massively raised input costs for tire manufacturers. As a result, the post-pandemic recovery will be hampered over the medium term.

Russia-Ukraine War Impact Analysis

The Russia-Ukraine war has had a direct impact on the European specialty tire industry. Growing tensions between Russia and European countries led Russia to shut off gas supplies, greating massive volatility in local energy prices. A steep increase in energy costs forced the closure and relocation of many industrial enterprises, including tire manufacturers.

The war has resulted in increased demand for specialist tyres from both Russia and Ukraine, mainly for military vehicles. The Russian government nationalized the frozen assets of western tire companies operating in the country. Some idle factories were also restarted to supplement production for war aims. However, without the inflow of foreign investment, the specialty tire market in Russia is likely to remain stagnant in the future.

By Type

• Bias Tires
• Radial Tires

By Distribution Channel

• OEM
• Aftermarket

By Application

• Industry Vehicles
  • Dumpers
  • Forklifts
  • Small Wheeled Loaders
  • Others
• Utility Vehicles
  • Mowers
  • Municipal Service Vehicles
  • Compact Tractors
  • Others

By End-User

• Agriculture
• Construction and Mining
• Military
• Off-Roading
• Others

By Country

• Germany
• UK
• France
• Italy
• Spain
• Rest of Europe

Key Developments

• In May 2024, Continental AG, a major automotive systems manufacturer, showcased its latest range of specialty tires at the TOC Europe 2024 Expo in Rotterdam, Netherlands.
• In April 2024, Continental AG acquired Slovakia's EMT, a company that develops rubber molding technology for specialty tires manufacturing. The acquisition will allow Continental to strengthen its offerings in the specialty tires segment.

Competitive Landscape

The major global players in the market include Nokian Tyres plc., Michelin, Bridgestone, Continental AG, The Carlstar Group, Apollo Tyres Ltd, The Goodyear Tire & Rubber Company, KAMA, Pirelli & C. S.p.A. and Yokohama.

Why Purchase the Report?

• To visualize the Europe specialty tire market segmentation based on type, distribution channel, application, end-user and region, as well as understand key commercial assets and players.
• Identify commercial opportunities by analyzing trends and co-development.
• Excel data sheet with numerous data points of specialty tire market-level with all segments.
• PDF report consists of a comprehensive analysis after exhaustive qualitative interviews and an in-depth study.
• Type mapping available as excel consisting of key products of all the major players.

The Europe Specialty Tire Market report would provide approximately 74 tables, 65 figures and 207 Pages.

Target Audience 2024

• Manufacturers/ Buyers
• Industry Investors/Investment Bankers
• Research Professionals
• Emerging Companies