Michelin's 3% Sales Decline Insights
A Shifting Landscape Amid Regional Rotation: A Look Back at the Global Original Equipment Tire Market from Michelin's 3% Sales Decline
The global original equipment tire market is undergoing a clearly discernible shift in the first half of 2026. Michelin's recently released forecast data provides quantitative evidence for this assessment: from January to May this year, the company's semi-steel tire original equipment sales declined slightly by 3% year-on-year.
This figure alone is far from alarming, but when placed against the backdrop of the ebb and flow of the global market since 2025, the regional structural rebalancing it reveals is far more noteworthy than the decline itself.
For Michelin, the global original equipment business landscape in 2025 is dominated by China. That year, the company's overall original equipment sales were almost flat compared to 2024. Behind this stability was a 10% year-on-year increase in the Chinese market (first half data), which strongly filled the gap left by Europe and North America.
The European market, constrained by weak consumption, supply chain fluctuations, and geopolitical pressures, saw an 8% decline in original equipment sales; North America, due to automakers' production adjustments and weak end-user demand, shrank by 5%. At that time, the pattern of "China advancing, Europe and America retreating" constituted a fragile equilibrium.
Entering 2026, this equilibrium was quickly broken, with the key variable still originating from China. With the complete withdrawal of new car purchase subsidies, the domestic passenger car market cooled down, resulting in a significant contraction in OEM orders for tires.
Michelin's OEM business in China went from a growth engine in 2025 to a pressure point overnight. When the growth in the Chinese market suddenly disappeared, and Europe and North America failed to show any significant recovery, a decline in global OEM volume became almost inevitable.
Looking at overseas markets, the predicament in Europe has not improved. High inflation, the growing pains of the electrification transition, and persistently weak consumer purchasing power have led local automakers to maintain a cautious new car production schedule, resulting in a lack of rebound momentum in OEM tire demand.
The North American market is similarly lackluster, with inventory restructuring and intensified regional competition putting continued pressure on OEM sales. Three core regions—the Chinese market weakening and the European and American markets remaining sluggish—combined to impact Michelin's upstream OEM business, ultimately manifesting as a 3% contraction.
Shifting our focus from a single company to the industry level, Michelin's trajectory precisely reflects the segmented logic within the tire industry in 2026: semi-steel radial tires weakening, while all-steel radial tires remain stable. In China, demand for all-steel radial tires for commercial vehicles continues to show resilience with limited fluctuations; however, demand for semi-steel radial tires, strongly tied to passenger vehicles, fluctuates almost entirely with the production and sales of new cars.
Globally, fierce price competition, strengthened regional trade barriers, and uncertainties in raw material costs are continuously squeezing the profit margins and market size of semi-steel radial tires. As a major player in this sector, the pressure felt by Michelin is a true reflection of the industry cycle.
However, it would be inaccurate to conclude from this that Michelin's overall business is entering a downward trend. The company's replacement tire business is effectively playing a "stabilizing" role. Since 2026, global tire replacement demand has steadily increased, and Michelin's replacement tire sales have maintained healthy positive growth, providing a solid buffer for overall performance. This structure of "weakening original equipment (OEM) demand and replacement filling the gap" is also typical of the industry's cyclical adjustment phase.
Looking ahead, the mainstream industry assessment tends to characterize this decline in OEM sales as a temporary fluctuation. The forces for recovery are slowly accumulating: the Chinese auto market will eventually emerge from the adaptation period following the policy withdrawal, automakers' inventories are expected to return to healthy levels, and global automakers' capacity adjustments will gradually be completed.
During this process, Michelin will likely continue to deepen the flexibility of its global layout, leveraging its long-standing technological moat in the high-end OEM sector to more closely integrate itself into the automotive industry's upgrade chain, thereby reducing over-exposure to the fluctuations of a single market and maintaining its strategic focus as a core supplier in an increasingly fragmented global landscape.
