MOUNTAIN VIEW, Calif. — The Mexican aftermarket tire industry generated about $4.5 billion in retail-level revenue in 2014, and is expected to keep growing 7.4 percent annually over the next 3-5 years, according to Frost & Sullivan Inc. research.
Revenue includes about $2.6 billion from passenger car and light truck tires and $1.9 billion from medium truck tires. The passenger tire segment is expected to grow faster than the medium and heavy-duty vehicle segment due to increasing consumer awareness on tire quality, according to Frost.
Distributors and installers sold about 22.7 million tires for cars and light trucks in 2014, in addition to 3.2 million tires for medium and heavy-duty vehicles, according to Frost, which expects those numbers to grow to 31.8 million passenger car/light truck tires and 4.7 million commercial truck tires by 2019.
Strong local vehicle sales and a growing economy, which has increased the size and purchasing power of Mexico's middle class, are the main drivers, Frost said. Ironically, poor road conditions in some areas of the country also are contributing to an increase in tire replacements.
“Luxury cars and light trucks are the fastest-growing passenger vehicle segments. They contribute to larger wheel diameter tire sales, thereby supporting price and revenue growth,” Frost said.
There are about 100 brands currently in the market, including local brands, low-cost import brands and premium brands. The top five brands are Bridgestone, Michelin, Continental, Goodyear, and Pirelli — which together account for more than 40 percent of the market, according to Frost.
However, the industry will continue to be negatively affected by the influx of used tires — both legal and illegal — the number of which is estimated to reach about 2 million annually, Mountain View-based Frost said.
Mexico, which Frost classified as a “price-driven market,” accepts used and very low quality tires from China, South Korea and the U.S. in the commercial vehicle segment, the research firm said.
“However, despite the cheap imports, Mexico will soon become a net tire exporter, with major manufacturers investing in production facilities to supply the fast-growing original equipment manufacturer (OEM) market, meet local market demands, and to sell tires in the United States and other neighboring countries,” Frost said. “Currently, six different companies produce tires in Mexico.”
The firm estimates the total number of light vehicles in operation in Mexico is growing by 2.1 percent annually, compared with 1.4 percent in the U.S.
Demand for batteries, brakes, filters and other aftermarket parts will steadily increase, reaching $8.4 billion by 2017, according to Frost.
However, it claims replacement rates remain lower than they should be. “This is because owners of older vehicles still tend to repair rather than replace failed parts. However, millions of new vehicle owners should present new growth opportunities for the aftermarket industry over the short and medium terms.”
Frost also noted that commercial trucks are increasingly turning to retreaded tires, which are expected to account for 25 percent of total tire sales by 2018.