OE passenger car and light truck tire sales—previously dampened by the lingering effects of the pandemic—have continued to rebound in the early part of the year. In addition to the increase in manufacturing spurred by supply chain easements, Michelin credits rising electric vehicle sales for the uptick.
Automotive tire sales for the first half of 2023 came in at $7.78 billion, with a segment operating income of around $959.3 million and an operating margin of about 12.3%.
Overall, demand for passenger and L/T tires was up about 9% globally compared with the first half of 2022.
Western and Central Europe saw the biggest gains in this arena, with demand rising 14% year-over-year. This, Michelin said, is indicative of the region's supply chains stabilizing after being hit hard last year from the impacts of war in Ukraine.
Meanwhile, North and Central America saw an OE tire demand increase of around 11%, and demand across China rose by 6%.
"In China, demand rose by 6% over the (year-ago) period, with a 6% drop in the first quarter stemming from the high inventory overhang from year-end 2022, and a 20% rebound in the second three months due to the favorable comparison with second-quarter 2022, impacted by the health crisis," Michelin said. "EVs accounted for nearly 30% of the country's new car sales over the first half of 2023, up more than five points year-on-year."
Continued destocking of replacement tires, however, continues to weigh on passenger and light truck replacement tire demand. Globally, the tire maker saw demand drop about 2%, though demand in China did rise 16%.
Regionally, Western and Central Europe as well as North and Central America saw replacement demand slump 6% from January to June.
Michelin, however, expects to see demand pick up in the later part of 2023 and early into 2024.
"We consider that the destocking is nearly probably finished for passenger car and light truck tires," Yves Chapot, general manager and chief financial officer, said during the July 26 investors call. "It will still probably continue to the end of Q3 with truck tires."