Experts forecast steady OTR, ag tire market increase

AKRON — The agriculture tire market continues to be strong, and industry analysts forecast steady growth for the global off-the-road (OTR) tire segments adversely affected by the COVID-19 pandemic.

As many as 43 million OTR tires, with an estimated value of $59.4 billion, will be sold worldwide this year, Smithers Group projects in its new report, "Future of Off-The-Road Tires to 2027."

The agricultural market is the only segment to maintain positive growth for the last two years, Smithers said. Other specialty segments saw demand dip during the pandemic along with disruption in the supply chain.

Total market value fell to $57 billion in 2020 from $62.4 billion in 2019, Smithers said, with losses especially severe in the construction, and ports and handling sectors.

Smithers is forecasting market value will grow at a compound annual rate (CAGR) of 5.7% through 2027 to $78.3 billion by 2027. Unit volumes will grow at 4% CAGR, topping 50 million tires in 2026. Much of this demand will come from developing markets Asia, the Middle East, Africa and Latin America, the report noted.

Astute Analytica, a Noida, India-based market research enterprise, forecasts the global ag tire market will increase 5% annually (CAGR) to reach $14.2 billion in 2030, versus $9.2 billion in 2021.

"One of the reasons for this increase in demand is the increasing popularity of off-road vehicles, which have become more prevalent in recent years," Astute Analytica said. "These vehicles are used for activities like farming and ranching, among others, and need tires that can handle all types of terrain."

The research firm said agricultural machinery is one of the main drivers of sales growth in the agricultural tires market. Some reasons for this growth are the increasing population, rising incomes, open markets and increased food production. Rising commodity prices contribute to increased demand for farm equipment.

Mining, construction, ports and handling, agriculture, industrial and other specialty tire formats are experiencing a return to demand, according to Smithers.

"At a projected $27.3 billion in 2022, mining, construction and ports vehicle tires make up the most cyclical segment and are seen growing at 5.9% per year through 2027," a Smithers spokesperson told Tire Business.

"Despite the economic shocks beginning in 2020 and ongoing volatility, a long-term outlook for commodity price increases will support mining in general (though not for conventional energy sources, rather, for metals and minerals associated with renewables and electric vehicle batteries).

"This market will remain more vulnerable than others to cyclicality, and there will still be potential for significant production planning issues, even with recent efforts to ensure adequate capacity to avoid shortages."

Smithers said investing in new technologies is imperative.

"The OTR tire market is experiencing technological change in end-use practices, vehicles and tires. Many of these advances span multiple or all OTR market segments," Smithers said.

"Improvements are constantly being sought with regard to tire attributes, such as durability (including heat resistance), load, puncture and cut resistance, soil compaction (in agriculture), and even reduced rolling resistance (such as in on-pavement use)."

Some technologies identified by Smithers' analysis include:

• The integration of smart tires to optimize industrial fleets, matching in-tire sensors to proprietary data analytics to streamline maintenance and other operations;

• The fitting of more increased flexion (IF) and very high flexion (VF) tires on tractors and other agricultural machinery;

• The increased adoption of electric vehicles, including the need for specialty tires with improved weight loading and durability;

• Building larger tires for the latest generation of mining and construction equipment; and

• Transitioning OTR tire formats toward a more sustainable materials set, including recycled content, sustainable natural rubber sourcing and greater use of better retreading technology.

"Dealers will need to be more informed about increasing load requirements and larger more sophisticated equipment when recommending and stocking tires," a Smithers spokesperson said.

"Dealers must be prepared to offer their OTR customers repair/replacement support, appropriate inventory, JIT (just-in-time) presence and advanced services such as tire management programs, tire and equipment monitoring and data analysis, profitability support, and lifecycle solutions (e.g., retreading and/or disposal/ recycling services)."