Why is Demand for Automotive Tires Soaring in U.S.?

The U.S. is the second-largest producer of automobiles in the world, turning out 10,880,019 vehicles in 2019, as per Organisation Internationale des Constructeurs d'Automobiles (OICA). Similarly, even more automobiles were sold in the country last year, specifically 17,480,004. This reflects a rather high demand for associated raw materials and auxiliary components, including tires. As per P&S Intelligence, the U.S. automotive tire market valued $57.9 billion in 2018, and it will grow at a 5.4% CAGR during the forecast period (2019–2024), to reach $75.4 billion by 2024.

Tires in the country are available for summer, winter, and all-season usage. Among these, all-season tires account for the highest sales, as they are suitable for all seasons, therefore do not need to be constantly replaced. For instance, the northern part of the country receives heavy winter snow, which requires people to change the tires of their vehicles each year. But with the availability of all-season tires, people no longer need to do so, which has made their lives easier and also helped them save on extra expenses.

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On the basis of end use, the U.S. automotive tire market is bifurcated into aftermarket and original equipment manufacturer (OEM). Of these, the aftermarket bifurcation held the larger share during the historical period (2014–2018). A tire needs to be replaced after 30,000–50,000 miles (50,000–80,000 km) of usage and a vehicle after much longer. This is why garages and small maintenance and repair shops are fitting most of the tires in automobiles. In addition, many people purchase the tires from manufacturers and replace them in their vehicles themselves.

Another reason behind the increasing tire sales via the aftermarket channel is the rising average of vehicles, which means that compared to before, people are using their automobiles for much longer. As per the Bureau of Transportation Statistics (BTS) of the U.S., the average age of passenger cars rose from 8.4 years in 1995 to 11.6 years in 2016. Similarly, the average duration for which people are using their light trucks increased from 8.3 years in 1995 to 11.6 years in 2016, thereby reflecting an increasing tire replacement rate in the country.

The most prominent U.S. automotive tire market trend currently is the development of advanced tires. For instance, tires with a low rolling resistance offer vehicles an enhanced grip on the road, improved fuel efficiency, and less wear and tear. Additionally, with the increasing population of youths in the nation, who are strongly inspired by motorsports, tire manufacturers have begun offering ultra-high-performance tires, which enable a top speed of 299 km/h, compared to conventional high-performance tires that enable a top speed of 270 km/h.

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Opportunities for tire manufacturers supplying to the U.S. exist in the growing electric vehicle (EV) niche. Being the second-largest carbon emitter in the world, the main contribution coming from the transportation sector, the U.S. is taking concrete steps to augment the share of EVs in the total automobiles on the roads. One of the major concerns regarding EVs is their range, which entirely depends on the energy density of the battery. Hence, in order to augment the EV driving range till the time the batteries become more efficient, tire manufacturers are offering lightweight, high-performance tires.

Hence, with the rise in automobile sales, the requirement for tires in the U.S. will grow too.