Michelin warns first-half 2026 tire markets will stay weak as OE demand slides

Michelin has warned that global tire markets will remain weak through the first half of 2026, with original equipment (OE) demand continuing to decline while replacement markets stay broadly flat. Speaking during a pre-close call on 2 July ahead of its half-year results, the French tire giant said global OE demand in the consumer segment—covering passenger cars, light trucks, and two-wheelers—is expected to remain “negative” during the first half, following a 3% decline through May. The sharpest contraction is seen in China, where domestic demand has “slowed down materially” due to less attractive incentives for new vehicle purchases. Europe and North America are also expected to end the half-year lower amid an uncertain economic backdrop. Replacement markets, however, are expected to remain “flattish” overall, with China showing strong demand driven by the replacement cycle for vehicles sold in recent years and a supportive macroeconomic environment. The US faces a “reverse trend” but reflects the gradual reduction of an inventory surplus of Asian tires that built up in 2020. In Europe, replacement demand is expected to remain broadly stable, with lower imports of Asian tires due to elevated inventories and anticipated anti-dumping duties on Chinese-made passenger car tires. For truck tires, Michelin said the global OE market, excluding China, is expected to remain negative during the semester after declining around 3% through May. Europe is forecast to post growth on a weak prior-year performance, while North and South America remain in the weaker phase of the cycle. In North America, Class 8 truck orders have increased for six consecutive months, though Michelin noted that inventories of new trucks remain elevated and production has yet to recover. Brazil continues to face a “difficult economic situation” that is limiting investment by transport operators and increasing competition from Asian truck manufacturers. Replacement truck tire demand is expected to remain positive overall, supported by Europe and South America, while North America remains under pressure with sell-in demand down around 15% through May due to lower tire imports and weak freight activity. Within specialty tires, Michelin described market conditions as a “mixed picture.” Agricultural OE markets are improving in Europe but remain weak in North America, while replacement trends show the opposite pattern. Infrastructure markets are “overall slightly positive,” materials handling remains weak, and mining demand continues to be supportive across most regions. Aircraft markets have begun to feel the effects of the Middle East conflict, with passenger traffic declining year-on-year in April and May. On revenue outlook, Michelin expects first-half tire volumes to broadly match its initial expectations, with a “sequential improvement” through the second quarter resulting in a “slightly negative” first half overall. Consumer tire volumes are expected to be close to flat or slightly lower in the second quarter, with OE remaining “the key drag” due to market conditions and an unfavorable vehicle mix. Replacement volumes should show growth, supported by Michelin-branded products, while lower-tier brands face pressure from “highly stocked cheap imported tires.” In truck tires, volumes are gradually improving and could be flat or slightly positive during the second quarter. The “main headwind” remains OE demand in the Americas, while European replacement business is expected to grow. In specialty tires, volumes are expected to remain negative, with mining remaining well-oriented. Michelin expects price-mix to remain positive, though weaker than in 2025. Within Polymer Composite Solutions (PCS), the group expects first-half revenue to be close to 2025 levels, with sealing solutions and coated fabrics performing well, while conveyor products continue to face a difficult business context. Recent acquisitions, including Cooley Group and Flexitallic, will contribute positively to the group’s scope in the second quarter, more than offsetting the carve-out of construction activities. Foreign exchange is expected to remain a negative factor during the first half, driven primarily by the US dollar, though the impact should be less severe in the second quarter than earlier in the year. On profitability, Michelin reiterated previously disclosed expectations, including a positive raw-material effect during the first half, manufacturing productivity gains, and selling, general and administrative expenses broadly in line with 2025. The company also maintained its expectation that second-half revenue will exceed first-half levels, although the operating margin ratio is likely to be slightly lower due to raw-material trends.