Michelin Group achieved $28.4 billion in sales and slightly more than $3.5 billion in segment operating income during 2024.
Sales and income “were supported by a powerful improvement in mix, despite soft tire volumes,” according to Michelin officials, who add that Michelin maintained a 12.6% margin “at constant exchange rates” during the year, “fueled by mix enrichment and improved operating performance, despite a low utilization rate of industrial capacity.”
Michelin’s overall tire volume fell 5.1% in 2024 “due to the unprecedented, simultaneous decline in OE demand across every segment, intensifying competition in mass markets” and other factors.
However, the company reports that it improved its position across several targeted segments and geographies, “particularly 18-inch and larger passenger car tires, high-end truck fleets (and) mining and aircraft tires.”
Specifically, Michelin’s automotive and two-wheel business units, now combined and reported as one, achieved operating margin of 13.1% “despite volumes penalized by the OE downcycle,” but “supported by a strong enrichment of sales mix, with (the) 18-inch and larger segment reaching 65% of Michelin-branded passenger car tire sales,” according to company officials.
Michelin’s road transportation business, which includes commercial medium truck tires, achieved a margin recovery of 9%, driven by “a targeted and value-based approach to the market and to the enhanced valorization of our products and solutions.”
Operating income in this unit climbed by 26% in the face of an 11% slowdown in North and Central America and a 20% decline in European market demand.
Sales and margins in Michelin’s specialty tire business, which includes ag and OTR tires, faced “a temporary drop” during 2024 “due to depressed OE markets in agricultural and construction activities and to one-off headwinds in mining tires.”
Florent Menegaux, Michelin’s managing chairman, says the company’s “2024 results are solid, despite a particularly unstable economic and geopolitical context.”
North American demand
Michelin estimates that the global passenger and light truck tire market grew by 2% year-over-year in 2024, with a 4% gain in replacement sales that “off-set a 2% decline in the OE segment.”
OE tire demand declined by 2% in North America and by 7% in Europe, but increased 3% in China.
Commenting on OE tire demand in North America, Michelin officials say the “North American market saw a shift to lower trim models with fewer features and less equipment,” on top of “slower than expected” demand for electric vehicles.
In the replacement PLT tire channel, “global demand hid significant disparities by region,” according to Michelin officials. Demand in North America increased by 2% on a year-over-year basis, “with the second half” of 2024 “unchanged after a vibrant 4% increase in the first six months” of the year.
“In a resilient economy, the second-half slowdown” in the U.S. and Canada “reflected the leveling-off of Asian (tire) import sales” and “year-end inventory levels... returned to normal.”
The global TBR tire market, excluding China, improved by 1% during 2024, with a 7% decline in OE sales “outweighing the 3% growth in replacement demand.
In North America, overall demand for TBR tires in the OE channel dropped 11% year-over-year thanks to the introduction of new emission standards “that had spurred a wave of early buying in 2023, especially in the second half” of 2024.
On the replacement side, demand for TBR tires in North America grew by 7% and included “seasonal fluctuations from inventory build-ups and drawdowns. The market was up by more than 15% as of end-July, buoyed by the massive buying of imports ahead of higher anti-dumping duties” on tires made in Thailand.
“The market then flattened out to 2023 levels in the second half, with freight demand broadly unchanged year-on-year.”
Commenting on the performance of its specialty tire segments, Michelin officials said the mining tire market “was dampened by extensive inventory drawdowns as supply chains returned to normal and mine operators focused more sharply on cash flow discipline. Demand nevertheless firmed up in the final quarter as inventories returned to normal by year-end.”
OE demand for ag tires “plummeted” in 2024 in both the Americas and Europe, driven “by the reduction in average farming income due to farm commodity prices, adverse weather events and high interest rates.”
Demand for construction tires contracted by around 15% on a year-over-year basis in the OE channel and “somewhat less in replacement” due to the slowdown in home building in both North America and Europe.
However, “infrastructure tire demand was more resilient in North America, supported by growth in public spending.”
Looking ahead
Michelin predicts that global tire markets will show “slight growth” in 2025, but will decline “in the first half due to lower OE demand. In a highly uncertain context, Michelin is expecting to improve its segment operating income at constant exchange rates.”
