Global Market Outlook on Off The Road Tires

  • APAC will continue to dominate the market in terms of growth prospects until 2020
  • Shift of market focus from product to service has been witnessed as an emerging trend in all the major regions to optimize buyer’s total cost of ownership

 off-the-road-tires-market-size

Global OTR Tire Market Maturity

  • Key trend, which is expected to influence OTR tire market maturity would be the customer’s reliance on distribution network. Both mining and construction customers are increasingly looking out for additional service, such as tire tracking while procuring tires

Market Overview

  • In 2015, OTR tire market constituted 10 percent of all the tire sales accounting for $21 billion 
  • Due to reduced commodity demand, the mining share in OTR tire sales has been plummeting since 2012 from 20 percent to 15 percent by volume 
  • Market demand for OTR tires from mining is softening, and hence there exists an opportunity to renegotiate with suppliers. However, the demand of OTR tire from mining industry is expected to surge and attain 2012 mark post 2020

Market Size and Trend

  • Global OTR tire demand is expected to grow at a CAGR of 6 percent until 2020, driven by increasing demand in small and medium OTR tire from the construction sector
  • Original Equipment (OE) demand is expected to surpass the replacement demand by 2–4 percent. The OE demand continues to grow in mature market, as demand for tires used in infrastructure is at a constant rise 
  • Demand for large/ultra-large OTR tires is expected to grow between 3 percent and 6 percent annually until 2018 fueled by increased demand from commodity, such as Gold.All commodity segments, except gold, will contract over the next year 
  • Significant decline in coal mining is anticipated in the upcoming years, due to growing dependence on alternative energies, coupled with environmental/regulatory pressure. This would drive down the OTR tire demand from coal miners, thus providing opportunities for other miners to lock their capacity for the upcoming years and develop an upper-hand in negotiation with the suppliers

Market Analysis –Demand and Supply

  • With the demand of mining going down, supply deficit for ultra-large tires is not anticipated 
  • Surging demand from construction is expected to bring new suppliers to the market in medium and large OTR tire segment, thus expanding the choices for end-user and making it critical for them to choose their supply partner
  • Currently, manufacturing plants for small/medium OTR tire sizes operate between 75 percent and 85 percent of their capacities 
  • Supply shortage of Tier-1 brand ultra-large OTR tires continued during 2013–2014. However, there are no supply issues for such tires currently. Demand is expected to outstrip supply owing to plant shutdown by major manufacturer, such as Michelin 
  • Global manufacturers are producing large OTR tires at full capacity with no plans for investment/plant expansion, until the demand for commodities surge