A new report from Smithers, The Future of OTR Tires to 2027
, estimates the total global OTR tire market to be worth $59.4 million dollars, ahead of the first year of our historical period (2017) but below the 2019 peak. A variety of economic and supply chain impacts, in addition to COVID-19 (as well as the responses to it) contributed to a declining to flat market in 2020-21, with more noticeable recovery in 2022. However, the picture in 2022 is complicated by lingering effects of pandemic restrictions, price volatility and inflation in many/most countries, actual or pending shortages (affecting energy and food, among other sectors) as well as geopolitical and financial disruptions (related to the war in Ukraine, and sanctions against Russia).
Top-performing Agricultural segment
Performing the best throughout the last 2-3 highly disruptive years has been the agricultural OTR tire market segment, which has been less subject to shortfalls of production and demand when other segments (or their customers) were closed or reducing operations. Agriculture lead market value and volume growth from 2017-2022, even with a slowing in 2022.
Performance across the three main end use segments will be much faster overall, and more balanced, than during the historical period. The growth rates from 2022-27 accelerate sharply from the 2022 base, which, while not depressed, lies significantly below the previous growth trajectory. Hence, the rapid growth includes a large rebound effect, particularly in the more volatile mining, construction and ports segment.
Agriculture will continue to grow, but now more in line with the whole market, even losing share somewhat even as it retains the lead in value and volume.
Other specialty tire segments have seen an adverse impact from the Covid-19 pandemic and the resultant fall in demand for raw materials, and disruption of international trade. Total market value fell from $62.4 billion in 2019, to $57.0 billion in 2020, with losses especially severe in construction, and ports and handling formats, according to the new report from Smithers.
Demand in developing markets
Across the next five years, Smithers forecasts a stabilization of the market, with value increasing at a compound annual growth rate (CAGR) of 5.7%, reaching $78.3 billion in 2027. Unit volumes will increase at a slower rate, 4.0% CAGR, topping the 50 million tire-per-year mark in 2026 driven mainly by demand from developing markets in Asia, the Middle East, Africa and Latin America.
The role of new technologies
The OTR tire market is being influenced by new technologies that align with the evolution of end-use industries. The integration of smart tires to optimise industrial fleets, matching on-tire sensors to proprietary data analytics to streamline maintenance and other operations; as well as supporting the wider safe use of autonomous vehicles in closed industrial environments are among the top trends and technologies influencing the OTR tire market.
The use of more increased flexion (IF) and very high flexion (VF) tires on tractors and other agricultural machinery as well as the increased adoption of electric vehicles, including the need for specialty tires with improve weight loading and durability are other macro-economic trends that are driving change in the segment. A more sustainable materials set – including recycled content, sustainable NR sourcing, and greater use of better retreading technology are also impacting the OTR tire market over the next five years.