The global off the road tire ecosystem consists of various global, regional, and local service providers that are evolving to enhance their market position. Moreover, intense competition and rapid advances in technology to cope with increasing farm mechanization and growing construction activities are key factors that aid market growth. The companies compete based on cost, warranty, and reliability of the products to sustain in the market.
Vendors in the off the road tire market are focusing on improving their services and expanding geographically into the developing economies. Continental AG (Germany), Bridgestone (Japan), Goodyear (US), Michelin (France), and Pirelli & C S.P.A(Italy) are the leading companies in the market, which compete in terms of varied offerings, price, and technology.
The major players may strengthen their presence worldwide through the acquisition of local and regional players for expanding their presence in those regions during the forecast period. The growing farming activities across the globe, coupled with the increasing need for residential and industrial construction is likely to fuel the market growth, thereby making it an ideal time to expand the off the road tire market geographically and increase the global market share.
The top three players including Continental AG, Bridgestone Corporation, Michelin held nearly 28% share in 2019, Continental AG provides off the road tires for industries such as agriculture, earthmoving, material handling, and underground. It offers agricultural tires for harvesters and tractors. For earthmoving, which involves construction, and underground mining, the company offers products under the ContiEarth and Contimine brands. The company serves customers in 554 locations in 61 countries and primarily operates in the Americas, Europe, and Asia.
Bridgestone Corporation offers off the road tires for earthmovers, dozers, loaders, graders, mechanical handling equipment, mobile cranes, and compactors. Bridgestone also focuses heavily on off-road racing events and constantly innovates in motocross tires. The company acquired Gemalto NV in 2017 to strengthen its product offerings and broaden market reach. In January 2020, Bridgestone Corporation announced the launch of the BATTLECROSS E50 EXTREME motorcycle tire for endurance competitions.
Michelin operates in 171 countries through 70 production facilities worldwide. Michelin is committed to research & development, for which the company’s Indian operating unit allocated over USD 700 million in 2017. The company believes in constant product innovation. It launched XTRA FlexLife earthmover tires for loaders, grinders, and articulated dump trucks in 2019. Also, it launched the CrossGrip and AxioBib2 series of multipurpose radial tires for road, grass, and snowy conditions.
Month & Year
Companies
Developments
July 2018
Product Launch
Michelin launched the CrossGrip and AxioBib2 series of tires. The CrossGrip is a multipurpose radial tire for road, grass, and snowy conditions. The tire is made using a special rubber compound and is designed for high-load-capacity use on loaders, backhoes, telehandlers, and tractors. The AxioBib2 is a high-traction capacity radial VF (very high flexion) tire for mid- and high-powered tractor loads running with low pressure on a standard wheel.
July 2019
Product Launch
Michelin launched the XTRA FlexLife earthmover tires. These tires were optimized for fitment to loaders, graders, and articulated dump trucks (ADTs). The tires were launched in 29.5 R25 and 875/65 R29 sizes for the OEM and replacement markets, with an additional five sizes (23.5 R25, 26.5 R25, 750/65 R29, 775/65 R29, and 20.5 R25) set to be launched in 2020.
September 2017
Product Launch
Continental Launched the first range of premium radial tires. Continental launched two standard tires for tractors. The tires are robust and durable and ensure high driving comfort, superior handling, and traction. They have been developed using a new bead technology and are made of an innovative nylon material, for which a patent is pending under the name N.flex.
March 2019
Product Launch
Pirelli launched the Scorpion MTB, the company’s first line of tires dedicated to mountain bikes. The characterizing concept of the new Pirelli MTB tires is the proposal of a range of models designed for a variety of terrains, based on their consistency, from the hard to the softer ones easily understandable and developed for each specific need.
Month & Year
Companies
Developments
August 2019
Expansion
Continental AG, in a bid to increase the localization of BS-VI and safety-related components, announced that the company is adding new production lines at its Manesar Plant to meet the growing requirements in India.
Michael Porter’s Five Forces model is a framework to study the global off the road tire market. Strategic business managers, trying to gain an edge over competing firms in the global off the road tire market, can utilize this model to better comprehend the industry in which the company operates. The components of each of the forces and the degree of impact of each force in the context of the global off the road tire market have been broken down and analyzed. Threat of New Entrants
The global off the road tire market is capital intensive, and the level of technical expertise required for product development and manufacturing is high. The presence of well-known tire companies, such as Michelin, Bridgestone Corporation, The Goodyear Tire & Rubber Company, and Continental AG, with their strong brand image, make it difficult for the new entrants to create a brand value and achieve economies of scale. Moreover, established tire manufacturers have vast distribution networks and geographic reach, which gives them a competitive advantage over others. Furthermore, the established market players are venturing into new regions through strategic partnerships and joint ventures with local suppliers to increase their market share, reducing the potential profit margins for new entrants. Thus, the threat of new entrants in the global off the road tire market is expected to be low during the forecast period. Bargaining Power of Suppliers
Off-road tire manufacturers procure both raw materials and additives from suppliers. The raw materials required for manufacturing off-road tires include natural/synthetic rubber, silica, fabric, and steel, while the additives include fillers and chemicals. There are several natural/synthetic rubber, fabric, and steel suppliers operating in the global market. However, the availability of suppliers is limited for other essential materials, such as silica, carbon black, fillers, chemicals, and other reinforcing materials. Established tire manufacturers procure these raw materials in high quantities, which reduces the bargaining power of suppliers to a certain extent. However, off the road tire manufacturing companies cannot easily switch suppliers due to the risks involved in the timely delivery of the required quantity and quality of materials and additives from new suppliers. Hence, these manufacturers tend to have long term contracts with their suppliers. Thus, the bargaining power of suppliers in the global off the road tire market is expected to be moderate during the forecast period. Bargaining Power of Buyers
Off the road tire buyers are automotive OEMs and aftermarket buyers. The concentration of buyers is moderate, as the product is primarily used in off-highway applications. The buyers prefer purchasing from existing tire providers due to the potential risks associated with the product quality and replacement services of new off the road tire manufacturers, making the impact of brand identity moderate. However, the switching costs for the buyers is low.
Many automotive OEMs generally tend to have strategic contracts with off-road tire manufacturing companies to develop tires specific to vehicle requirements, which enables them to purchase the product in large quantities and gain high bargaining power. On the other hand, the aftermarket buyers purchase off-road tires in small numbers and have low bargaining power. Thus, the overall bargaining power of buyers in the global off the road tire market is expected to be moderate during the study period. Threat of Substitutes
Off the road tires have no direct substitutes that match their specifications and features. However, conventional tires are the only alternative to off-road tires, especially in developing countries and regions. The limited awareness regarding the advantages of off-road tires and limited government initiatives to increase the adoption of such products are some of the factors restricting the adoption of off the road tires over conventional tires. Hence, the threat of substitutes is expected to be low in the global off the road tire market during the forecast period. Intensity of Rivalry
The intensity of rivalry in the global off the road tires market is high as the tire manufacturing companies are developing the multiple new material combinations and designs to improve the operational efficiency of the product. Moreover, market players are strategically investing in research & development for offering advanced products. The global market is dominated by a few top players, such as Michelin, Bridgestone Corporation, The Yokohama Rubber Company, The Goodyear Tire & Rubber Co., and Continental AG. These players continuously compete to increase their respective market shares, while the rest have an intense rivalry, owing to their presence in the unorganized aftermarket.
The low threat of new entrants, moderate bargaining power of buyers, low threat of substitutes, and moderate bargaining power of suppliers are the factors contributing to the high intensity of rivalry in the global off the road tires market during the forecast period.
