The tire industry is undergoing a profound adjustment: differentiated transformation is leading to a new direction.

In 2025, the global tire industry is experiencing a significant challenge. Financial reports from several industry giants show declining performance, weak end-market demand, and persistently high cost pressures. International leaders such as Michelin, Bridgestone, and Goodyear have all reported net losses, and many domestic Chinese tire companies have also issued warnings, expecting a significant drop in profits, with some companies anticipating a decline of up to 80%. The industry as a whole is undergoing a period of deep adjustment. The industry faces triple pressure. The continued rise in raw material costs is the main source of pressure. Natural rubber prices have remained at a high level of 14,000-16,000 yuan/ton for a long time, while the cost of synthetic rubber has risen significantly along with fluctuations in crude oil prices. For European tire manufacturers, energy costs have risen to over 20% of total production costs. Meanwhile, leading Chinese tire companies such as Zhongce, Sailun, Linglong, and Sentury, along with Shandong tire brands, have intensified price competition in the low-to-mid-end market and further squeezed the industry’s overall profit margins by leveraging their cost competitiveness and flexible channel strategies. Faced with these challenges, structural adjustments have become a common strategy for many large tire companies. Bridgestone closed its European factory, which had been operating for over a century; Goodyear divested some non-core assets to optimize its balance sheet; and Toyo Tire also decided to adjust its production network and withdraw from its local manufacturing operations in China. The industry is currently undergoing a significant period of strategic adjustment and cost structure optimization. Against this backdrop, Kumho Tire and Pirelli performed relatively well, achieving growth against the trend. Kumho Tire’s sales reached a record high of 1.2213 trillion won in the second quarter of 2025; operating profit was 175.2 billion won, with a profit margin of 13.5%, and sales increased by 7.9% year-on-year. Pirelli also achieved a 3.53% increase in net profit in the first half of the year. Kumho Tire has made progress in the competition through global expansion, a high-end product strategy, and the promotion of green manufacturing. In the European market, sales in 2024 increased significantly compared to 2020; in the first quarter of 2025, relying on its new energy vehicle supporting and localized network, sales increased by 15% year-on-year. In the North American market, sales increased by 31% thanks to flexible tariff response strategies. In the Chinese market, focusing on the EnnoV series of new energy tires, sales increased by 18%. Product premiumization is one of its core strategies; in the second quarter of 2025, the sales proportion of tires 18 inches and above increased to 43.4%, effectively increasing the average selling price. Meanwhile, Kumho continued to expand in the original equipment (OE) tire market, successfully supplying tires for models such as the Volkswagen Passat, Skoda Superb, Hyundai NEXO, and Kia Tasman, helping to enhance brand image and product premium. Furthermore, Kumho actively builds ESG competitiveness; its Nanjing plant uses photovoltaic power to replace 20% of its electricity consumption; its Tianjin plant received “Green Factory” certification from the Ministry of Industry and Information Technology; and its Vietnam plant optimized processes to reduce costs and energy consumption. The company has committed to using sustainable materials and achieving net-zero emissions by 2045, laying the foundation for its brand value and long-term development. Pirelli’s advantage lies in its focus on ultra-premium, large-size (18 inches and above) high-performance tires, which account for 82% of its business. As a core supplier to high-end brands like Ferrari and Porsche, Pirelli has maintained its profitability in the first half of the year by leveraging the growth in the high-end, large-size tire market, despite a saturated traditional tire market. The competitive landscape of the tire industry is rapidly evolving. Relying on scale and cost for homogeneous competition is becoming increasingly difficult. Deepening expertise in high-value niche markets, optimizing supply chain strategies, and achieving cost reduction and efficiency gains through green production are becoming new key competitive factors. The tire industry’s profound adjustment continues. The development cases of Kumho and Pirelli demonstrate that in the industry’s transformation from “scale expansion” to “value creation and ESG integration,” a differentiation strategy centered on high value creation is becoming an important path for companies to meet challenges and seek sustainable development.