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The high-performance tires market is anticipated to record a CAGR of over 6.5%, during the forecast period, 2020 - 2025.
The sales of high-performance tires have increased significantly over the years, owing to a rise in the different types of automotive racing competitions, which act as a major driver for the high-performance and ultra-high-performance tires market. Growing popularity for various types of automotive racing around the world has helped boost the growth of the market to a significant extent. Competitive automotive racing was initially focused on popular car racing series such as Formula One, NASCAR, and motorbike races, which attracted many sponsorships and promotional activities. However, over the years, the racing competitions have witnessed an increase in a number of different types of races with vehicles having varying engine sizes, such as SUVs, dirt bikes, monster trucks, solar car, sprint car, and touring car.
Key Market Trends
Growing Demand for Replacement/Aftermarket Tires
The replacement of the high-performance tires market presents a huge opportunity for tire manufacturers worldwide.
- Vendors are investing in marketing to increase their visibility as a brand, especially to tap the lucrative aftermarket of the high performance and ultra-high performance tire segments.
- They are also investing in making their products visible on their website and enhancing their portfolio of high-performance tires available for online sales.
The demand for high-performance tires in the aftermarket is mainly attributed to the faster wear and tear of softer rubber tires, which are required to perform at extremely high speeds.
In a typical racing championship (for which it has the maximum penetration), a team usually uses between 9-14 sets of tires depending upon the length of the track, surface type like asphalt, concrete, etc., and the type of the track - short track, speedway, and superspeedway, or road course.
- For a racing championship, the demand for racing tires in the aftermarket would range on an average from 16-34 units.
- Therefore, the demand for high-performance tires in the aftermarket is higher to a considerable extent than that of the OEM segment
Brand loyalty is exhibited by OEMs and vehicle team owners, who replace tires on their cars with the same brand as originally installed.
- As a result, tire manufacturers have strived significantly to obtain contracts with OEMs and vehicle team owners.
- These contracts are important and attractive to the tire manufacturing companies, as they save on the distribution expenses and advertising costs.
In light of all these factors, the market for high-performance replacement tires is expected to grow over the forecast period.
European Market Growing at a Faster Pace
Countries in Western Europe, such as the United Kingdom, Germany, and France, played a major role in contributing to the high-performance tires market. Manufacturers in Western Europe, such as Ferrari, Daimler, BMW, Volkswagen Group, and Renault frequently participate in automotive racing events organized across Europe to test and promote their products. This has increased the demand for racing tires by OEMs. The region is also a host to many auto races, primarily in countries, such as France, Italy, Spain, and the United Kingdom. A rise in the auto races market is expected to increase the demand for racing tires.
Increase in production standards of tire manufacturing, sustainable innovation, and excellent technical know-how based in the country are expected to continue strengthening the position of Germany to emerge as a leading high-performance tire manufacturing location, in the supply side dynamics during the forecast period.
The high-performance tires market is characterized by the presence of numerous international and few regional players, resulting in a highly competitive market environment. Some of the leading players in the market are Michelin, Bridgestone Corporation, Yokohama Rubber Co Ltd, Hankook Tire & Technology Co Ltd, Continental AG, and Pirelli & C. SpA.
Market leaders operate with many subsidiaries that cater to specific products in different countries. Yokohama and Pirelli, in particular, are trying to increase their market penetration by setting up production bases and manufacturing new tires as per modified F1 rules, to have a comprehensive supply chain. Bridgestone and Michelin both have invested huge amounts in Canada to expand their product portfolio in the automotive tire segment.
Demand for high performance, highly efficient, and safe handling tires from the end market are expected to make the market more competitive and effectively dynamic during the forecast period.
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