MOUNTAIN VIEW, Calif.—Demand in Mexico for replacement market tires is poised to grow at nearly 7.5 percent a year the next three to five years, according to a new market study from Frost & Sullivan Inc.
Distributors and installers sold roughly 22.7 million cars and light truck tires and 3.2 million medium and heavy-duty vehicle tires last year, which Frost & Sullivan estimated to be worth about $4.5 billion in retail-level revenue.
Strong local vehicle sales and a growing economy have increased the size and purchasing powers of Mexico's middle class population, Frost & Sullivan said, and are driving aftermarket tire growth.
Poor road conditions in some areas of the country also help to increase tire replacement rate.
The market could grow to nearly 32 million car/light truck tires and 4.7 million truck/bus tires by 2019, the research firm said.
Luxury cars and light trucks are the fastest-growing passenger vehicle segments, both of which contribute to larger rim-diameter tire sales, thereby supporting price and revenue growth, Frost & Sullivan said.
Retreaded tires are gaining favor in the heavy-duty vehicles segment and should account for a quarter of sales by 2018.
Frost & Sullivan estimates there are about 100 brands in the market, including local brands, low-cost import brands and premium brands. Bridgestone, Michelin, Continental, Goodyear and Pirelli account for more than 40 percent of the market.
At the same, though, the industry is plagued by the proliferation of used tires—legal and illegal—the number of which is estimated to run about 2 million annually. As a price-driven market, researchers said, Mexico accepts used and low quality tires from China, South Korea, and the U.S. in the commercial segment.
Despite the low-cost imports, Mexico is poised to become a net tire exporter, base on the amount of investment in production by major tire makers to supply the fast-growing original equipment market, meet local market demands and export tires to the U.S. and other neighboring countries.
Six companies produce tires in Mexico—Bridgestone Corp., Continental A.G., Cooper Tire & Rubber Co., Michelin, JK Tyre & Industries Ltd. and Pirelli Tyre S.p.A.—with Goodyear to join them by 2017.
Frost & Sullivan research shows the total number of light vehicles in operation in Mexico to be growing 2.1 percent annually vs. just 1.4 percent in the U.S.
For more details on the study, go to Frost.com or call 877-463-7678.