Detroit 3 tire suppliers monitoring UAW impacts

After a tumultuous couple of years, auto makers were—finally—finding their strides, or some variation anyway.

Supply chain snarls were being resolved, OEMs were getting more of the microchips they needed and the industry overall was learning to navigate some of the most recent geopolitical issues.

Then came the United Auto Workers' strike.

The union, for the first time in its history, struck all three of the Detroit-based manufacturers simultaneously. And as the strike—now in its third week—continues to grow, the impact of the strike on the supply chain is growing right along with it.

And tire makers, of course, are not immune.

To better understand the impact of the UAW strike on tire makers, two things must be considered. The backdrop against which the strike occurs as well as the North American OE market share.

In a nutshell, 2023 has been … solid enough.

For tire makers, the OE tire market had been a silver lining in a somewhat disheartening year. Because OE demand was rising as new vehicle output grew.

"A defining characteristic of the automotive market so far in 2023 has been recovering new vehicle production leading to increasing new-vehicle inventories, growth in new-vehicle sales, improving affordability through modest price declines—or at least not increases—and more sales incentives," Jonathan Smoke, Cox Automotive Inc. senior economist, wrote Sept. 29. "In other words, in many ways, we've seen a shift to more normal trends in most parts of the auto market."

And that was serendipitous timing for tire makers. Because conversely, the replacement tire market was down a bit, riding out a destocking cycle that emerged after the COVID-19 supply chain snarls. Dealers and distributors had loaded up on inventory when production resumed after the pandemic shutdowns—and they're still working their way through it.

There was some optimism that the destocking could end late this year or early next year, which would give replacement tire demand a little more room to grow. Until then, the OE uptick was heartening.

That was certainly the case for Bridgestone.

But Will Robbins, director of consumer product strategy, told Rubber News that he expects the OE/replacement cycle to continue for the foreseeable future as the economy continues to stabilize post-COVID.

And now, of course, there is the strike to consider.

For most OE tire suppliers, there is good news.

Simply, the Detroit 3 don't have quite the hold on the North American automotive market that they used to. Automotive News estimates that General Motors, Ford and Stellantis hold a combined 40 percent of the North American market share, down significantly from 1999 when they combined for a 68-percent market share.

The bad news is that 40 percent still is significant.

That leads to worse news for tire makers supplying those OEMs. Because in a year like 2023, any dip in OE demand could be impactful.

And when it comes to impacts, it looks like the world's largest tire makers could be best positioned to take the hits from the strike and its subsequent manufacturing stoppages.

Tire Business data indicates that Michelin, Bridgestone, Goodyear and Continental—including all of their respective brands—likely hold the greatest shares of North America's OE tire market for passenger and light truck, assuming there is little change to the 2022 figures.

Last year, Tire Business estimates, Goodyear held the largest OE tire share for P/LT in North America at about 23 percent.

Michelin had the second largest share at 21 percent, while Bridgestone and Continental each held an estimated 17 percent of the P/LT OE market in 2022.

Digging deeper, though, Tire Business data indicates that it's likely those tire makers also hold the largest shares of the OE fitments for the Detroit 3—and by a significant margin, assuming 2022 estimates hold fairly steady.

Continental, Goodyear, Michelin and their related tire brands accounted for at least 75 percent of the OE share for Ford last year. Each held at least 25 percent of the auto maker's OE, according to Tire Business.

For General Motors, it's a very similar story. Bridgestone and Goodyear, Tire Business data shows, had at least 25 percent each of the GM's OE tire share, while Michelin held between 10-25 percent.

Goodyear also held the lion's share of the OE market for Stellantis with at least 25 percent, while Bridgestone and Michelin hold 10-25 percent each.

There are, of course, other tire makers with skin in the game when it comes to manufacturing stoppages with the Detroit 3. Hankook, for instance, held 10-25 percent of the OE share for Ford last year, and a small (less than 10 percent) market share at both GM and Stellantis.

Pirelli, likewise, held small shares for Ford and GM fitments in 2022.

Also last year, Falken and Kumho each held small shares of Stellantis' OE fitments.

It should be noted that while the four largest tire makers—Michelin, Bridgestone, Goodyear and Continental—have the largest of the Detroit 3 OE tire market shares, they also have diverse OE portfolios that include a number of fitments outside of the Detroit 3.

And it can be expected that this would help to stabilize any direct impacts of the UAW strike.

Take Michelin.

The Greenville-based tire maker last year held at least 25 percent of the OE market shares for Honda North America, Nissan North America and Tesla, according to Tire Business estimates. It also held 10-25 percent of the OE share for Mercedes-Benz of North America as well as Volvo Car Corp.

That said, Michelin is monitoring the UAW strike. And while the company was unable to comment specifically on the strike's impact, it did emphasize its commitment to all of its North American customers.

"We will continue to work with all our customers to ensure we deliver products and services best suited for their needs," Michelin North America Inc. told Rubber News.

The same can be said for Bridgestone.

Last year, in addition to the Detroit 3, Bridgestone held 25 percent or more of the North American OE market share for BMW of North America, Mazda (North America), Subaru of America, and Toyota Motor Manufacturing, according to Tire Business estimates.

The Nashville-based tire maker had an estimated 10-25 percent of the share for Honda North America.

As the strike continues to play out, Bridgestone said it will monitor the situation and can adjust as needed.

"As a major supplier of original equipment tires, we supply to most major auto companies, including Ford, GM and Stellantis," Bridgestone Americas said in a statement provided to Rubber News. "Our team is continuing to monitor this situation closely, maintain open lines of communication with all of our key stakeholders, and utilize our flexible and agile management to adjust as needed."

Agility likewise is key for Goodyear.

The Akron-based tire maker told Rubber News it has the ability to shift production to meet demand on the replacement side, which helps to mitigate any direct impacts from the UAW strike.

"We are closely monitoring the UAW situation and have the ability to shift production to our replacement portfolio to minimize impact to our business," Goodyear said.

For its part, Goodyear last year supplied Honda North America, accounting for an estimated 25 percent or more of the auto maker's OE share. The Akron-based tire maker also held an estimated 10-25 percent of the OE market share for Mazda (North America), Mercedes-Benz of North America, Tesla and Toyota Motor Manufacturing, Tire Business data shows.

Continental, meanwhile, held significant OE market shares (25 percent or more) for BMW of North America, Mercedes-Benz of North America, Nissan North America, Tesla, Volkswagen of America and Volvo Car Corp. Tire Business estimates it also held 10-25 percent of the OE share for Honda North America and Subaru of America last year.

To date, Continental manufacturing has not been impacted by the UAW strike.

"Continental manufactures passenger, light truck, SUV and commercial truck tires for OE and the replacement market in the U.S.," the company told Rubber News. "Continental manufacturing operations will continue at normal capacity."

Remember that destocking cycle that's been a bit of a drag on 2023? As Robbins predicts, it likely won't be changing any time soon.

So don't count on the replacement market to help mitigate any impact from the UAW strike on the OE side for tire makers. Because the U.S. Tire Manufacturers Association expects aftermarket shipments to remain quiet in 2023.

In its latest forecast, issued Aug. 4, the USTMA notes aftermarket shipments are projected to fall short of its earlier forecast—as well as full-year 2022 shipment levels—by more than 10 million units—or about 3.6 percent.

For passenger tires, the USTMA projects that replacement shipments this year will reach 210.5 million units, down 2.5 percent from the February forecast and 1.5 percent behind the 2022 total. The new projected total is down versus 2021 and 2020, and also is 5.4 percent behind the shipment total from 2019, the last full year before the onset of the COVID-19 pandemic, USTMA data shows.

Imports of passenger tires fell 12.3 percent in the quarter to 40.7 million units and 11.6 percent in the six months to 76.4 million units.