Vehicle production across the world saw a decline of 1.1% across the globe in 2018. In 2017, the global passenger cars production accounted for 97,302,534 units which came down to 95,634,593 units in 2018. In 2019, the production and sales of vehicles in major economies slumped but the market is expected to perform well in the coming years of forecast period. China has the largest share in the passenger car market, followed by the United States, Japan, Germany, South Korea, and India. Improving road infrastructure and rising disposable income of the middle-class consumers are driving the vehicles market in the developing countries. Competitive pricing of vehicles by automotive manufacturers has also created a huge demand for passenger cars in developing countries. Electric vehicle market is also expected to exhibit a CAGR of 20% during the study period. Main objective of electrification of vehicles is to reduce vehicular emission and increase safety. Recent developments in tire technology has helped manufacturers to produce tires with increased life, fuel efficiency and improved safety.

Additionally, the demand for commercial vehicles has been continually increasing (expected CAGR of 5% during the study period), owing to the growing e-commerce (resulting in growth in the logistics industry), construction, and mining industries. In 2017, freight transportation (between 50 km and 1,999 km) accounted for 89.1% of the total freight transportation, and as the market continues to expand, the demand for pick-up vans, small trucks, and other LCVs is also likely to increase.

The automotive high-performance tire market is expected to exhibit a growth rate of 6.7% during the forecast period. The growth is driven by numerous factors such as increasing inclination of people towards sports like car and bike racing and extreme terrain rallies. OEMs use these events as a platform to market their products and increase brand visibility. Increasing disposable income of customers living in emerging economies is leading to a growth in demand for higher capacity vehicles such as SUVs and crossover vehicles. Rapid infrastructure development in developing economies, especially India and China, has caused a growth in sales of commercial vehicles and construction vehicles. Replacement and aftermarket tire market presents a huge opportunity for vehicle manufacturers to generate revenue. Customers are choosing high performance tires over traditional rubber tires because rubber tires are subjected to wear and tear easily.

OEMs exist as a symbol of brand loyalty. Therefore, tire manufacturers try very hard to get the partnership contract with OEMs that will use their tires in various models of vehicles. This move helps tire manufacturers to reduce costs on distribution network.

Europe has shown a strong demand for high performance tires due to presence of large number of OEMs such as BMW, Volkswagen, Ferrari, Daimler and Renault. These OEMs regularly participates in motor sports events held in the continent and showcase their new line of innovative products that caters to the customer’s need of safe, cleaner and cost-effective vehicles and components.