December 31, 2020

Agriculture Tire & Tire Cord Market (Covid-19) Outbreak: Trends Together With Growth Forecast To 2030

Rental Programs Help Tractor Manufacturers to Tide over Uncertainty with COVID-19 Pandemic

Agricultural raw material prices are anticipated to remain low during November and December 2020 in the coronavirus (COVID-19) era. The World Bank’s Raw Materials Price Index projects prices for agricultural raw materials, such as natural rubber, will gauge a modest recovery by the first quarter of 2021. However, the recovery is not expected to offset the losses incurred in 2020. Pandemic-related mobility restrictions have caused a slowdown in economic growth of the agriculture tire & tire cord market.

Tractor makers are expected to innovate in vehicles to bolster volumes during the COVID-19 pandemic. Though tractor sales are gaining momentum, manufacturers need to innovate in vehicles to tide over uncertainties stemming from the pandemic. Rental programs and shared business usage models are projected to revive growth in the agriculture tire & tire cord market.

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Manufacturers Target Growth Opportunities with Small Farmers in India

Virtual design modelling and new tire compound recipes are helping companies in the agriculture tire & tire cord market gain competitive edge over other players. Since India is an agriculture-intensive economy, tire manufacturers are establishing supply chain routes in this country. Apart from Apollo and Good Year Tyres, companies such as BKT and Birla Tyres are increasing efforts to gain recognition in the India agriculture tire & tire cord market. There is a growing demand for agriculture tires & tire cords that deliver safety at farms.

Manufacturers are designing agricultural tires with standard rubber combinations at affordable prices, as Indian manufacturers are budget-strapped. Companies are increasing their production capacities for radial agricultural tires in order to enhance the convenience and productivity of Indian farmers. In countries other than India, manufacturers are innovating in smart tires with sensor technologies for agricultural applications.

On- and Off-road Tires a Game Changer for Agricultural Transportation

The agriculture industry has become one of the largest transport users. Farmers in Germany transport several million tons of goods annually over a distance of 4 to 90 kms on an average. However, companies in the agriculture tire & tire cord market are still making slow progress to develop trucks that can withstand challenging applications in transport and logistics tasks. As such, the market is slated to advance at a modest CAGR of ~5% during the assessment period.

In order to overcome challenges in transportation and logistics, truck manufacturers are utilizing on- and off-road tires. For instance, the Alliance 398 MPT agricultural tire is being highly publicized for on- and off-road applications between destinations of warehouses, factories, and agricultural sites. Manufacturers in the agriculture tire & tire cord market are establishing stable revenue streams in truck manufacturing, since trucks are more fuel-efficient than tractors.

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Reduced Downtime in Vehicles Leads to Improved Bottom Lines for Farm Owners

The agriculture tire & tire cord market is projected to surpass the US$ 14.9 Bn mark by 2030. However, users are challenged with downtime associated with agricultural trucks and tractors. Hence, tire companies are increasing awareness about preventative tire maintenance measures to reduce downtime. They are educating farm owners about agriculture tire tread depth measurement and precision inflation to reduce the downtime pertaining to agricultural trucks and tractors.

The agriculture tire & tire cord market has transformed from metal to pneumatic products to deploy better fuel economy and power in agricultural vehicles. Pneumatic agricultural tires are helping farm owners to boost productivity levels in various activities. These tires are gaining popularity for its increased traction, fuel efficiency, and reduced compaction. Reduced downtime in agricultural vehicles results in improving bottom lines for farm owners.

Wear-resistant Tread Compounds Help in Production of All-terrain Agricultural Tires

Apart from tractors and trucks, manufacturers in the agriculture tire & tire cord market are tapping into value-grab opportunities within slurry tankers and towing trucks. For instance, Nokian Tyres— a tire manufacturer in Finland, is increasing its R&D capabilities to adapt its production processes according to the ever-evolving nature of the agricultural industry.

Companies in the agriculture tire & tire cord market are setting their collaboration wheels in motion to team up with tractor and truck manufacturers to spark innovations in all-round tires. Rugged agricultural tires are useful in winters and other demanding applications such as for soil compaction, tread wear, and sidewall strength at super-low inflation rates. All-terrain mobility combined with on-road performance is being preferred by tractor and truck owners. Manufacturers are using high-grade and wear-resistant tread compounds in tires to deploy long-lasting performance in agricultural vehicles.

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Mobile Apps Aid in Recommended Adjustments to Tractor’s Tire Performance

It has become important for manufacturers in the agriculture tire & tire cord market to adapt to the changing needs of vehicle manufacturers to stay abreast with latest developments. Trelleborg Wheels— an expert in farming, material handling, and construction industries, is capitalizing on this opportunity to introduce its Progressive Traction technology, which helps to manufacture tires that are meant for high-power tractors. Companies in the agriculture tire & tire cord market are taking cues from established companies to innovate in tires that reduce vibration, minimize fuel consumption, and decrease energy dissipation.

Mobile apps are a breakthrough innovation in the market landscape, as advanced sensor-based control systems are capable of measuring potential differences between optimal pressure and actual tire pressure. Moreover, wireless connectivity between mobile devices and a farmer’s computer deploys the recommended adjustments in the tractor’s tire performance.

Analysts’ Viewpoint

Tractor manufacturers are bearing the ripple effects of the COVID-19 outbreak, which are expected to reflect in volatility for government policies. The low cost of ownership with trucks is helping farm owners to scale their business in various states. However, the ever-evolving nature of agricultural industry is emerging as a challenge for companies in the agriculture tire & tire cord market to address the changing needs of farm owners. Hence, manufacturers are innovating in pneumatic tires and increasing their R&D about tread wear, modern tire designs, and soil compaction to increase the availability of all-terrain tires. Mobile apps are emerging as a smart solution to manage vehicle performance in real time.

Agriculture Tire & Tire Cord Market: Overview

  • The global agriculture tire & tire cord market is anticipated to expand at a CAGR of ~5% during the forecast period, owing to increased use of agricultural equipment worldwide to achieve better farm yields
  • China, India, and the U.S. hold a key share of the agriculture tire & tire cord market globally, owing to the presence of a larger number of in-use tractors and high sales of new tractors in these countries

Drivers of Agriculture Tire & Tire Cord Market

  • Developing countries depend heavily on agriculture, and their growing population is fueling the demand for high farm yield. Consequently, governments and international organizations have been initiating various schemes to promote mechanization in the agriculture sector. Growing mechanization in agriculture in Middle East & Africa and Latin America is projected to boost the agriculture tire & tire cord market in these regions. Financial support and subsidies from various governments and food organizations, such as FAO, are boosting the adoption of tractors in developing countries, which, in turn, is anticipated to drive the agriculture tire & tire cord market in these countries.
  • For instance, in August 2020, in India, under the Sub-Mission on Agricultural Mechanization, the government released US$ 7.48 Bn to state governments across the country in order to boost inclusive growth and productivity in agriculture through mechanization. Similarly, in Africa, the African Union is aggressively promoting the adoption of sustainable mechanization across the continent under its Comprehensive Africa Agriculture Development Program. Off-highway vehicles such as tractors and harvesters are expected to play a pivotal role in augmenting agricultural productivity in the region.
  • Tractors were earlier employed for simple applications such as plowing and tilling. Presently, tractors perform an array of operations such as irrigation, harvesting, and fertilizer spreader; hence, more specialized tires with larger rim size are used, which are more expensive. Till 2009, the largest agriculture tire had a circumference of 243 inches; however, currently, tire manufacturers are offering sizes as large as 256 inches. The overall increase in the size of the tire has fueled the price of the tire and is subsequently, boosting the market, in terms of revenue.

Challenges for Agriculture Tire & Tire Cord Market

  1. Manufacturing cost of the tire is largely dictated by the price of raw materials such as natural rubber and Brent crude. Volatility in the market price has a negative impact on tire manufacturers.

Segmentation of Agriculture Tire & Tire Cord Market

  • The global agriculture tire & tire cord market has been segmented based on application, equipment horsepower, tire type, sales channel, fabric type, and region
  • Based on application, the global agriculture tire & tire cord market has been segregated into tractors, harvesters, implements, irrigation, forestry, and others. The tractor segment held a leading share of the global agriculture tire & tire cord market in 2019, due to government initiatives and commercial farming boosting the sales of tractors. The irrigation segment is anticipated to expand at a high growth rate, owing to trends such as pivot irrigation, which drive the demand for irrigation tires.
  • Based on equipment horsepower, North America is witnessing a high demand for low & medium horsepower or 0-80HP equipment, as a majority of farms are family-owned and consumers are opting for low interest rate purchase of affordable smaller tractors. The 80-200HP segment of the market in Europe and Asia Pacific is estimated to expand significantly, as small fragmented farms are being acquired and being converted into larger commercialized farms that require larger tractors. Furthermore, the use of implements and tractor attachments is increasing in Asia Pacific, which requires high horsepower tractors. This, in turn, is likely to boost the 80-200HP segment of the agriculture tire & tire cord market in the region.
  • Based on tire type, the bias tire segment dominated the global agriculture tire & tire cord market. Radial tires have significantly high penetration in Europe, and the segment held a relatively minor share of the market in Asia Pacific, Latin America, and Middle East & Africa, in 2019. Developing regions such as Asia Pacific, Latin America, and Middle East & Africa are price sensitive markets and hence, consumers refrain from buying expensive radial tires. Decrease in price of raw material and production cost, and increase in consumer purchase power are estimated to boost the demand for radial tires in these developing regions.
  • Based on sales channel, the agriculture tire & tire cord market has been classified into OEM and aftermarket. The aftermarket segment held a leading share of the global market in 2019, due to the wear & tear nature of the tire and requirement for periodic replacement. The OEM segment is anticipated to expand, owing to rise in sales of tractors and agriculture equipment in Latin America & Middle East & Africa during the forecast period.
  • Based on fabric type, the agriculture tire & tire cord market has been classified into PET, PA6, PA66, Aramid, and others. The PA66 segment accounted for a prominent share of the market in terms of revenue. Polyamide PA66, which is also known as nylon 66, is widely used in specialist and high performance tires owing to its high melt-point and temperature resistance. The chemical competency of the PA66 offers better performance compared to yarns such as polyester and polyamide 6 (PA6). Increase in demand for PA66 fabric type can be attributed to an increase in trend toward high performance tires. High performance tires require larger amounts of fabric reinforcement, as they are wider, which in turn is propelling the segment.

Agriculture Tire & Tire Cord Market: Regional Analysis

  • Based on region, the global agriculture tire & tire cord market has been segregated into North America, Asia Pacific, Europe, Latin America, and Middle East & Africa
  • Asia Pacific held a prominent share of the global agriculture tire & tire cord market in 2020 with China and India being major contributors. China and India, together, account for a significantly high number of tractors in use worldwide. Thus, they offer significant opportunities to manufacturers of agriculture tires. Availability of key raw material such as natural rubber, inexpensive labor, and high domestic demand for tires have helped the emergence and expansion of key players in the region.
  • Asia Pacific is followed by North America and Europe, in terms of share of the global market, with the U.S., Germany, France, Italy, and Turkey being major contributors in the region. The agriculture tire & tire cord market in these regions is projected to expand with increase in population and growing mechanization rate boosting the usage of tractors, which in turn is driving the demand for agriculture tires.

Agriculture Tire & Tire Cord Market: Competition Landscape

  • Major companies operating in the global agriculture tire & tire cord market are expected to benefit from the formation of strategic associations with global players involved in the agriculture tire & tire cord market. The market witnesses the existence of key players who have strong worldwide existence and firm establishments, coupled with diverse product portfolios.
  • Prominent players operating in the global agriculture tire & tire cord market include
    • Balkrishna Industries Limited (BKT)
    • Bridgestone Corporation
    • Continental AG
    • MICHELIN
    • Mitas
    • China National Rubber Tire Co.
    • Trelleborg AB
    • Titan International, Inc.
    • Sumitomo Rubber Industries Ltd.
    • Pirelli & C. S.p.A.
  • Key players at the global agriculture tire & tire cord market are expanding their footprint by engaging in mergers and acquisitions with several players in industry. For instance, on July 3, 2018, Trelleborg AB signed a contract and completed the acquisition of the TRS Tyre & Wheel Ltd., a New Zealand-based company owned by Bapcor Group. The acquired company, i.e. TRS Tyre, has nationwide operations. The acquired company operates in four other locations within New Zealand and generates annual sales of approximately US$ 18 million. This acquisition was aimed at enhancing Trelleborg AB’s sales of tires for agricultural, material handling, and construction vehicles, as well as complete wheels for New Zealand-based consumers.
  • On March 31, 2015, Trelleborg AB acquired Armstrong Tyres, an Australia-based service and distribution company that caters to the agricultural industry. The acquired company specializes in tires and complete wheels catering to Australia-based original equipment manufacturers (OEMs) and tractor dealers. The acquisition was aimed at increasing Trelleborg AB’s presence in the market in Australia and strengthen its base for the sale of tires to the aftermarket in the country.

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