On July 27, Michelin released its financial results for the first half of 2026. The report shows that revenue reached 12.7 billion euros, a 2.6% decrease year-on-year, though it grew by 0.5% at constant exchange rates. The company’s business line operating profit hit 1.45 billion euros, marking a 7% increase.
In the Chinese market, the rising adoption of new energy vehicles has spurred demand for high-end, large-size, and NEV-specific tires. However, domestic tire manufacturers are accelerating their push into the mid-to-high-end market, intensifying competition for international tire brands in China.
Weakness in Original Equipment Tire Market, Profitability Still Improving
From the first-half financial data, Michelin’s revenue declined, but its profitability continued to strengthen. Revenue stood at 12.7 billion euros, down 341 million euros from 13.028 billion euros in the same period last year. Currency fluctuations had a negative impact of approximately 403 million euros, accounting for 3.1% of sales revenue. Excluding currency effects, the company’s revenue actually grew by 0.5%.
In terms of cash flow, Michelin’s free cash flow before acquisitions was 282 million euros in the first half, an increase of 384 million euros compared to the prior year, reflecting a solid financial position. During the same period, the company completed acquisitions of Cooley Group and Flexitallic, resulting in free cash flow after acquisitions of negative 328 million euros due to related cash expenditures.
A key reason for the revenue decline was the weakness in the original equipment tire market. Michelin’s data shows that in the first half of 2026, global demand for original equipment tires in the passenger car and light truck segment fell by 3% year-on-year. The Chinese market saw a 7% decline, while Europe and the North/Central America markets also dropped by 1% each. In contrast, global replacement tire demand grew by 1%.
By business segment, Michelin’s consumer business generated 6.926 billion euros in revenue in the first half, with an operating profit of 867 million euros and a margin of 12.5%, up 0.4 percentage points year-on-year. Growth in the automotive replacement tire market and the two-wheel business offset the weakness in the original equipment tire market.
In the road transportation segment, Michelin reported revenue of 2.813 billion euros, down 6.4% year-on-year, but the operating profit margin still improved to 5.9%. The specialty tire business recorded revenue of 2.22 billion euros, with an operating profit margin maintained at 14.1%, driven by growth in mining tire and aircraft tire sales. Meanwhile, the polymer composite solutions business saw revenue rise 14% year-on-year to 728 million euros, primarily due to contributions from the earlier acquisitions of Cooley Group and Flexitallic.
Notably, Michelin confirmed a capacity reduction plan in its financial report. The company stated that to optimize its industrial footprint and improve operational efficiency, it will gradually shut down the BFGoodrich tire plant in Tuscaloosa, Alabama, by the end of 2028, with phased production cuts starting in early 2027. Michelin will set aside approximately 220 million euros in non-recurring expense provisions for this move. Additionally, to adapt to challenging economic conditions while maintaining France as a strategic hub, the company announced a voluntary workforce adjustment plan in France, potentially affecting up to 1,500 jobs.
Regarding future operations, Michelin stated to the media that the group will continue to execute its strategy focusing on product innovation, brand building, and competitiveness enhancement, while steadily improving operational efficiency in a complex market environment.
Automotive industry analyst Xu Zhipeng believes that despite revenue pressure, Michelin achieved profit growth through its brand pricing power, improved product mix, and strict cost management. At the same time, the company’s global capacity reductions, including the U.S. plant closure and French job adjustments, reflect that this century-old manufacturer is actively adapting to a period of slowing growth and intensifying international trade conflicts.
Intensifying Competition in China's Tire Market
Michelin’s half-year report also highlights that China’s market performance reflects the growing importance of replacement tire demand as vehicle ownership increases. Additionally, the development of new energy vehicles is placing new demands on tire product performance.
The financial report shows that in the first half of 2026, demand for original equipment tires for passenger cars and light trucks in China fell by 7% year-on-year, making it one of the regions with a larger decline among major global markets. However, during the same period, China’s replacement tire demand grew by 9%, positioning it as one of the better-performing markets globally.
Michelin indicated that the growth in China’s replacement tire market is mainly driven by tire replacement needs from the large number of new vehicles delivered in recent years, as well as increased demand for 18-inch and larger tires.
In recent years, China’s new energy vehicle market has grown rapidly, with many NEV models entering their usage cycles, leading to related demand spilling over into the aftermarket. Compared to traditional fuel vehicles, NEVs, due to the extra weight from battery systems and the instantaneous torque output of electric motors, impose higher requirements on tires in terms of wear resistance, grip, and rolling resistance. This has pushed tire companies to shift from merely meeting basic performance to developing products specifically for NEVs.
For example, Michelin has continuously launched tire products tailored for NEV models in recent years and has strengthened collaboration with Chinese NEV manufacturers. The financial report indicates that in China’s original equipment tire market, the company’s sales growth came primarily from local automakers, particularly in the electric vehicle and plug-in hybrid segments.
At the same time, Chinese tire companies are accelerating their breakthrough into the mid-to-high-end market. Previously, international brands like Michelin, Bridgestone, and Goodyear dominated the premium tire market for years with their technological expertise and brand influence. Recently, Chinese tire companies have gradually enhanced their brand influence through technical research and development, product upgrades, and overseas market expansion, entering more mid-to-high-end segments.
According to data from the China Rubber Industry Association, China has become the world’s largest tire producer, with numerous domestic tire companies and continuously expanding export volumes. In recent years, companies including Sailun Tire, Linglong Tire, Zhongce Rubber, and Sentury Tire have been improving their product technology levels and expanding their international market share through overseas factory construction.
Data shows that in 2025, in the domestic original equipment market, Linglong Tire’s sales volume reached approximately 21.8 million units, while Zhongce Rubber’s was about 18.5 million units. In recent years, Linglong Tire has entered the supply chains of automakers such as BMW, Audi, and Volkswagen, and in its new projects from 2025 to 2026, mid-to-high-end products account for a high proportion. Zhongce Rubber’s Westlake brand has also begun entering the supply systems of more mainstream automakers, achieving a strategic partnership with Toyota for a global model in 2025, and securing projects for models like the Zunjie S800 and AITO M6 in 2026.
Furthermore, Michelin mentioned in its half-year report that it is developing digital twin technology capable of using real-time vehicle data to predict tire status, aiming to enhance tire management capabilities through artificial intelligence. This indicates that with the development of smart vehicles, the competitive boundaries for tire companies are expanding. Future competition will not only be about the tire products themselves but will also extend to areas such as data services and vehicle safety management.