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Amidst shaky economic conditions, the Latin America tyre market to grow at a CAGR of over 7%: Bonafide Research
Jul, 23
2021

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Amidst shaky economic conditions, the Latin America tyre market to grow at a CAGR of over 7%: Bonafide Research

 

210659985-Latin-America-Tyre-Market-Outlook-2026

Latin American economies have been facing structural issues in the economies for the past decade. However, as the economies are getting gradually stable and recovering from the disruption from the Covid-19, the region is poised to be a strategic avenue for automotive production in the West. As the standard of living improves, vehicles are expected to penetrate the market further. To understand the detailed trends in the tyre market landscape, Bonafide Research has recently published a market research report titled- Latin America Tyre Market Outlook, 2026.

From 2015 to 2020, the tyre market grew at a CAGR of roughly 4%, taking into account a 5.60% YoY fall in the market in 2020. If the time frame of 2015 to 2019 is considered to assess the natural growth of the tyre market in the region, it was observed that the market grew at a CAGR roughly of 7%. It has been further forecasted that the tyre market will be growing at a CAGR of 7.12% during the period of 2021 to 2026.

Latin America is one of the worst-hit regions due to the unprecedented Covid-19 pandemic. The regions had been growing sluggishly for the past few years and the outbreak caused an enormously adverse effect on the economic and social conditions. However, despite the major impact of the pandemic, the economic outlook for Latin America is expected to improve this year. The automotive industry in the region faced challenges instability posed by the economic condition. Mexican automotive sector reflected similar patterns compared to Brazil in automotive sales trend in the past year, whereas, Argentina was severely hit due to economic instability and high inflation rates which had an adverse effect on the tyre market in the region. The tyre market in the region grew at a CAGR of 2.25% in volume terms historically from 2015 to 2020 and is forecasted to grow at a CAGR of 4.95% during the 2021 to 2026 period.

The Latin American region has the potential to be a strategically important hub for the production of automobiles. However, the economic structural issues act as a major constraint for the industry to reach its optimum growth. Nevertheless, the Latin American automotive market is already a major exporter of automotive components to the USA. Characterized by having low labor rates, the manufacturing industry in the region is expected to thrive if the major economies in the region find some stability

The logistics sector in Latin America is facing significant challenges. Due to the infrastructure issue, the logistics undergo significant challenges to make the system more efficient. With the geographical terrain such as in Latin America, the majority of vehicles need to be having bias-ply tyres which can handle rough terrain. However, as companies are also innovating the radial tyre segment, working on its drawbacks to make it more durable and have a longer life, the radial tyres continue to have a promising market in the region. In the year 2015, almost USD 4 Billion worth of radial tyres were sold. It has been further forecasted that the radial tyres will be growing at a CAGR of 8.15% during the forecast period of 2021 to 2026. Bias-ply tyres on the other hand are also expected to see a jump in their demand as infrastructure for logistics and developments improve. During the forecast period, the bias-ply tyres are expected to grow at a CAGR of over 6% to reach a market of USD 10 Billion.

Following the trend which is consistent with other regional markets, the tyre market in Latin America is finding it difficult to access the online and e-commerce sales channels. The nature of the product also makes it difficult for tyres to access the B2C or D2C online sales channels as people usually do not buy tyres online for the simple reason that, they are not aware of the specifications of the tyres that they need to consider and/or they do not know how to change tyres or prefer a specialist or mechanic change their tyres. It has been forecasted that during the period of 2021 to 2026, the online sales channels are to grow at a CAGR of 11.28% whereas the offline sales channels are expected to grow at a CAGR of 6.94% to register approximate annual revenue of USD 17 Billion by 2026. E-commerce continues to show growth prospects in Latin America, deeper penetration of which can add some additional momentum to the growth of tyres.