As 2026 Q3 financial reports are released, profits of domestic tire manufacturers are generally weak. Only a handful of firms have achieved profit growth, with most listed tire makers recording a 20%-70% year-on-year drop in Q3 earnings.

The industry downturn stems from combined domestic and overseas headwinds. Overseas, anti-dumping and countervailing duties imposed by Europe and the US have crushed exports. High tariffs erased the price advantage of Chinese tires and caused overseas orders to shrink sharply. A flood of returned capacity has intensified fierce competition in the home market. Domestic supply glut stands out amid concentrated new capacity rollout, fueling brutal price wars. E-commerce platforms keep pushing tire prices down. Even with price cuts to chase orders, demand stays sluggish. Factories run at low operating rates while channel inventory piles up, and deal conversion remains difficult.

Cost pressures add further strain. Prices of raw materials such as natural rubber and carbon black stay high, alongside rising selling and financial expenses. The sustained appreciation of the RMB has turned exchange gains into losses for exporters. Most manufacturers lack overseas production bases to hedge currency risks, squeezing margins further. Multiple rounds of price hikes were largely offset by promotions and rebates, yielding little real benefit. Many production lines operate intermittently, and the traditional peak season "Golden September & Silver October" has turned into a wave of production halts.

Still, the industry is not universally struggling. Nokian Tyres posted a 45% year-on-year profit jump in Q3, proving losses are not inevitable for the whole sector.

The root cause of this crisis lies in blind capacity expansion in previous years. Small manufacturers without strong brands or sales channels rely solely on low-price competition and have little resilience against downturns. Even top players are hit by excess capacity, while leading international tire groups have proactively scaled back production.

For the near term, profit warnings and falling earnings will keep appearing in financial statements until surplus capacity is eliminated and supply-demand balance is restored. This autumn and winter of 2026 brings a prolonged and painful reshuffle for China’s tire industry.