Minardi: Diverse Latin tire market always changing

Don Detore
Tire Business
ddetore@crain.com

Eduardo Minardi speaks at the 2025 Latin American & Caribbean Tyre and Auto Parts Expo in Panama.

BUENOS AIRES — Any analysis of the Latin American tire market wouldn’t be complete without detailing the differences between the diverse region and the U.S.
Eduardo Minardi, who spent nearly three decades at Bridgestone Corp., including managerial positions in Mexico and Argentina, before starting his own boutique consulting firm, Minardi Global, said it’s vital to understand these differences before examining the Latin American (LatAm) tire business.

He noted that the U.S. is a single country comprised of 50 states with a federal government that establishes common rules, despite some differences by state. Meanwhile, Latin America, including the Caribbean, includes 33 countries, each with its own set of rules, laws and cultures, without a single governing body or common market as such.
Transactions in Latin America are primarily exports and imports, subject to different bureaucracy, taxes and regulations. Free trade agreements and pacts between countries exist, but no general agreement exists.

The economies of Brazil, Mexico and Argentina represent approximately two-thirds of the gross domestic product (GDP) of Latin America, and, according to Minardi, have tariff-free agreements with quotas for the automotive sector, including tires and auto parts.

“In fact, the automotive value chain is one of the most streamlined and complementary among these three countries,” he said.

The U,S, has signed free trade agreements with several countries in the region, including Chile, Peru, Colombia, Panama, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, the Dominican Republic and Mexico. Mexico most actively trades with the U.S., he said, given the nearly 2,000-mile border with the U.S.

“The native races of each region were joined by waves of migration of varying origin, number, and intensity, thus creating a distinct imprint by country or even by subregion, such as northern and southern Mexico or Brazil,” he said, noting it differentiates each not only in their favorite food and music, but also in their business culture.

“In short, people talk about Latin America; however there is no unity but rather a collection of countries identified with a name that unites them for geographical and historical reasons,” he said.

Question: How different are Latin America in terms of tires?

Answer: In terms of typologies, the sizes and types of PS/LT tires sold in LatAm are more similar to those in the European market than in the US. This is due to the nature of the vehicle fleet introduced by manufacturers dominated by Volkswagen, Stellantis (Fiat, Peugeot, etc.), Toyota, Nissan/Renault, and Kia/Hyunday. General Motors and Ford have had manufacturing presence in LatAm for 100 years, with models that are more European for cars and more American for pickups.

The truck market is practically divided into two geographic sub-regions: The “southern cone” of LatAm (Brazil, Argentina, and Chile) is dominated by European platforms such as Volvo, Scania, Daimler and Man/Iveco; while northern LatAm (Mexico and Central America) has a greater presence of US brands and styles such as Kenworth, Freightliner and International.

As a quantitative reference, we could round annual sales of PS/LT tires in the U.S. to 260 million and those of other categories to almost 80 million, totaling about 340 million units. I make this addition for comparative purposes because there is no precise public data available for LatAm by product category.

However, it is estimated that almost 180 million new tires are sold per year across all categories. The reader may be surprised by this figure, given that it is more than 50% of annual sales in the U.S., even though per capita income and the vehicle fleet are much lower.

The reason is simple and has to do with greater tire wear due to the lower proportion of paved roads, lower maintenance, the general condition of vehicles and excess loads in some countries that lack controls.

There is also an unmeasured market for used tires in some LatAm countries. The vehicle fleet in large cities is more modern and includes a large number of high-end vehicles. In contrast, the suburbs of metropolitan areas, small cities, and rural areas show an older fleet.

Similarly to GDP, Brazil, Mexico, and Argentina account for approximately two thirds of the region’s tire demand. Of the 180 million tires sold annually, Brazil demands between 40% and 45%; Mexico between 20% and 25%; and Argentina approximately 10%. This is because these three countries have the largest automotive and auto parts manufacturing infrastructure.

Mexico is a party to the USMCA (North American Free Trade Agreement) along with the U.S. and Canada. For tires to circulate freely and tariff-free between these three countries, they must meet a requirement of at least 70% local or regional content (materials and processes).

In this regard, Mexico produces and exports a significant proportion of PS/LT tires to the U.S. and imports radial truck tires that are not produced in its territory.

Q: How are LatAm consumers similar/different to those in the U.S.?

A: To understand consumers it is important to consider the socio-economic structure of both regions. Based on reports from the Pew Research Center and the US Census Bureau and reports from the World Bank and CEPAL for LatAm, the comparison of socio-economic structure of the two is:

A look at the income difference between the U.S. and Latin American countires.

Consumer preferences are not that different from those in the U.S., at least in terms of the first factor, which is the expectation of “durability.” The difference in the budget allocated to purchasing tires for LatAm consumers means that the “premium” segment is a smaller share than in the U.S. Therefore, LatAm consumers prioritize price to a greater extent.

Regarding fleets, the proportion of independent operators or small fleets (less than 10 trucks) is very high, reaching 80% to 95% of the fleet depending on the country. This level of fragmentation makes the “value-for-money” product offering very attractive in LatAm. Traditional top brands always strive to sell “Total Cost of Ownership,” including retreading.

All of the above is indicative, as there are many differences between countries in the region and sub-regions within the same country.

Q: How would you describe the LatAm tire market today? How is it changing? What are some of the challenges?

A: The three most significant changes seen in the region are the modernization of the vehicle fleet, the growing presence of imported products and new purchasing and sales methods through the digitalization of processes. Let’s review these concepts one by one.

Traditionally, vehicle manufacturers introduced new models with a time lag compared to the launches taking place in their countries of origin. This process was replaced by almost simultaneous launch in LatAm of new models in developed economies. Of course, each product responds to the specific needs of the market it serves.

The Latin American economies that produce tires were relatively restrictive on imports or many years. As a result, manufacturers developed their businesses with a low level of competition. But globalization, beginning in the 1990s, brought about significant changes.

On the one hand, it promoted the import of premium brands not produced locally, which in any case did not achieve significant volumes. On the other hand, it also promoted the import of low-cost brands, which dented the sales of local producers.

The latter’s initial response was to produce or outsource the production of lower-cost and lower-priced tires to protect their dominant market position. But this defensive mechanism lasted until low-cost producers experienced a gradual but dramatic improvement in quality and performance. Throughout the 2000s, imported products, mainly from China and Southeast Asia, gradually gained market share and consolidated their commercial presence through local distributors.

Some countries reacted with higher import tariffs or antidumping measures. But as a trend, these imports became consolidated, and established brands chose to redefine their strategies and shift from “volume to value,” focusing on products with the highest added value for consumers.

Attracted by the productive expansion in China and neighboring countries and encouraged by their large idle capacity, many distributors developed their private brands to differentiate themselves and avoid intra-brand competition.

Do you see any similarities with what happened in mature markets like the U.S. and Europe?

The third factor of change is the widespread adoption of digital solutions for buying and selling tires, as is also happening in the U.S.

Mercado Libre, an Argentine company and the fourth largest global marketplace by revenue, has already achieved a 10% market share for tires in the region and is growing at double-digit annual rates. Another important player in digital sales is Cantu Pneus from Brazil, with online sales of more than 5 million units per year without having its own stores until just over a month ago. Cantu sells, among others, its SpeedMax and Itaro brands.

Some U.S. CRMs (customer relationship management) also compete in this space (e.g. Salesforce), although the specialized player in the tire market is Bravo Digital Solutions with a vast network of advanced distributors and retail clients who use its SaaS. These include complete store digitalization and ERP, mobile scanning of vehicles, tires, and auto parts, automated marketing solutions and database management for service tracking and alerts, cross-selling, and loyalty.

Finally, Brav offers an AI agent that interacts with operators and greatly facilitates store management, promoting efficiency and increasing sales. Nothing to envy of the best technological solutions in the U.S.

Regarding the evolution of the LatAm market, it maintains an average unit growth of around 4% a year. As new mobility has flattened tire demand in developed countries, the vehicle fleet in emerging countries is increasing at rates greater than the region’s economic growth.

The LatAm tire market is estimated to be valued at $17 billion (U.S.) in 2024 and could grow at an annual rate of over 4% until the end of this decade.

Q: How important is the LatAm market to tire manufacturers?

A: Traditional manufacturers established their first plant in the region more than 100 years ago. In fact, Firestone and Goodyear opened their first manufacturing facilities as early as in 1931. This highlights the economic development expectations that the major companies hoped to capitalize on.

Today, the dominant players are Bridgestone, Pirelli, Goodyear, Michelin, and Continental, with plants in several countries, both to meet O.E. and replacement needs and to export to non-factory markets in LatAm and the U.S.

Mexico is clearly positioned as the "enclave" for PS/LT tire exports to the U.S., and its plants are as technologically advanced as the ones in the U.S.

Q: What segment(s) drive the LatAm market? How much of a factor are EV products?

A: EVs are not yet popular in LatAm. Let’s put this in perspective. EVs in China accounted for 62% of global sales in the first half of 2025, followed by the EU with approximately 20% and the US with less than 10%. The rest of the world, which includes LatAm, accounted for only 7% to 8% of EVs sold. This makes sense given the lack of massive infrastructure to support battery charging.

In LatAm, EVs are more of a luxury or sophisticated fad than a reality in the region, at least for now. The most attractive markets in LatAm in terms of demand, price, and profitability are similar to those in the U.S. Thus, mining tires, high-end (high-rim diameter) automotive tires, and specific uses for trucks, OTR and some agricultural applications constitute the jewels of the business.

Within the truck market, there are premium fleets willing to pay for higher mileage, less downtime, lower CO2 emissions and retreading, in line with the circular economy. But they are a minority.

The high end O.E. automotive segment is also attractive, as long as the recurrency rate of premium OE is high enough to trigger profitable sales in the replacement market.

However, as is the case in the rest of the world, low-cost manufacturers have demonstrated large improvements in quality and performance in the high end segment and have challenged the dominant position of the major brands, gaining them a significant share of the market.

Q: There seems to be much more competition for business in LatAm, given the Chinese manufacturers. Is that accurate? What effect does that have on the market?

A: As indicated previously, the penetration of low-cost brands is causing a revolution in the region. For example, tires from China and other Asian countries already represent more than 40% of the replacement market volume in Brazil and Argentina. The growth of these imports in Mexico has also resulted in antidumping duties. The result has been a gradual reduction in prices and a loss of market share by traditional producers.

Among the consequences of these low-cost imports is the difficult situation faced by many retreading companies. Their costs and prices are mostly higher than those of low-cost tires, so retreading, which is so beneficial for the environment and the circular economy, is gradually reducing volumes and market share.

Q: What kind of effect will the new plants in Mexico have on the LatAm market once they come online?

A: Mexico offers a unique opportunity to access the U.S. market through products that can demonstrate a local or regional component of 70% or more. The "maquila" has traditionally been the legal way in which plants have been structured for export in Mexico. It is about a manufacturing operation where factories receive duty free equipment and raw materials from a U.S. company (owned by the same company/brand), process and assemble them and then re-export the finish goods. The charge for that is the conversion cost plus, so main profits are made in the U.S.

With the advent of import restrictions in the U.S., those who have positioned themselves in Mexico have a competitive advantage. This is why Sailun is expected to be a winner. ZC Rubber has also announced an investment in Mexico and purchased the land where it would build its plant. It remains to be seen who will be most committed to that market as a launching pad for the U.S.

Sailun did so with a local partner, TireDirect, the country’s largest tire distributor, also present in the U.S. through its Dallas subsidiary, North American Tire Trader (NATT).
This year, there was also news in southern LatAm, as Linglong announced the opening of a plant in the state of Paraná, Brazil, also with a powerful local partner, Sunset SA, from Paraguay/Brazil. Sunset is the owner of the XBri brand and with years of experience in wholesale tire distribution. Sunset also has a high-end retail store in Ciudad del Este, Paraguay, which services would be the envy of even the best retail specialist in the world.

Q: What are some key challenges faced by manufacturers?

A: Manufacturers face two essential dilemmas. The first relates to the market, and the second relates to its costs. Tire distributors and retailers in the region have historically been largely "mono-brand," meaning each operated with a family of brands from one manufacturer. Competitive dynamics and the growth of imports have led many distributors, either openly or covertly, to become "multi-brand" by incorporating imported products.

Manufacturers have had different reactions to this reality. But most defend the status quo and require their resellers to be mono-brand or allow them to carry a small percentage of products from other brands.

The reality of mature markets shows that multi-branding is here to stay, but it is a leap that many LatAm manufacturers are unwilling to take, even though multi-branding is a reality in the markets where their parent companies operate.

The second point I mentioned relates to cost. Since each country has its own laws, labor rules, unions and competitive and supply practices, no general conclusion can be shared about costs. What is certain is that manufacturers have found it difficult to compete in a market where prices are falling while imports are increasing. Hence their focus on higher value-added products, without realizing that Chinese and Asian producers will also compete in these segments and with very competitive products and prices soon.

The Sailun and Linglong plants will be state-of-the-art and will compete with manufacturers who, despite upgrading their plants, are at a disadvantage due to their older layouts, equipment, processes and labour contracts. While resorting to significant modernization of their operations, traditional manufacturers will have to review their overhead costs, which are often unfocused but responsible for their lack of competitiveness. That includes but is not limited to the multi-layered organizations and leadership.

What is clear is that large manufacturers will have to reduce costs further while the low cost players investing in the region will have to acquire certain costs to protect their reputations.

Q: Anything else to add?

A: Anyone looking to do business in LatAm must consider local support that helps them understanding the context, risks and opportunities.

One of the region’s challenge is that far from having policies that create a sustainable framework for investments and business development, many countries in LatAm are swinging from economic openness to closure and vice versa, or from right to left oriented policies and vice versa. The most emblematic case is Argentina, which had a very closed economy for almost 20 years and is now facing a level of economic openness for which local manufacturers were unprepared. This sort of yo-yo, which moves according to the political and economic fluctuations of each country, also suffers from the repercussions of the international policies of the power centers.

For example, right now, globalization as we knew it is being dismantled and a new system or re-globalization is emerging. In this context, tariffs imposed by the Trump administration are taking center stage. LatAm´s tire imports from low-cost countries have increased significantly and could increase even more in the near future as they face restrictions on competitive access to markets like the U.S. and E.U.

There are also very open economies like Chile, which has trade agreements (FTAs) with 65 countries and free trade agreements with 20 countries. The general tariff on tires is only 6%, but FTAs consider a 0% tariff.

Minardi: Diverse Latin tire market always changing

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