How Michelin Is Helping Independent Tire Dealers Thrive Amid 2025’s Margin Squeeze

Independent Tire Dealers Face Growing Challenges in 2025

Independent tire dealers in 2025 are under increasing pressure from multiple fronts. Original equipment (OE) demand is dropping, the U.S. market is seeing an influx of low-cost imported tires, and consumers are more price-conscious due to inflation and economic uncertainty. These factors have dealers asking a critical question: Where has my margin gone?

Michelin North America’s President and CEO, Matthew Cabe, outlines a dealer strategy focused on addressing these challenges while protecting profitability in the premium segment.

Michelin’s Positive Outlook and Strategy

Cabe recognizes the pressures dealers face but remains confident. He positions Michelin’s strategy as a means to safeguard the value of the premium tire segment. This approach goes beyond branding; Michelin’s strength lies in product innovation that dealers can rely on to attract customers.

“Michelin, as the leader, must bring new innovations to market so consumers have a reason to remain in the premium tier,” Cabe explained. “Offering the same product as everyone else won’t move the needle.”

The company’s first-half 2025 financial results support this approach. Despite a 6.1% drop in global tire volume—mostly due to an 85% decline in OE demand—Michelin achieved a 4% increase in price-mix. This was driven by strong sales of tires like the CrossClimate 2 and X Line Grip D.

Managing Competition from Budget Imports

A major concern for dealers is the surge of budget imports in the U.S. While these imports have contributed to a 2% growth in the passenger light truck (PLT) replacement segment in North America during the first half of 2025, they have also pressured pricing, especially in popular 16- and 17-inch tire sizes.

Cabe emphasizes Michelin’s role in defending dealer margins by staying ahead through superior product quality and innovation.

“We provide products you can trust for safety and performance,” he said. “We help dealers by continually raising standards and introducing new technologies they can confidently offer to customers.”

Local Manufacturing as a Competitive Advantage

One of Michelin’s strengths in the U.S. market has been its reliable supply chain backed by local manufacturing. Cabe highlighted that about 70% of Michelin’s U.S. sales are produced domestically, with 85% manufactured in North America.

This “local-to-local” strategy has become a key differentiator amid global supply chain disruptions. It has earned dealer trust over decades and enables Michelin to invest aggressively in AI-driven inventory management.

“Predicting daily demand at a granular level, like how many tires we’ll sell tomorrow in Houston, is complex,” Cabe said. “AI helps us optimize inventory placement, ensuring dealers have the right products when they need them, eliminating costly stock imbalances.”

Adapting Distribution Post-ATD Partnership

Michelin’s exit from its partnership with ATD has shifted its distribution model. Cabe acknowledged that this change affected how independent dealers access Michelin tires but stressed the company’s commitment to serving these dealers through alternate wholesalers.

“Our priority is ensuring independent dealers have quick and cost-effective access to our products so they can serve their customers efficiently,” Cabe noted.

This focus aligns with Michelin’s broader financial strategy to realign inventory and reinforce local supply chains.

Balancing Profit with Sustainability and Innovation

Michelin’s strategy centers on the pillars of people, planet, and profit. The company’s investments in sustainable rubber sourcing, hydrogen storage, and cross-industry research drive tire innovation that adds value for dealers.

“Sustainability and technological advancements inspire new ideas,” Cabe said. “Sometimes breakthroughs in other fields feed directly into making better tires.”

Leadership Lessons and Market Realities

As Cabe approaches his first year as CEO of Michelin North America, he reflects on the need to adapt quickly in a complex and shifting environment.

“I came in with plans but quickly realized the landscape changes daily,” he said. “Success requires agile teams who understand the mission and can act decisively.”

With two decades of experience across engineering, manufacturing, marketing, and global operations, Cabe brings a broad perspective to navigating today’s tire market challenges.

Actionable Strategy for Dealers in 2025

Cabe offers practical advice for independent dealers aiming to maintain profitability:

• Focus on premium SKUs with clear performance benefits such as improved braking and winter traction.
• Leverage the story behind the product—local manufacturing, sustainability efforts, and material science innovations enhance customer engagement and trust.
• Adopt smarter inventory practices. Michelin’s AI-driven tools improve forecast accuracy and fill rates; dealers can implement scaled versions of these methods in their own operations.

“We are an innovation company with a strong engineering foundation,” Cabe concluded. “Our goal is to support independent dealers by providing products with compelling stories that help them succeed.”