EVs, Fleet Management to Aid Commercial Tire Growth

EVs, Fleet Management to Aid Commercial Tire Growth

The post-COVID market is bouncing back, which is driving market trends in 2023.

When I was a child, rollercoasters were an awe-inspiring combination of power and adrenaline, a towering marvel of speed and terror to be gazed upon with either great anticipation or great fear– sometimes both. I have always loved knowing how things work, and even at a young age, I appreciated the mechanics of it all: the slow, steady, deliberate creaking of the steep climb, and the unseen forces just out of reach methodically pulling riders toward the unknown.

I remember the anticipation and excitement I’d have while waiting in line to ride. As the cars climb, all my appreciation (and sometimes fear) would build as we neared the top before that first big drop. Finally came the slow steady roll forward as I gathered my courage, preparing for what came next: the rush of the incredibly sudden and breathtaking downward plunge. Finally, after what seemed like an eternity, my breath returned, and the ride ended. That brief moment of exhilaration and fear of the unknown was over. Life returned to normal.

While rollercoasters are an exciting experience for many of us, a thrill ride is not what we want for our industry. In 2020 and 2021, life’s sudden unknowns – the very twists and turns we loved as children – were what most of us were forced to confront … and it was one ride we all hoped would end very quickly.

Fast forward one year. In 2022, the heartbeat of the nation began to rebound. Reports of a declining transportation industry were proven to be greatly exaggerated. Commercial fleets once again resumed delivery of goods and services on a regular basis. Products began making their way across the country and into local stores. Families – mine included – again were on the move. While the previous two years brought commerce and travel to a halt, 2022 rolled forward full speed ahead.

The OEM Market

Looking to 2023, Michelin is encouraged by what is on the horizon. We expect to see a continuing trend of growth and expansion as our commercial sector fleets return to pre-COVID levels of activity. What does this look like? First, we have to look at the OEMs. Due to supply chain challenges over the past two years, OEM new vehicle sales have not met fleet demand, and we expect strong demand to continue into 2023.

Additionally, commercial vehicles continue to evolve, particularly with technologies constantly emerging and becoming more sophisticated. From TPMS systems becoming more widely available to more fuel-efficient designs helping cut fuel costs, innovations will contribute to a strong rebound in commercial fleet resilience.

EVs Will Become More Common on the Roads

Another area of growth is the emerging EV market, especially in light commercial transit and medium-duty vehicles as well as the Class 8 sector. The increased demand for electric vehicles across all areas of the commercial landscape is a powerful driver for not only more fuel-efficient vehicles, but also for controlling the carbon footprint and promoting environmental change.

According to a recent study by The Boston Consulting Group, it is predicted that by the year 2030, just under 50% of all vehicles sold in the United States will be electric or hybrid vehicles. This does have a few drawbacks at the moment. With the instantaneous torque of electric motors, combined with the extra weight of the batteries, tires will wear out faster than they do on traditional internal combustion vehicles. Because electric vehicles are heavier due to the weight of their batteries, a larger tire with either larger dimensions or the same current dimensions but with a higher load capacity will be required to offset the faster wear. Also, given the current challenge of battery range, rolling resistance and performance are critical.

Continued research and advancement toward optimizing EV tires will allow commercial fleets to further improve their bottom lines and the lives of people everywhere.

Fleet Management Services

A recent report by MarketsandMarkets showed that over $25 billion in fleet management service sales in 2022 will grow to an astounding $52 billion by 2027. That equates to a 15.5% compound annual growth rate (CAGR) over the next five years. Fleet management services will continue to see unprecedented transformation with new regulations, uses and behaviors and increasing digitalization of activities. Outbound tender volume has stabilized above 2019 levels. Aging fleets and supply chain challenges will contribute to increased demand for ERS (Emergency Roadside Service) and mechanical services.

This comprehensive approach to keeping fleets on the road longer will continue to be an area of opportunity within the industry. Improving operational performance can help facilitate a fleet’s day-to-day workload as well as operational lifespan. With fleet owners focusing on improving employee safety, maximizing operational and economic performance, and reducing CO2 emissions, the fleet management services sector is poised for sustained growth.

Final Thoughts: Demand into 2023

Despite a likely economic recession on the horizon, manufacturers are rebuilding their inventories and offsetting the consumer impact. The OE market is set to have one of its strongest years in the last decade. The post-COVID market is bouncing back, and we expect this to be a major driver in 2023.

The replacement tire market also shows signs of having a good year in 2023. As continued growth and order backfills are addressed, the trend toward normalization of the 2019 and 2018 markets continues, showing potential for 2023 to match two of the strongest revenue markets in the past decade.

Finally, the fleet management services sector is positively positioned for the next year as well. As owners and operators look for new ways to extend the life of their vehicles, fleet management services will offer better and newer alternatives, keeping the vital goods and services economy necessary for continued prosperity moving ever forward.

Karen Schwartz is vice president of marketing, B2B, for Michelin North America. Previously, she served as the global managing director for the Digital Services Platform Group at Michelin, housed within the Services and Solutions Global Business Line, where she was responsible for leading a SaaS “Start-up” team. She began her career with Michelin in 2018 as the North American B2B marketing director for Michelin’s on-road business. Prior to Michelin, Schwartz spent 15 years at Procter & Gamble.

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