Goodyear Tires
Goodyear was founded in 1898 by Charles Goodyear, with a headquarters in Akron, Ohio. Goodyear has successfully navigated every major auto and industrial cycle, like the rise of the automobile, the interstate buildout, oil shocks, globalization, and now EVs. Throughout all these years, Goodyear has been able to stay relevant at scale, a feat that most legacy manufacturers have struggled to achieve. Goodyear has remained a top player in the industry and is connected to automakers, replacement channels, and heavy industry and aviation through commercial and specialty products. Though its scale has not come without failure, Goodyear has faced its share of plant closures, high fixed costs, and debt.
Goodyear’s mission is to deliver innovative products that improve people's lives through safe, high-performance mobility. For years, the brand has leaned into customer trust and tire endurance. No matter where you drive or operate, there is a Goodyear product designed to get you there. The current leadership is focused on low teen gross margins, 10%+ segment operating margins with fewer businesses, fewer assets, and more cash flow per dollar of capital deployed. This has led to Goodyear offloading some of its assets, like Dunlop, its chemical division, to concentrate on premium tires, commercial solutions, and an asset-light brand with a strong supply chain.
There are several catalysts that the Goodyear management team is focused on. First the lads are claiming they will deliver $1.5 billion in run rate cost savings by the end of the year (2025). Also Goodyear is deleveraging through asset sales, in 2025 they will have closed more than $2.2 billion in divestitures. Goodyear sold its Off-the-Road business to Yokohama and sold Dunlop brand rights to SRI. Net debt was reduced by roughly $1.4 billion, with no maturities until 2027. Though risks are real, the tire business is cyclical and Goodyear remains exposed to volume shocks, commodity swings, and cheaper competition. Execution risk also looms with plant closures, labor negotiations, and transitional supply agreements post divestiture need to go smoothly.
Goodyear's revenue is strong, with its sales dominated by consumer, commercial, specialty, and aviation. They have also been focusing on growing their embedded and fleet platform businesses. Goodyear manufactures and distributes tires for passenger automobiles, which are sold through a global network of wholesalers, retailers, and more than 800 company-owned service centers. Revenue from this segment represents a majority of the company’s revenue base. Goodyear also supplies truck and bus fleets, aircraft operators, and industrial end markets. While this segment is smaller, they can build strong relationships that create strong recurring revenue streams with high margins and low churn. Goodyear, until recently, operated a chemical business, which it recently sold in October 2025.
Despite having a global presence, Goodyear earnings and revenue is still centered around the Americas. In 2024, Goodyear sold 166 million units with 81.6 million of those units being sold in the Americas. EAMA is a structurally weaker geography, but one with improving economics due to plant rationalization as energy prices, labor laws, and inflation in EMEA have historically been drags. Asia-Pacific, is the smallest revenue driver for Goodyear, with markets like China and Australia pushing customers toward high performance SKUs. While Goodyear operates globally, its margins battleground is regional.
The global tire industry is dominated by a handful of century old players like Bridgestone, Michelin, Continental, and Goodyear. The high end of the market is protected by brand image, scale, and moats built through relationships with OEMs. Unlike luxury consumer players, these moats erode fast when the macro turns or commodity prices spike. At the low end of the tire market, aggressive companies from China, Southeast Asia, and India are flooding the market with budget SKUs, often dumping supply into developed markets. This has created a dual tract industry, one lane is packed with the high margin players and the other is the high volume players. Goodyear has found themselves in between these lands, as of 2024, they remain the largest tire manufacturer in North America with a strong OEM footprint. But its margins lag peers, weighed down by legacy infrastructure, labor costs, and a U.S. centric footprint.
The tire market is broken down into three major markets: consumer vs commercial, original equipment vs replacement, and standard vs premium SKUs. A tire that goes on a brand new Ford or Toyota becomes strong recurring revenue but when it comes to replacement tires customers may opt in for a cheaper tire. Although for Goodyear, replacement sales make up about 72% of its total volume. In the commercial segment, customers care more about uptime, cost per mile, and service relationships more than brand aesthetics. It’s a space where retreading, digital monitoring, and service bundles can boost Goodyear's margins. Goodyear has built a strong business in North America, particularly in the trucking and aircraft segments. Meanwhile, brands are scrambling to secure the EV, sports cars, and large diameter performance tires segments, which requires lots of R&D and distribution to secure the market at scale.
The macro and secular trends are changing the industry in positive and negative ways. First, the shift towards premium and larger diameter tires continues as SUVs continue to dominate new vehicle sales. In Goodyear's most recent quarter (Q3 2025) they noted that over 43% of their sales in the Americas came from 18 '+ and ultra high performance tires. Regulation and environmental policy are also reshaping supply chains as tariffs on imported tires have introduced volatility in the U.S. market. At the same time regulators are pushing sustainability mandates in Europe and North America, this forces tire markets to improve fuel efficiency, reduce rolling resistance, and disclose their chemical usage. In developed markets, aging populations means few drivers but more durable ownership cycles as old heads own their cars for longer. While in emerging markets like Southeast Asia and Africa, car ownership rates are increasing, with infrastructure investments driving volume growth. Goodyear’s decision to divest from non-core businesses / assets and focus on its core growth regions is an attempt to align with these demographics.
Despite being perceived as a slow-moving industry, the entire tire sector is quietly being reshaped by automation, digitization, and data integration. Modern factories run on real-time feedback loops connected to material inputs, energy consumption, and product quality. Goodyear has been actively investing in its facilities in Malaysia, Germany, and the U.S. Goodyear has also rolled out digital fleet management tools that allow customers to monitor tire wear, pressure, and performance through embedded sensors within the tires. Goodyear is now vertically integrating its supply chain with a direct-to-consumer platform, B2C mobile installation, and real-time price visibility. Goodyear has also released several EV-optimized SKUs with different thermal profiles, noise reduction, and wear patterns.
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The global tire industry is highly competitive despite being an oligopoly with four major players dominating the market. Michelin, Bridgestone, Continental, and Goodyear account for a massive portion of global tire revenue. They supply OEMs, control the high-end market, and possess large-scale supply chains that act as moats against smaller players. Under these major players is a bunch of low-cost tires imported from China, Southeast Asia, and Eastern Europe, which have commoditized the lower end of the market. Goodyear is still the largest tire manufacturer in North America, yet globally it is in fourth place as their competitors have outpaced Goodyear in both margin and innovation. Goodyear has spent the last decade playing defense, managing debt, absorbing tariffs, and patching up legacy manufacturing systems.
Despite that, Goodyear is strong. Their strengths lie in their brand and supply chain, especially in North America. Goodyear has a very large footprint with over 800 company-owned retail and service centers, a huge network of over 350 warehouses, and joint ventures that create scale that few can replicate or match. Goodyear's ability to control the last-mile distribution is a major advantage, especially as e-commerce and mobile installation reshape how consumers buy tires.
Goodyear’s brand is often reduced to a blimp, while nostalgic, a floating billboard provides vibes but little to no value or alpha. Goodyear’s real moat lies in its supply chain and physical networks; the company operates the largest network of tire and auto service centers around. The IP game in the tire industry is shifting from rubber chemistry to intelligence. Goodyear has developed proprietary compounds and tread designs for electric vehicles. Goodyear is able to weaponize their supply chain to crush small players who can’t absorb the costs of rubber and oil derivatives.
The barriers to entry in the premium tire market are sky high; it requires meeting safety standards, massive capex investments in complex supply chains, and customer-facing service networks. As well as the regulatory environment acts as a large shield for the current players, this also filters out the low-quality competitors who cannot meet the R&D spend requirements for compliance. On the switching costs side, for the average customer, they are pretty non-existent, though for OEMs, they are very high. A car’s suspension and handling dynamics are tuned specifically to the tire it launches with, which creates a strong lock-in effect. The switch toward EVs has created psychological switching costs, as when a driver realizes the price of EV tires, they retreat to the safety of the OEM brand for replacements. Over the years, Goodyear has positioned itself as the safe choice.
Goodyears P&L is dogwater, they recently reported a $2.2 billion net loss on $4.6 billion in revenue. This was driven by a $1.4 billion non cash deffered tax asset valuation and a $674 million goodwill imparents. Adjusted this leads to a a net income of $82 million. Revenue also dropped 5% YoY due to volumes softness in replacement tires. Goodyear’s gross prifts hover around $844 million with margins sitting around 18%. Despite shrinking volume, Goodyear is still maintaining pricing power. Goodyear has also been on the process of selling off assets like their Off-The-Road tire business to Yokohama for just under a billion dollars and the Dunlop brand rights to Sumitomo for $735 million. Goodyear has a strong war chest, that will enable them to tame their debt and pension obligations.
Goodyear’s operatubg cash flow is ugly and its FCF is even uglier sitting at negative $490 million LTM. Operating cash flow has struggled and has been dragged down by working capital requirements and restructuring costs. These costs are coming from retooling factories for the next generation of tire making. If Goodyear is able to hit targets FCF will turn positive and the market narrative around the company will improve. Ratios and metrics can be ignored as their is a massive disconnect from the sheets to the reality of the company’s market dominance. Goodyear is heavily focused on turning things around, in 20220 they stopped dividends and stopped buybacks to focus on paying down their debt. Their strategy is clear, sell non core assets and then maybe in a few years, returning capital to shareholders will be back on the menu.
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Goodyear's organic growth is shifting from volume led to margin led. Historically, the company grew by riding the rising global auto sales and increased miles driven. Their playbook is now changing to offer premium tires, stronger regional target marketing, and a push to supply the increasing demand for SUV and EV tires. In their most recent report they noted strong gains across all their core segments in every region, a major signal that their new strategy is working. Goodyear is also focused on picking strong markets the high demand and areas where they can eat off their pricing power. Rather than just carpet bomb new markets like many chinese manufacturers are doing. Goodyear has also built a strong fleet solutions product that is scaling in North America and the EMEA regions. This unlocked a major source of recurring revenues that are more predictable than consumer volume trends.
Goodyear’s inorganic growth has historically been focused on acquiring assets that expand its TAM. In 2021, Goodyear acquired Cooper Tire for $2.5 billion. This deal was intended to expand Goodyear’s position in the mid-tier tire market and deepen its distribution in North America and China. Although Goodyear has changed teams more recently, it has gone from an acquirer to a seller. They spun off their off the road segment by selling the Dunlop brand's rights for $735 million and sold their chemical business to some PE dorks for $650 million. In the future investors can expect more deals like Goodyears 50/50 joint venture with Bridgestone. It extends its reach into thousands of distribution points while avoiding capex heavy expansions.
We believe several catalysts will power Goodyear's next growth faze that include product mix, macro environments, and margins. Goodyear is focusing on shifting towards more premium SKUs with a focus on SUVs, EVs and large diameter vehicles. The macro environment is favorable for Goodyear, as the average vehicle age in the US is at an all time high and replacement demand continues to rise. Regulations are also playing into Goodyears strengths while the Tariffs are messing with inputs, it protects the company from low end foreign competition. ESG bullshit is also favorable towards Goodyear compared to those foreign shitcos and help drive demand for eco-conscious dorks, who are searching for fuel efficient low resistance tires. Another powerful catalyst is Goodyear’s continued margin expansion, the lads have realized $580 million in cost savings through Q3 of 2025 and expect a full year segment operating income uplift of $750 million. Their target is $1.5 billion in savings by the end of the year.
Goodyear has spent the last two years consolidating its global production by closing legacy plants. Goodyear is investing heavily in select facilities, focusing on modernizing them with automation, real-time quality controls, and digital manufacturing tools. Goodyear’s distribution is very strong, with over 10,000 touchpoints. This eliminates layers of distribution markups, shortens order-to-delivery times, and gives Goodyear unmatched control over inventory flow. Goodyear is also continued to invest in its innovation center in Akron and Luxembourg, with a major focus on EV Optimization compounds, airless tire technology, and smart tire sensors. The goal of these projects is to drive margin improvements and improve next-generation technology.
Goodyear’s supply chain is both a strength and a weakness; it spans five continents with manufacturing facilities in the U.S, Mexico, Brazil, Germany, Poland, China, and India. This provides global reach and sourcing flexibility and proximity to demand centers. But this also creates complex redundancy and latency issues across the supply chain. The TireHub network gives Goodyear excellent distribution from the warehouses to the installers. This is rare in the industry with most competitors rely on fragmented regional distributors, which means slower delivery, lower margins, and weaker control over their brand image.
Goodyear, on the other hand, operates with an Amazon-like immediacy in a sector that still moves like a fax machine. Goodyear still faces troubles in the raw materials segment, roughly 70% of its raw costs are linked to oil derivatives. Goodyear is working on offsetting these costs through multi-year deals, hedging strategies, and continued R&D investment on alternative compounds. Goodyear’s supply chain is becoming leaner, faster, and more digital. This frees up capital that was previously tied up in inventory. If Goodyear continues to cut the bloat, its supply chain will become best in class.
Goodyear is risk prone, they are currently fighting a battle at multiple fronts. They are in the middle of dealing with plant closures, footprint rationalization, SKU reduction, downsizing their workforce, and working on simplifying their supply chain. Management risk is closely tied to these issues as the team needs to operate with little room for error. While Goodyear’s plans are credible on paper, plans in manufacturing rarely ever get everything right on their first try. Goodyear operates in a business where small execution misses can compound into large financial damages. While Goodyear has improved its supply change, they still face challenges that go along with a globally distributed network that is exposed to shipping routes, energy prices, currency swings, and geopolitical beef.
Another major risk for Goodyear is deceleration. Goodyear’s turnaround narrative relies on cost savings and improving their product mix volume softness. If demand drops faster than expected, Goodyear is in for a rough few years. Tire replacements while not smart can be delayed, fleets could defer maintenance and this could hurt margins and revenue. Goodyear has invested heavily into the premium tire mix, but if consumers no longer favor EVs or SUVs (doubtful) Goodyear will be left holdings the bag on tons of inventory of the wrong tire. Discounting tires would follow which would also hurt their margin expansion plans. Goodyear is also in an ocean of debt, even after its asset sells the company is still leveraged.
The tire industry is brutal; there is always someone who is willing to sell and make cheaper tires. Goodyear faces serious competition from low cost manufactures in Asia and India that are constantly pushing supply into developing markets. One benefit that Goodyear currently has going for it is tariffs and regulations. Raw materials are another ongoing challenge; tires are closely tied to oil, chemicals, and steel. When input costs rise, margins get squeezed, and prices for their tires rise. There is no easy fix for this; it's a continuing battle that must be fought constantly. Demand is also sensitive, with many car owners driving less due to work-from-home policies and increased usage of Uber, Waymo, and other taxi services.
Goodyear also faces reputational risks that come with plant closures, layoffs, and environmental risks associated with tire manufacturing. Plant closures and layoffs in the manufacturing sector often lead to labor disputes, strikes, and even government backlash. Any prolonged dispute could directly impact output and costs. Tire manufacturing is a dirty, energy-intensive, and heavily regulated game; any violations could lead to major fines, lawsuits, and reputational damages. While exiting the chemical business reduced Goodyear's exposure to some risks, it didn’t get rid of them all.
All eyes are on Goodyear, and management has already realized a large portion of its targeted cost savings goal. Each earnings report that shows margin expansion will reinforce the credibility of their turnaround. Asset sales have been executed, but the real results will show when the company pays down debt and improves leverage ratios, interest exposure, and liquidity metrics. Goodyear’s product portfolio is also another potential catalyst, with continued growth in premium tires, and its commercial fleet business will lift margins.
Goodyear is in the middle of a serious battle. If the company can execute its ‘Goodyear Forward’ strategy successfully, it will have reached its goal of a better margin profile and lower leverage. This upside requires discipline, time, and a macro environment that doesn’t actively hurt demand and raw material prices. Although the downside is equally clear, if volume weakens, a macro slowdown could quickly erase progress. A continued failure to deliver margin improvement, evidence that savings are being offset by pricing erosion would force Goodyear to focus on survival over everything.
The bad boys over at Azar Capital Group think Goodyear is a solid company but they are at a crossroads. The company’s turnaround is real with progress being made, but we the lads believe that the risks out weigh the pros. The hardest part of the journey has yet to happen. While management has done a swell job delivering solid numbies, there is not yet enough margin safety for them to ring the bells. Those interested in this segment should keep an eye on Goodyears progress, and the general macro environments that will impact the companies bottom line. As the greats have said “Jobs not finished”.
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