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Risks
1. Competition: Michelin faces competition from existing tire manufacturers as well as other companies that are introducing new tires with advanced technological features. Additionally, the tire industry is highly fragmented with numerous small manufacturers entering the market.
2. Volatile Raw Materials Costs: Tire production requires a variety of raw materials such as rubber, steel, and oils. Due to their steep commodity costs, any rise in price can significantly affect Michelin’s profit margins.
3. Changing Consumer Preferences: The tire industry is largely driven by user trends. Any significant shift in consumer preferences can result in a sudden decline in sales which can adversely affect the brand.
4. Regulatory Environment: Tire makers have to adhere to a variety of government regulations related to product safety and environmental impact. Failure to comply with these can lead to financial losses or loss of reputation.