Domestic tire shipments

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A tire EXPLOSION!

Pent-up demand coupled with a deliberate reduction in supply created the perfect storm

Domestic tire shipments were down dramatically in 2009 as the eff ects of the recession lingered and lack of demand prompted tire manufacturers to ramp down production and jett ison inventory.

According to Rubber Manufacturers Association (RMA) and MTD data, U.S. consumer tire plants ran at close to 65% capacity in 2009.

In 2010, however, those same tire producers were caught off -guard when pent-up demand resulted in increased spending on tires (see Chart 2) and vehicles.

Th ey ramped up production — some even announced investments in capacity — and increased imports. But they couldn’t keep up, which resulted in backorder problems.

As for retail tire dealers, 47.3% reported their unit sales were up by an average of 11% through the fi rst nine months of 2010, according to MTD’s exclusive “State-of-the-Industry Survey.”

When asked to predict their unit sales for the year, the respondents were more optimistic: 52.3% said they would be up for the year.

Wholesale distributors fared even better: 68.3% said their unit sales were up by an average of 13%. And 71.8% believed their sales would be up at year’s end.

In December, the RMA predicted passenger, light truck and truck tire shipments in the U.S. would collectively be up more than 9% in 2010 vs. 2009. Leading the way were OE passenger tire shipments, which the RMA estimated would be up 44%, a year-over-year gain of 11 million tires.

Th e anticipated jump in shipments is the result of an increase in domestic vehicle production, plus consumers taking advantage of incentive programs and low interest rates.

Overall replacement tire shipments also experienced signifi cant growth in 2010 “as a result of increases in vehicle miles traveled, stable energy prices, longer vehicle life and overall positive domestic economic conditions for both the consumer and commercial sectors,” according to the RMA.

The 5% increase in replacement passenger tire units was spurred by non-Chinese imports.

“Th e imposition of a three-year Chinese import tariff in September 2009 decreased Chinese imports, but eff ectively increased imports from other Pacifi c Rim countries such that nonRMA imports are forecast to increase nearly 6% in 2010.” (Th e RMA will release its preliminary numbers, which sometimes vary dramatically from its forecast, in February.)

Th e RMA’s Tire Market Analysis Committ ee sees some improvements in the replacement and OE categories in 2011, although the increases will vary.

Th e growth in replacement passenger tire shipments “will be tempered, as continued economic uncertainties for the consumer will result in a less than 2% increase, or nearly 3 million units.” Replacement light truck tire shipments may be fl at “in keeping with commercial economic forecasts.”

Aft er a 19.2% increase in 2009 vs. 2008, replacement truck tire shipments, which include wide-base and heavy truck tires, will increase another 3.8% in 2011.

OE passenger tire shipments will be up this year because of a projected 6% increase in vehicle sales. Litt le or no growth is anticipated for OE light truck tire shipments because “no increase is anticipated in domestic vehicle production” in this segment.

Th e OE truck tire sector is expected to continue to rebound in 2011, perhaps by 750,000 units. ■

Chart 2 UNITS SHIPPED: 2001-2010 (in millions) PASSENGER TIRES Y ear Replacement OE 2010 198.7 34.6 2009 184.0 25.0 2008 195.0 39.0 2007 205.0 48.0 2006 199.1 49.0 2005 205.8 53.0 2004 199.4 53.0 2003 194.0 54.6 2002 190.5 57.5 2001 192.0 54.0 LIGHT TRUCK TIRES 2010 27.6 3.4 2009 26.0 2.6 2008 30.0 3.0 2007 35.7 4.9 2006 35.0 5.2 2005 36.6 7.0 2004 36.5 7.9 2003 34.5 8.1 2002 34.0 8.4 2001 32.0 6.3 MEDIUM/HEAVY TRUCK TIRES 2010 15.2 2.7 2009 12.7 2.1 2008 15.5 4.3 2007 16.7 5.0 2006 17.6 7.1 2005 17.8 6.6 2004 16.5 5.8 2003 15.8 4.3 2002 15.0 3.9 2001 13.8 3.6