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February 28, 2014

Tire sales drop because winter is too severe

According to Industry analyst Nick Mitchell, tire demand in January was down compared to the previous January, despite plenty of snow.

The reason? Winter weather was too severe.

"Our channel work has indicated that the winter weather conditions were so extreme this year -- especially in the Midwest, Northeast, Mid-Atlantic and Southeast -- that many consumers were unable to make their way into the bays," says Mitchell, senior vice president of research for Northcoast Reseach Partners LLC.

"Indeed, in some regions, tire dealers and auto technicians were forced to close for a couple of days, which obviously served as a headwind to sales trends. Additionally, it is important to remember that the harsh weather at the onset of the winter-selling season likely pulled some replacement demand forward into November and December, which clearly weighed on sales trends in January."

There also was a decline in December for the same reason. However, despite the short-term setback, Mitchell says the three-month moving average of the Northcoast Research Tire Demand Index remained healthy in January, "which serves as a positive indicator for the strength of underlying demand trends in the replacement tire market."

The January index also revealed that for the first time since July 2013, opening price point tires took the top ranking over Tier One and, to a lesser extent, Tier Two tires.

Mitchell, based in Cleveland, Ohio, also is author of Modern Tire Dealer’s Your Marketplace column.

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