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September 04, 2014

Tire prices fell in August, ending the streak

Tire pricing in the aftermarket took a step backward in August. So says industry analyst Nick Mitchell.

"Our survey of more than 20,000 consumer replacement tire SKUs suggests that the broader pricing environment deteriorated slightly during August," says Mitchell, senior vice president of research for Northcoast Research Holdings LLC. "Indeed, following three straight months of firmer pricing, U.S. consumer replacement tire prices faded a bit in August, as the average price of a light vehicle tire in our sample fell 0.3% on a sequential basis."

In addition, the average price of the most popular passenger tires was down 0.2% ("recall the category increased 3.7% in July mainly driven by an increased availability of higher priced Hankook SKUs"), while the average price of the most popular light truck tires fell 0.6% ("the average price for a premium tire was down 0.1% and the cost of the average mid-tier tire decreased 0.7%").

"While we were not entirely surprised by the minor declines across each category considering several recent increases on specific brands/categories, we believe the modest declines in the Tier 1 and Tier 2 categories were due more to out-of-stocks on several high price-point tires rather than pressure from increased volume rebates in the Tier 3 channel."

The demand/supply relationship for Tier 1 and Tier 2 product remains "very healthy" in the replacement market, says Mitchell.

"Despite the minor price readjustments during August, we continue to believe that pricing trends are stabilizing at the manufacturing level across Tier 1 and Tier 2 brands."

In order to monitor pricing trends in the consumer replacement tire market, Northcoast Research developed the Northcoast Research Tire Pricing Index, which is a proprietary data set comprised of retail prices.

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