Our recent discussions with tire dealers suggest sellout trends were negative year-over-year in April. It’s the third straight month showing a decline.
Sellout volumes were down 0.9% in April, better than the 3.6% decline in March. And while the declines continued, we note that April was up against a strong 5.1% comparison for April 2024.
Looking at the regional level, we saw stronger results out of the Northeast and moderate strength in the Midwest, while the Southwest and Northwest saw declines. We believe results for the month were impacted by uncertainty related to tariffs, along with a continued environment of deferring unnecessary maintenance and tire replacement.
Price hikes begin
Looking ahead we recall recent commentary from Goodyear Tire & Rubber Co., as well as responses from dealers that indicated price increases had hit the market. Two-thirds of dealers reported seeing price increases in the month of April. We would expect to see the full impact of increases in our May survey results. Those numbers will face a moderately soft comparison of a 1.3% decline from a year ago.
Given volatile industry conditions due to macroeconomic factors, miles driven is another data point that can show the health of the overall market. Those trends over the last month were flat to slightly negative in April. The trends were barely positive in March. For April our Miles Driven Momentum registered a 0.8% year-over-year decrease in April, following a 0.2% increase in March. Early May was off to a strong start, with the first week up 4%.
Raw materials continue to drop
The cost of the raw materials needed to build a basic replacement tire fell 7.4% year-over-year in April — and the drop from the previous month was 5.4%. If current prices were held at a constant, we’d expect a 7.5% year-over-year decrease during the second quarter of 2025. That follows a 1.6% year-over-year increase in the first quarter.
Looking at the specific inputs to build a tire, natural rubber costs dropped in April by 1.8%. It was the first recorded drop in natural rubber costs since August 2023.
Oil prices fell the most dramatically — by 25% compared to a year ago — while fabric/cordage was down 5%, carbon black fell 3.9% and synthetic rubber was down 0.3% compared to year-ago prices.
We view this year ahead as one with moderating price movements, as well as potential declines as the index laps some year-over-year increases. We view all of this as a potentially welcome shift toward stability.
Demand is soft
Dealers report that consumer demand for passenger and light truck tires was down slightly in April from year-ago figures, in the range of low-single digits. Twenty percent of our independent tire dealer contacts reported negative demand trends for the month — an improvement from March where 100% of tire dealers reported a drop in consumer demand.
The worry about tariffs and an overall poor macroeconomic environment were the causes dealers pointed to for that slower traffic. We also note that April was up against a tough comparison from April 2024, when 23% of dealers reported positive retail sellout.
One constant that remains — dealers say consumers are still opting for tier-three tires rather than tier-one and tier-two options.
For the 11th time in 12 months, dealers said tier-three tires were the most in-demand in the market. Historically our surveys have shown tier-two tires to rank highest, but that hasn’t been the case over the last year.
Tier-one tires did make a slight comeback in April, marking the second straight month they were in second place in our demand ranking. Tier-two tires fell into third place for the month.
We believe that the type of consumer in the market right now is looking for high-value tires at the lowest cost possible, as consumers’ wallets are stretched thin and tariffs weigh heavily on sentiments.
With that said, tier-one performing well does not surprise us, as higher-end consumers are still part of the replacement market, and they value high performance over a low pricepoint.
Traditionally it’s not uncommon to see volatility in our survey, and we would expect to see tier-three tires rank as a top performer in the current environment. But we expect tier-two brands to remain the top performer in the long term as consumers balance price and quality.
