Tire dealers reported strong November sales, and attributed the good month to a pair of unrelated factors: the end of the hysteria of the election cycle, and the return of winter weather around Thanksgiving.
The latest Tire Demand Index by Industry Analyst and Modern Tire Dealer Columnist Nick Mitchell shows a 5.6 point uptick since October.
“Interestingly, most respondents suggested that trends accelerated throughout the month as concerns over the election results moderated and weather conditions turned more favorable. In fact, many contacts indicated that the days surrounding Thanksgiving, in which harsh winter weather gripped the majority of key cold weather markets, were their strongest days of the month.
“The normalized winter weather trends have continued into December, which bodes well for additional pent-up demand to be released.”
Much of that pent-up demand lingers from the lack of a harsh 2015-2016 winter, and it affected demand trends through the first half of 2016, Mitchell says. “Dealers across the Great Lakes, Northeast and Mid-Atlantic regions believe this factor has created pent-up demand, which should be released with the help of Old Man Winter.”
“We continue to believe that the underlying volume trends should remain solid in December and into 2017, as the key drivers of intermediate-term replacement demand remain favorable, including a growing car parc and increasing miles driven trends. Furthermore, we expect trends will benefit from low gasoline prices, as well as respectable employment and wage growth.”
The return of winter weather in late November also helped dealers sell more Tier 1 tires, Mitchell says.
“According to the dealers, the return of normal winter weather in the final week of the month acted as a stark reminder for consumers of the importance of owning quality winter tires regardless of their price tag relative to lower quality alternatives. Therefore, we are optimistic that the persistence of normal winter weather throughout the end of November and throughout the first half of December should continue to lift mix and volume trends into 2017.”