“We’re seeing some amount of healthy, legitimate demand out there," Darren Thomas, senior vice president of sales and marketing for Sumitomo Rubber North America (SRNA), said during the company's latest virtual dealer forum.
That’s good news for independent tire dealers.
Thomas, SRNA Vice President of Strategic Planning Rick Brennan and other SRNA executives shared key statistics during the online event, which took place on May 19.
Brennan said that while consumer mileage is still down (29%), “we expect it to be 80% of normal mileage by the end of May.”
All states have experienced consumer vehicle mileage increases of at least 10%, he reported, and more than half are seeing increases of 20% and up.
Snapshot by segment
The overall U.S. replacement tire segment during the month of April was down 56%. The corresponding light truck tire segment was down 45%, while the TBR segment was down 15%.
Those percentages are shrinking – at least on the consumer side. According to Brennan, through mid-May, the U.S. replacement tire segment is down 34%, while the light truck replacement segment is down 30%. TBR, as a segment, is the current exception. As of now, it's down 19%, 4% more than it was in April.
In Canada, during the month of April, the replacement passenger tire segment was down 59.5%, the replacement light truck tire segment was down 67.9% and the TBR segment fell 31%. (Early-to mid-May figures for Canada have not yet been released.)
“Overall, things are starting to look up,” said Brennan. Stimulus payments have had a “real impact.”
Consumer spending methods are changing, as well, he noted. Fewer consumers are making credit purchases. More are using cash and debit cards.
Brennan said that SRNA is not observing “a lot of price fluctuations in the marketplace. We do see some size-specific changes but overall, for most of the brands, we don’t see a lot of movement, either on the retail or wholesale side.”
The dealer perspective
Matt Leeper, director of sales for SRNA’s consumer tire business, said dealers are telling the company that “business is improving without any major deviations,” which corresponds with the “improved sales across-the-board” that SRNA is experiencing.
“Two weeks ago, dealer feedback was that they were 20% down. Right now, we’re looking at better-than-normal sell-out. Almost every SRNA dealer has been active with placing or accepting shipments.”
Orders for winter tires, in particular, have increased.
“We’re seeing improved dealer orders and improved dealer forecasting,” Leeper reported.
OE remains in flux
There is more uncertainty in the original equipment channel. “Most U.S. (vehicle manufacturing plants) are coming back online,” said David Coletti, SRNA’s vice president of OE.
But there’s still a great deal of unpredictability when it comes to ramp-up and volume, he added. “March, April and May forecasts have all seen changes. The latest forecast for 2020 (new vehicle production) sees 12.3 million vehicles” being produced by the end of the year.
“Considering the current unemployment numbers, OEMs may need to make additional adjustments” to align supply with demand.
Keep on truckin’
Bob Klimm, SRNA’s director of TBR sales, discussed the manufacturing sector’s impact on truck tire demand. As a whole, manufacturing “contracted significantly” in April, he said. “And we’re seeing the same effect in May.”
Overall industrial production was down 20.2% in April, the largest monthly decline since January 1984, he reported. This is having an impact on freight levels and the rate of moving goods, the latter of which has fallen to its lowest level since 2009.
However, there is reason for optimism going forward, said Klimm. “It looks like regional and long-haul trucking bottomed out in April and we’re starting to see a climb-up in May. Local delivery is still in a strong position. It appears that the worst is behind us.”
Click here to read an exclusive MTD interview with SRNA CEO and President Richard Smallwood, published earlier this week.