Light truck tires: Building market security
Americans are on the move, and that’s good news for the commercial light truck tire industry. According to the U.S. Census Bureau, the number of people moving for a new job or transfer totaled 3.5 million in 2012, up from 2.8 million in 2011. People who move need homes to live in, and the housing market has been recovering as a result.
According to the National Association of Home Builders, new homes sold in 2008 totaled 482,000, dropping to 306,000 by 2011. That decrease affected commercial light truck fleets, and tire makers saw a reduction in volumes.
But in 2012 there were 368,000 new homes sold, and that number is expected to rise in 2013. As it does, tire makers keep a watchful eye on the entire trucking industry.
“Housing starts reached their highest rate in March,” reports Paul Williams, executive vice president for truck tires, the Americas at Continental Tire the Americas LLC.
“Over 11,000 jobs were added in April in the trucking industry, and truck orders are still around the 20,000 range. I expect to recover some of the lost volume in the first quarter, but overall, no growth in 2013.”
More people are finding it easier to move because it’s also easier to sell their homes. The National Association of Realtors says because there are relatively few houses on the market, double-digit gains in housing prices are possible in 2013. And that, in turn, is spurring construction — and the commercial tire market.
“We are confident that the economy will continue its recovery,” says Norberto Flores, brand manager, Goodyear Commercial Tire Systems. “Among the signs we see are positive trends in the Dow Jones and S&P 500 over the last several months, the reduction in unemployment and an increase in housing starts.”
According to the Rubber Manufacturers Association (RMA), in 2012 total light truck replacement tire units shipped totaled 28.1 million units, a decrease of approximately 500,000 units, or 1.9%. A nearly 1% growth is forecast for 2013 given the slowly improving economy and signs of improvement in the housing market.
The RMA says the absence of overall growth can be attributed to “a cautious consumer as well as economic uncertainties in both the commercial and consumer sectors of the replacement market.”
While an increase in building is good news, many tire makers remain cautious.
“The market is providing mixed signals,” says Continental’s Williams. “While replacement tire shipments are down about 4% year-to-date, compared to the same period in 2012, we have seen a slight recovery in the past two months. Other trucking indicators show positive performance.”
The RMA says that declining unemployment and a rebound in housing will bode well for an increase in commercial light truck tire demand in 2013.
“Commercial light truck tire sales have been steady in 2013. Interest has been growing in smaller, more maneuverable and more fuel-efficient vehicles,” says Rod Hutchinson, product manager for the U.S. and Canada Consumer Tire Sales Division at Bridgestone Americas Tire Operations.
“Fleets are looking for more information about the fuel efficiency of tires, but are still concerned about durability, tread wear and cost. Bridgestone offers a consumer regional fleet program that is designed to maximize value for fleets by tailoring to their specific needs.”
As manufacturers cater to those needs, the commercial light truck segment gains stability.
“The commercial segment is the second largest segment in the light truck category, making up 22.5% of all light truck tires, and has remained stable over the past several years,” says Scott Jamieson, director of product management at Cooper Tire & Rubber Co.
“Typically this segment is broken into two parts: the durable on- and off-road traction tire and the reliable long-lasting highway tire. Consumers in this segment are looking for tires that meet a very specific need or requirement based on their vehicle use. They traditionally make their living with their vehicle or that vehicle is required to get them to and from their job, and they need a tire that can perform to their expectations and requirements, and also one they can trust.”
Another factor that affects the market is weather.
“The commercial LT market has been sluggish as a result of a long winter, however we are seeing more purchase activity,” says Jim Mayfield, president of Del-Nat Tire Corp. “The big opportunity in North America seems to be driven by resource extraction. We are seeing heavy activity from our customers who operate in the domestic oil industry.”
“Industry shipments for the commercial light truck tire market are slightly down year-to-date in 2013 when compared to the same period (January to April) in 2012,” says Goodyear’s Flores. “We believe the rest of the year will be fairly flat at the OE level. The replacement market could feel the impact of sequestration, mainly in government accounts.”
Other manufacturers see reasons to be optimistic.
“Year-to-date growth has been moderately strong, outpacing the growth of the overall market,” says Karl Koenigstein, technical marketing, Michelin North America Inc.
“The commercial light truck market is still strong, and market demand is still outpacing supply capability,” says Dean Barnhart, sales manager at Wholesale Tire Distributors, the exclusive distributor of the Saffiro brand.
“The Commercio VX1 caters to a niche market that we have just entered with select sizes,” says Brad Feeney, commercial products program manager at TBC Wholesale Group, distributors of the Sailun brand. “Every month this category is growing for us.” ■