Consumers are deferring tire purchases, Keegan reports
Some 3% of consumers are now deferring tire purchases when their tires' tread levels are at the point where new tires are recommended, reported Robert Keegan, chairman and CEO of Goodyear Tire & Rubber Co., during a conference call following the release of the company's third quarter financial report.
Studies at the company's tire stores indicate consumers in this recession or "near-recession" are putting off tire purchases longer than before. However, the purchase can be delayed but not ignored indefinately, Keegan said.
The high level of economic uncertainty will make for a challenging 2009, Keegan said, especially in the first half.
Despite the industry downturn, the company has record third quarter sales, said Keegan (see related item, "Goodyear sales up 2% in third quarter.") Goodyear is managing its production output and costs aggressively to maximize cash flow performance.
Consumers are driving less and using less gasoline, Keegan said. The pull-through market affect has been an increased interest in fuel-efficient tires and mid-tier tires, he said.
Even though the costs of oil and natural rubber are currently down 45%, look for high raw material costs to continue to have an affect on tire prices going into the fourth quarter of 2008 and the first quarter of 2009, said Keegan.
Goodyear will continue to work on price/mix improvements and continue its "relentless" release of new products to capitalize on market opportunities, according to Keegan. It will pursue technology to broaden the company's portfolio including expanding its Fuel Max technology from the commercial to the consumer level.