"In 2006, U.S. tire manufacturers operated their plants at only 73% of capacity (influenced in part by the Goodyear Tire & Rubber Co. strike). But in 2007, I see the operating rate jumping to 85%," says tire industry analyst Saul Ludwig in the March installment of the "Ludwig Report" in Modern Tire Dealer magazine.
"That means firmer pricing from the manufacturers."
Tire dealers should not be timid about pushing up their prices as well, he notes. "With so many 17- and 18-inch tires now standard on new cars, that, too, is a great opportunity to sell more top-of-the-line tires this year.
"Tire demand will soon pick up as gasoline is now around $2.25/gallon rather than the $3/gallon level that existed for much of last year."
Tire dealers should plan on having good business in 2007, Ludwig says.
Ludwig is a managing director with KeyBanc Capital Markets, a division of McDonald Investments Inc. based in Cleveland, Ohio. Look for the full "Ludwig Report" in the March issue of Modern Tire Dealer magazine.
