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Expect business to improve, says Ludwig

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"For the past nine months (July 2008 through March 2009), consumer tire shipments from manufacturers to dealers/distributors have tumbled by 12%, yet my surveys of tire dealers suggest that actual retail sales (in units) declined by about 5%,"says Saul Ludwig in the May installment of the "Ludwig Report" in Modern Tire Dealer magazine..

"That means that dealer inventories have probably been reduced to a level commensurate with the current level of business," he says.

"But in the wake of excess manufacturing capacity and lower raw material costs, tire prices are slipping and marketing specials are increasing.

"Don’t be too quick to rebuild inventories — buy only what you need and recall my comment last month about SKU proliferation. That being said, I do expect that you will see your business begin to improve year-to-year in the coming months."

 Ludwig is a managing director with KeyBanc Capital Markets Inc., based in Cleveland, Ohio. Look for the full "Ludwig Report" in the latest issue of Modern Tire Dealer magazine.

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