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After a ‘Solid, But Not Exceptional’ 2015, Tire Dealers Are Upbeat About 2016

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Industry analyst and Modern Tire Dealer columnist Nick Mitchell says the late start to winter in the northeast corner of the country tempered volumes at the end of 2015, but tire dealers are still calling it a good year.

“Dealers are saying business is solid, but not exceptional. Volume growth moderated in November and December due to unseasonably warm temperatures in the Great Lakes, Mid-Atlantic and Northeast,” says Mitchell, senior vice president and research analyst at Northcoast Research Holdings LLC. “Sentiment among the dealers is definitely upbeat, albeit not quite as optimistic as the tone at this time last year, as the participants are more divided over the likely strength in 2016.

“Specifically, one cohort is expressing optimism that an expanding car parc, including an uptick in the number of cars entering the first replacement cycle, low gasoline prices, and an improving economy will buoy volumes next year. This group expects to see a 2% to 3% increase in sell-out volumes, with some benefit accruing from the release of pent-up demand.

“Meanwhile, the rest of the dealers that we speak with anticipate that sell-out trends will track in the range of flat to up 2%, as they expect less of a windfall from deferred tire purchases arriving in 2016, as well as a more modest tailwind from lower gas prices, especially amidst growing signs that consumers in markets dependent on the oil and gas industry are starting to retrench in the wake of ongoing weakness in the price of oil.

“Tying these views together, we think it is prudent to project that domestic volumes will increase in the low-single digit range next year, which is consistent with the assumptions in our models.”

Mitchell shares his insights in the upcoming January edition of Modern Tire Dealer, which also includes the 50th annual Facts Issue.

MTD also asked Mitchell to use five words to describe the tire industry in 2015, as well as 2016. (Mitchell's five words for 2015: perpetually falling raw material prices.

What are your five words for either or both years? Share them in a comment below, or share them with MTD on Twitter (@MTDMagazine) using the hashtag #MTD5words.

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