Healy: Is This a Summertime Turnaround?

Our latest check-ins with tire dealers show retail sellout trends were up again in July, which gives us two consecutive months of unexpected improvement. Sellout growth was only 0.8%, compared to the 1.7% increase in June. The trends are flat to slightly down compared to the second quarter of 2024.

Regionally, tire dealers in the opposite corners — the Southeast and the Northwest — saw mid-single volume growth gains. Other regions saw positive volume trends, while the Southwest region was lagging with weak numbers, down 6.3% year-over-year.

From our view, it looks like the onset of summer inspired a slight increase in consumer tire replacement.

Miles driven followed a similar trend line and were up low single digits in July — 3.58% — following a positive June. That’s back-to-back months of gains following a slight decrease of 0.18% in May.

Raw material report

The cost of the collective inputs needed to build a basic replacement tire fell again in July, this time by 3.4%. This follows an average 4.3% year-over-year decrease from the second quarter of 2025. If raw materials were to hold a steady price now, it would equate to a 6.2% decrease in those collective costs in the third quarter and a 0.1% sequential decrease from the second quarter.

Oil prices are moving the most dramatically of any of the inputs — down 16.6% year-over-year in July given tensions in the Middle East. Natural rubber prices increased 1.7% compared to year-ago prices and synthetic rubber prices are up too, by 0.3% year-over-year. Carbon black and tire fabric/cordage prices are both down, 7.9% and 7.3%, respectively.

We continue to view 2025 as a year of moderating price movements, with some potential decreases as the index laps increases. Together, we think it is a welcome shift toward stability.

Consumer demand improves

Our dealer commentary indicates consumer demand for passenger and light truck replacement tiers was up low-single digits on a net basis in July, when compared to the same month a year ago. Almost half — 45% of independent dealers — saw positive trends in July, up slightly from the 44% who reported gains in June.

Shoppers are still deferring purchases, but July 2025 saw a modest uptick in tire replacements. And of those who were buying, they still largely preferred low end, tier-three tires over the tier-one and tier-two options.

Consistent choice

When looking at the mix of products in the market, independent tire dealers report that tier-three tire brands again are the most in demand at the retail counter. This marks the 14^th time out the last 15 months that tier-three tires have been the most in demand.

As you may recall, this doesn’t match the long-term trends of our survey, which stretches back more than a decade. Historically it’s been tier-two tire brands that have ranked the highest and been the most in demand at the retail level. In July, tier-one and tier-two brands tied for second place in our survey.

We believe the consumers who are in the market for replacement tires are looking for high value products at low prices. We know shoppers’ wallets are stretched thin and tariffs continue to influence sentiments and decisions.

We haven’t seen the traditional volatility in this mix recently like we normally do. Typically, tier-two tires are the top performers as they balance price and performance. But we’ve seen tier-three brands at the top of the charts for many months now and we’d expect that to remain the case in the near- to immediate term.

We expect tire price increases to continue to affect buyer behavior, too. Those prices have started to inch higher and independent tire dealers are attributing the increases to tariffs. Those price hikes are further accelerating consumer trade downs to more affordable, lower-tier tires.