Healy: Tire Sellout Makes More Gains

Retail sellout trends were up again in August and the results were firmer than what independent tire dealers reported in July.

Our check-ins with tire dealers showed average sellout increases of 1.6% in August, compared to 0.8% in July. The monthly numbers are also better than the second-quarter average, which trended flat to slightly down.

No Region Left Behind

In a twist from the norm, every region we surveyed saw flat or positive volume trends. Tire dealers in the Southeast reported the strongest numbers, up a moderate 3.1%. When thinking of the summer selling season, we’d label sellout as firm, with positive sellout percentages in June, July and August.

After three positive months, September offers a 1.1% comp from a year ago. The turn of seasons typically brings the question to mind of whether consumers need to replace tires before winter. From our view, it appears the summer drove slight increases in consumer tire replacement.

A Miles Driven Mystery

We know miles driven correlates to tire usage and wear. But looking at the miles driven over the last month, trends were down low-single digits in August and that follows a low, single-digit decline for all of the second quarter. Our Miles Driven Momentum Index registered a 1.1% year-over-year drop in August, and that follows a 3.6% decrease in July.

We continue to see miles driven trends that will remain ahead of pre-pandemic trends and we expect to continue to see flat to slightly elevated trends against healthy comparisons from a year ago.

The costs associated with raw materials also dropped in August — falling a combined 7.1% for the month. This follows an average decline of 4.3% in the second quarter. If pricing of the components needed to build a tire would hold steady, it would equate to a 6.1% decrease in costs year-over-year in the third quarter. It would also amount to a 1.8% sequential drop from second-quarter prices.

Natural rubber costs and oil prices both fell by double digits in August — 16.9% and 15.5%, respectively. (We note our index includes stable prices for tire fabric/cordage due to a lag in reporting.)

Steady Replacement Demand

Dealer commentary suggests consumer demand for passenger and light truck replacement tires was positive on a net basis, when compared to August 2024. Not quite half of our independent tire dealer contacts — 44% — saw positive demand trends in August, which is on par sequentially from the positive demand trends in July.

Consumer deferment and trade down remain consistent themes, as they have all summer. Mild weather and low precipitation levels allowed consumers to either further postpone their tire purchases, or opt for lower-tiered options.

We saw healthy demand for low-cost, tier three brands, but dealers did point to increasing trends for premium tier-one tire brands in both July and August. Demand for tier-two brands bottomed out during the month of August, which hasn’t been the case since April.

Mixing Up the Mix

Our recent survey of tire dealers indicates tier-three and tier-one brands were most in demand from consumers in August. This marks the seventh month in a row that tier-three tires have been the most in-demand segment.

Tier-one brands took hold of second place in our demand rankings for back-to-back months — July and August — and that hasn’t happened since April. Tier-one moved up into second place after being at the bottom of the chart in June.

We believe this is all a sign that consumers are still balancing the questions of quality and price. Volatility in these rankings is normal and for the decade-plus of our surveys, tier-two tire brands were the historic leader of the pack. Usually, tier-two products are where consumers find that sweet spot balance of cost and performance.