Healy: Tire Buyers Continue to Seek Balance

Our recent check-ins with dealers indicate that retail sellout trends were roughly down in the low single-digits on a year-over-year basis in January, similarly to the declines seen in December 2025. Independent dealers whom we surveyed highlighted average sellout declines of 1.1% in January, coming in slightly better than the 1.5% decrease in December and trends flat-to-slightly-up on average.

Dealer commentary suggests consumer demand for PLT replacement tires was down low-single digits year-over-year on a net basis compared to January 2025, with 56% of our independent dealer contacts seeing negative demand trends during January, up from 54% seeing declines in December.

Consumer deferment and trade-down have been consistent themes over the past several months and we believe that we will continue to see this soften as consumers start to think about winter weather.

Looking more closely at volume for the month of January on a regional basis, the Midwest was the lone region to see positive volumes, which were likely driven by the tougher weather conditions recently. Other regions saw flat or negative volume trends, with the Mid-Atlantic seeing the weakest trends, down roughly 6.3% year-over-year.

Sales trended higher throughout the summer and carried forward into the fall season, with noticeable gains in September, October and November 2025. In December, we saw those gains turn negative for the first time since May 2025 as the seasonal tailwind began to ease.

January followed a similar pattern, with sales remaining softer in line with December’s slowdown. Looking at February, we note that February had a flat-to-slightly-negative comp, with February 2025 seeing retail sellout volumes lower than January 2025.

Value-oriented

In terms of what is selling well at retail, we continue to believe it’s value-oriented products. We note that dealers continue to highlight that tier-two and tier-three products remain the most popular tires.

Will this trend change? Hard to know, but given that raw material costs remain lower, we think that the pricing environment of how manufacturers behave and approach share could be something to watch as we move through the remainder of the year. That said, recent uncertainty relating to tariffs and rates from certain regions is also a wildcard in predicting this behavior. All said, a lot is unknown relating to the pricing world and how this could shape the price points at retail as we move into mid-year.

While the demand environment seemed soft in January, we do not feel that all hope is lost. We feel it’s reasonable to think that some demand destruction has probably happened due to weather, with store closures and consumer deferment.

That said, we also think that rough winter weather could potentially provide a catalyst for spring/summer season replacement demand, as potholes and road conditions could spur replacement units. Given this, we think it’s reasonable to be hopeful and do not believe that the year will be lost due to a slow start at retail.

Return of tier-two?

Looking at the best and worst performers in our survey from a mix point of view, independent dealers report that tier-two brands are the most in-demand at the retail level. This marks the fourth out of the last five months where tier-two tires were the most in-demand. Historically, tier-two has been the most in-demand in our decade-plus history of the monthly survey.

In November 2025, we last saw tier-two be the most in-demand, as consumers continue to trade down from tier-one brands. We believe that the type of consumer in the market right now is looking for high-value tires at the lowest cost possible, as consumer budgets remain under pressure.

Traditionally, there is a high level of volatility in our survey, but we have largely seen tier-three as a top performer in the current environment as of late. But we expect tier-two to remain the top performer in the long-term as consumers balance price and quality.

Declining raws

The basket of raw materials to make a basic replacement tire fell 4% year-over-year during December 2025. We note this follows a 4.5% year-over-year average decrease during the third quarter of 2025. Holding raw material pricing constant, data would equate to a 3.9% decrease in input costs to build a tire and a 0.6% sequential increase from the third quarter of 2025.

In analyzing specific input costs, natural rubber costs fell 8.5% year-over-year in December as supplies increased. Oil prices fell an average of 18.1% year-over-year and 3.3% from month-to-month in December, driven by economic pressures potentially impacting consumption, as well as increased supply across the industry.

December data shows synthetic rubber costs were down 0.5% year-over-year, carbon black prices down 10.8% year-over-year and tire fabric/cordage costs up 22.5% on a year-over-year basis. As it relates to fourth quarter 2025 averages, rubber costs were down 0.5% versus up 10.9% during the same period in 2024, carbon black prices were down 9.3% versus down 3.2% and tire/cordage costs were up roughly 22% versus down 7% in the prior-year's last quarter.