Healy: What's Impacting Retail Sellout

Recent feedback from independent tire dealers we’ve surveyed indicates that March retail sellout failed to turn green.

Dealer feedback suggests that sell-through trends remained weaker compared to a year ago, but underlying demand conditions have yet to show the level of improvement desired by most dealers.

While we have been waiting for Mother Nature to provide a boost to the industry from a demand perspective, it has yet to be seen. 

Independent dealers highlighted average sellout declines of 0.3% in March 2026, which was firmer on a sequential basis relative to the 1.7% decrease in February. Looking at the first quarter of 2026, total sellout figures declined by an average of approximately 1%.

Looking more closely at volume for the month of March on a regional basis, the Midwest region was the lone region to see the strongest positive volumes.

Other regions saw flat or negative volume trends, with the Southeast and Southwest regions seeing the weakest trends, down roughly 1.3% year over year. First quarter 2026 sellout was down 1%, a decline from the fourth quarter of 2025, which saw sellout increase roughly 0.5%.

Regarding where we go from here from a demand standpoint, we feel it is contingent on driving activity and consumer spending.  On a year-to-date basis through February 2026, vehicle miles traveled were up approximately 1.6% compared to a year-prior at 497.8 billion miles traveled, according to the Federal Highway Administration.

That said, given volatile industry conditions driven by cost inflation and broader macroeconomic factors, we continue to monitor several data points to assess the health of automobile travel demand, which closely correlates with tire usage and wear. 

Gas prices have been moving higher across the country, as the American Automobile Association states national averages have surpassed $4 per gallon for the first time since 2022. As seasonal demand for gasoline begins to pick up, consumers are starting to feel the impact of higher prices at the pump.  

Trade-down continues 

Tire dealer commentary suggests consumer demand for PLT replacement tires was down low-single digits on a net basis compared to March 2025, with 27% of independent dealer contacts seeing negative demand trends during March, down from 56% seeing declines in February 2026. 

Consumer deferment and trade-down have been consistent themes over the past several months and believe that we may see it soften as consumers begin to think about Spring weather. Consumers continue to trade down to tier-two and tier-three tires, but February saw tier-one tires take the second spot in this month’s survey for the second straight month. 

Raws hold steady 

Crude oil prices also remain an important driver of fuel costs, with the price of a barrel of oil surpassing the $100 mark multiple times. A recent article from the Energy Information Administration stated that total domestic gasoline supply decreased from 241.4 million barrels to 240.9 million.

In assessing raw material prices, our base average cost to build a tire index suggested inputs were up 1.5% for the month of February and up 8.6% for the month of March on a year-over-year basis. During the first quarter of 2026, the cost to build a tire was up 2.2%, on average, compared to a 4% decrease, on average, during the fourth quarter of 2025.

In analyzing specific input costs, natural rubber costs increased 2.6% year-over-year in March 2026, as supplies thinned. Oil prices increased an average of 38% on a year-over-year basis and 44% month-over-month in March, driven by geopolitical pressures in the Middle East impacting supply across industry. March data shows synthetic rubber costs were down 2.3% on a year-over-year basis, carbon black prices were down 10.2% year-over-year and tire fabric/cordage costs climbed 19% on a year-over-year basis. As it relates to the first quarter, average rubber costs were down 2.6%, carbon black prices were down 7.1%, and tire/cordage costs were up 19.3%.  

Cautious optimism 

All things considered, we would describe the outlook for the industry as being in a mixed position. In one area, we see a consumer who has likely done OK from a tax refund standpoint.

We note IRS data suggests that as of early-April, the average refund a consumer pocketed this year is up approximately 11%. So on one hand, we see the consumer in a position to invest into their vehicle. 

That said, rising fuel prices could keep consumers off the road a bit and perhaps put those dollars in other areas of their monthly budget. All said, we still view tire replacement activity as a must and a when - and not an if - decision.