Healy: Sellout Trends Stay Soft

Recent dealer feedback suggests that retail sellout trends have remained softer than many hoped for, indicating underlying demand conditions have yet to improve to the extent many had hoped.

While retail activity showed modest improvement in March when looking at overall first quarter trends, April once again showed low single-digit declines in tire retail demand.

Additionally, despite expectations that more favorable weather conditions and the tax refund season would help support industry demand, that benefit has yet to meaningfully materialize as our tire dealer contacts believe consumers remain in a standstill mindset pushing off tire replacement.

Independent dealers highlighted average sellout declines of 1.1% in April 2026, which was in line with the 1% decrease in the first quarter. Looking more closely at volume for the month of April on a regional basis, the Southeast region was the lone region to see the strongest positive volumes. Other regions saw flat or negative volume trends, with the Midwest and Southwest regions seeing the weakest trends, down roughly 1% year-over-year.

Dealer commentary suggests that consumer demand for PLT replacement tires was down low-single digits year-over-year on a net basis compared to April 2025, with 33% of our independent tire dealer contacts seeing negative demand trends during April - down from 27% who observed declines in February. We also note that May 2026 had low single-digit negative comp. When compared to April 2025, May 2025 saw retail sell-out volumes that were modestly lower. If weather conditions are favorable in the months ahead, we would expect volumes to be roughly flat to modestly higher.

Consumer deferment and trade-down have been consistent themes over the past several months and we believe that we may see this soften as consumers begin to think about summer weather. Consumers continue to trade down to tier-two and tier-three tires, as tier-three took the top spot for the third consecutive month.

Raw material update

In assessing raw material prices, our base average-cost-to-build-a-tire index suggested inputs were up 24.3% for the month of April on a year-over-year basis. During the first quarter, on average, the cost to build a tire was up 2.4%, which compared to 4% decrease on average seen during the fourth quarter of 2025.

In analyzing specific input costs, natural rubber costs increased 31.2% on a year-over-year basis in April, as supplies thinned and tensions grew in the Middle East. Oil prices increased an average of 65% year-over-year and 11.8% month-over-month, driven by geopolitical pressures in the Middle East impacting supply across industry. Synthetic rubber costs were up 12.1% year-over-year, carbon black prices were down 4.4% year-over-year and tire fabric/cordage costs were up 16% year-over-year In holding current prices of raw materials constant, we estimate that the average cost to build a tire will increase 4.7% during the second quarter of 2026 and will be up 18% over the remainder of 2026. 

Where we go from here is a hard equation to solve for at this time.  We have some unique items like America 250, the World Cup and just the summer driving season ahead of us, which could all be catalyst to demand. However, the consumer remains somewhat under siege from fuel and broader inflation.  

Given this, we would not be surprised to see the consumer look for deals and potentially go for value-oriented fitments rather than premium name brands.

We note over the last 12 months, value-oriented brands appear to be share gainers at the margin, based on feedback. And we think this dynamic could continue throughout the summer.