We recently checked in with our tire dealer contacts and their feedback suggest that June retail sellout trends improved from the lows experienced through much of 2025 and during the first half of 2026, although demand remained softer than many had anticipated.  

April 2026 retail activity was down in the low single digits year-over-year, followed by some sequential improvement in May, though trends remained negative. June sellout saw a nice bounce back from April and May declines, indicating that conditions stabilized as the quarter ended.  

With the peak driving season and warmer weather now underway, many dealers believe consumers who have deferred tire purchases for an extended period should begin returning to the market.

While retail replacement demand has yet to meet expectations, contacts noted that vehicle service activity has strengthened, reinforcing their view that deferred tire replacement demand should gradually materialize over the coming months 

Independent dealers highlighted average sellout increases of 0.6% in June, which was marginally improved from the 0.7% decrease in May and 1.1% decrease in April. In aggregate, we saw sell out activity that was down roughly 0.4% in the second quarter.  

Looking more closely at volume for the month of June on a regional basis, the Southwest and Midwest were the strongest regions this month, posting increases of 3.8% and 3.3% respectively, while the Northwest region saw the biggest declines of mid-single digits. Other regions saw flat or negative volume. 

Given ongoing cost inflation and broader macroeconomic uncertainty, we continue to monitor several key indicators of automobile travel demand, which remains closely tied to tire usage and replacement activity. One area worth watching is the recent move in gasoline prices, as higher fuel costs could influence miles driven if sustained.  

The national average price for regular gasoline increased roughly five cents to $3.84 per gallon as of the second week in July, reversing the decline seen since late May amid renewed geopolitical tensions overseas. Crude oil prices have also moved back into the low $70-per-barrel range and could rise further if volatility surrounding the Strait of Hormuz persists.  

Meanwhile, recent data from the U.S. Energy Information Administration (EIA) showed gasoline demand declined to 8.84 million barrels per day from 9.12 million the prior week, while domestic gasoline inventories fell to 212.1 million barrels from 214.0 million.  

Though higher fuel prices could weigh on discretionary travel, the peak summer driving season remains an important catalyst for tire replacement demand and we believe consumers who have deferred replacing worn tires may still move forward with those purchases as vehicle usage increases over the coming months. 

A raw deal 

In assessing raw material prices, our base “average cost to build” a tire index suggested inputs up were 23.8% for the month of April, up 24.8% for the month of May on a year-over-year basis and up 18.6% for the month of June. During the second quarter of 2026, the average cost to build a tire was up 22.4% over prior-year levels which compared to a 2.5% increase on average during the first three months of 2026.  

In analyzing specific input costs, natural rubber costs increased 26% on a year-over-year basis in June as supplies thinned. Oil prices have increased an average of 22% on a year-over-year basis and fell 37.2% month-over-month in June, driven by geopolitical pressures in the Middle East impacting supply across industry.  

Data shows that synthetic rubber costs were down 18.7% year-over-year, carbon black prices were up 17.5% on a year-over-year basis and tire fabric/cord costs were up roughly 8% year-over-year. 

As it relates to the second quarter, average rubber costs were up roughly 31%, average carbon black prices were up 3.8% and average tire/cord costs were up 11%,. 

In holding current prices of raw materials constant, we estimate that the average cost to build a tire will increase 11.7% in the third quarter and will grow by 22.9% in the fourth quarter. 

Tier performance 

Looking to the best and worst performers in our survey from a mix point of view, independent dealers report that tier-three brands are the most in-demand at the retail level. This marks the sixth out of the last seven months where tier-three has been the most in-demand segment of the market.  

Historically, tier-two brands have been the most in-demand in our decade plus history of the monthly survey. Tier-two brands came in for the second most sought after tier this month, while tier-one remains the least sought after tier, mainly due to price.

Consumers currently in the market appear increasingly focused on value-oriented tires at the most affordable price points, as household budgets remain pressured and broader macroeconomic uncertainty continues to weigh on consumer sentiment.  

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. We expect tier-two to remain the top performer in the long term as consumers balance price and quality.