As we do monthly, we recently checked in with tire dealers to assess the industry’s vital signs. Their feedback suggests that retail sellout trends have improved from the lows experienced through much of 2025 and the first half of 2026.  We note month to month trends have been a bit more volatile, but the recent trend appears more favorable with back-to-back months of gain at the point of sale .

As we near the end of the summer driving season, the dealers we contacted expect consumers who have deferred tire purchases for an extended period to begin returning to the market. While retail replacement demand has yet to meet expectations, our contacts noted that vehicle service activity has strengthened further, reinforcing their view that deferred tire replacement demand should gradually materialize over the coming months 

Independent dealers highlighted average sellout increases of 0.9% in July 2026, which was marginally improved from the 0.6% increase in June and 0.7% decrease in May. In aggregate, we saw sellout activity that was down roughly 0.5%, year to date. The Southeast and Northwest were the strongest regions this month, posting increases of 7.5% and 6.3% respectively, while the Midwest region saw the biggest declines in low-single digits. Other regions saw flat or slightly positive volume trends.  

Looking at last month, we note that retail demand posted a sellout activity that was up 1.6% from last year. While this creates a more challenging comparison, the potential for more stabilized oil prices amid the possibility of easing tensions in the Middle East and pushed-off tire replacement means dealers could begin to see demand pick back up. 

Consumer deferment and trade-down have been consistent themes and recent improvement in retail sellout suggests some of the deferred replacement demand may beginning to materialize. Consumers continue to trade down to tier-two and tier-three tires, as tier-two saw the top spot for the sixth consecutive month. 

Dealers report that tier-three brands are the most in-demand at the retail level. This marks the 7th out of the last eight 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 the decade-plus history of the monthly survey. Tier-one brands came in second in terms of demand after tier-three this month, while tier-two brands were the least sought-after tires mainly by a slim margin.  

Consumers 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 run, as consumers balance price and quality. 

A look at oil 

Given ongoing cost inflation and broader macroeconomic uncertainty, we continue to monitor several key indicators of automobile travel demand, which remain 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 20 cents on a month-over-month basis to $4.07 per gallon as of August 13, reversing the decline seen since late-June and early-July amid renewed geopolitical tensions overseas.  

Crude oil prices have moved back into the low $80-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 showed that crude imports averaged 7.3 million barrels as of press time, an increase of 1.14 million barrels per day from the previous week.  Domestic crude inventories increased by 17.4 million barrels on a week-over-week basis and at 424.4 million barrels, inventories are roughly 2% lower than the five-year average for this time of the year. Although higher fuel prices could weigh on consumers’ discretionary travel, the back-to-school season remains a solid catalyst for tire replacement demand, as increased commuting supports purchases heading into the fall. 

Raw material inputs 

In assessing raw material prices, our base average cost to build a tire index suggested inputs were up 14.5% for the month of July versus the same month last year. On average, the cost to build a tire during the second quarter was up 20.7% year-over-year, compared to the 2.1% increase on average during the first three months of 2026. 

In analyzing specific input costs, natural rubber costs increased roughly 27% on a year-over-year basis in July, as supplies thinned and tensions continued in the Middle East. Oil prices increased an average by 6.2% year-over-year, but declined 13.1% in July. Our research shows that synthetic rubber costs were up 11% year-over-year, In holding current prices of raw materials constant, we estimate that the average cost to build a tire will increase 15% during the third quarter.