We recently checked in with our dealer contacts and feedback suggests that retail sellout trends have deteriorated from the back-to-back positive summer months of July and June.  

Retail activity is up 0.6% year-over-year, followed by some sequential improvement, seeing consecutive months turn positive for the first time since October and November of 2025.  

Sellout trends have returned to the negative year-over-year levels we were seeing earlier in 2026, indicating a meaningful shift for gains beyond just  help from the weather is difficult to envision. When looking at retail activity on a year-to-date basis, we are seeing a slight decrease from 2025.

While retail replacement demand has softened following two consecutive months of modest gains, dealer sentiment has become slightly less optimistic, suggesting a more cautious outlook for tire replacement activity in the coming months.

As we transition into fall, many dealers we have surveyed believe the war in Iran and overall uncertainty is a direct headwind to tire purchases. 

Specifically, the dealers we talked with highlighted average sellout decreases of 1.3% in August, which strays from the trends we observed in July and June, where dealers noted 0.9% and 0.6% gains, respectively. In aggregate, we saw sellout activity that was down roughly 0.6% year to date.  

Dealer commentary suggests consumer demand for August PLT replacement tires was flat. This compares to 2025 reports of a 25.% net increase. As the summer season came to an end, we note that 60% of dealers are reporting flat to mid-single demand increases, with the remaining 40% noting mid-single-digit decreases. Consumer deferment and trade-down have remained consistent themes. 

During the past month, the Midwest region was the strongest region for retail sellout, posting roughly flat volumes, while the Southeast and Southwest regions saw the biggest declines of 3.1% and 1.3%, respectively. Other regions saw volume trends down low-single digits year-over-year.  

Some of our dealer contacts also have pointed to rising tire prices, which in certain cases have led consumers to view tires as a deferrable maintenance expense. 

Given persistent cost inflation and continued macro-economic uncertainty, we remain focused on several key indicators of automotive travel demand, which we believe remain closely correlated with tire usage and replacement activity. One area worth watching is the recent increase in gasoline prices, as higher fuel costs could influence miles driven if sustained.  

The national average price for regular gasoline increased roughly 24 cents month-over-month to $4.31 per gallon as of Sept. 14, adding on dollars at the pump for consumers, as geopolitical tensions and supply chain issues persist. Crude oil prices have also moved back into the upper $80-per-barrel range and will likely continue to be volatile surrounding the Strait of Hormuz tensions.  

Tier-three is tops

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 8th out of the last nine months where tier-three has been the most in-demand segment of the market.  

Historically, our 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-three brands last, month while tier-one was the least sought-after. 

Consumers currently in the market seem to be 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. 

Raw costs rise 

In assessing raw material prices, our base “average cost to build” a tire index suggests input costs are up 18.8% for the month of August on a year-over-year basis. When looking at the third quarter to date, we saw the average cost to build a tire up 16.8% year-over-year, which compares to a 20.7% year-over-year increase on average experienced during the second quarter of 2026.  

In analyzing specific input costs, natural rubber costs had a sizeable increase at roughly 36% on a year-over-year basis in August, as supply remained constrained and ongoing Middle East tensions supported higher commodity prices.  

Oil prices increased on average by 31.2% year-over-year and increased on average 6.5% month-over-moth, reflecting a reversal from the declines seen in July. August data shows synthetic rubber costs were up 9.4% year-over-year, carbon black prices are up 16.2% year-over-year and tire fabric and cord costs held constant. 

In holding current prices of raw materials constant, we estimate that the average cost to build a tire will increase 20.7% in the fourth quarter. We note these movements are on a spot basis and have the potential to shift and lag in terms of impacting tiremaker financials.