We recently checked in with the tire dealer community to gauge the retail market. When looking at retail activity year-to-date, we are seeing a decline from 2025, with frustration growing among dealers.

While replacement demand has had a tough year so far, we see the winter season and changing weather as a possible catalyst on the negative or positive side of things. With severe weather comes more urgency among consumers. 

However, an underwhelming winter may bring about similar trends to what we have been seeing in 2026 so far. As we approach winter, dealers noted the elevated fuel prices, alongside the wars in the Middle East, as a pain point among the industry.

Given persistent cost inflation and continued macroeconomic uncertainty, we remain focused on several key indicators of automotive travel demand, which we believe remain closely correlated with tire usage and replacement activity. 

The recent increase in gasoline prices is worth watching, as higher fuel costs could influence miles driven, if sustained. 

According to AAA, the national average price for regular gasoline increased roughly 21 cents month-over-month to $4.36 per gallon as of Oct. 8, adding dollars at the pump for consumers as geopolitical tensions and supply chain issues persist.

Crude oil prices have also moved back into the lower $90-per-barrel range and will likely continue to be volatile surrounding the Strait of Hormuz/Middle East tensions. 

Meanwhile, recent data from the U.S. Energy Information Administration showed crude imports averaged 6.8 million barrels per day, an increase of 1.1 million barrels per day, with the four-week average up 4.3% from levels in 2025. 

Commercial crude inventories, excluding the Strategic Petroleum Reserve, came in at 424.1 million barrels. We note inventories are roughly 1% higher than the five-year average for this time of year. 

Against a backdrop of high fuel prices, elevated costs and an uncertain economic environment, we see few near-term drivers that could meaningfully improve conditions.

In assessing raw material prices, our base “average cost to build” a tire index reflects numbers from August due to the September data not being released as of press time. 

However, certain inputs have been updated and our index suggests input costs were up 18.8% for the month of August, on a year-over-year basis, and roughly 25% in September. 

Analyzing specific input costs, natural rubber costs, which have been updated, had a sizeable increase of roughly 43% year-over-year in September as supply remained constrained and ongoing Middle East tensions led to continued elevation in commodity prices. 

Oil prices in September increased on average by 60% year-over-year and increased on average 20.6% month-over-month, reflecting a sharp incline from the prices seen in August and a continuing reversal from the declines seen in July. 

Data compiled during the month of August shows synthetic rubber costs were up 9.4% year-over-year.

Data also shows that carbon black prices are up 16.2% year-over-year and tire fabric/cordage costs are holding constant due to lagging data, down 0.9% year-over-year. 

Holding current prices of raw materials constant, we estimate that the average cost to build a tire would increase 19.8% in the third quarter and up 27.8% 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.

Product mix

Our latest survey reveals that tier-three brands have enjoyed more growth than tier-one and tier-two brands since my last column. This is a reversion of what we have recently witnessed, but it is also not surprising.

Consumers will only buy tires if they absolutely need them. And when they do, we believe they will opt for value brands in order to conserve money.