Healy: A Summer Gain in Tire Sellout

Dealers indicate that retail sellout trends were up in June, which marks an unexpected improvement compared to recent months. It was a small gain — of 1.7% — but it’s an improvement nonetheless from recent declines, including a 1.4% drop that was reported in May. Trends have been flat to slightly down compared to the second quarter of 2024.

Looking closer at volume on a regional basis, the Northeast and Midwest both saw mid-single digit volume growth, while other regions saw positive trends, too. The Mid-Atlantic region reported the weakest numbers, with a decline of 1.3% year-over-year. From our view, it appears the onset of summer drove a slight increase in consumer tire replacement.

Miles driven also took a turn into positive territory in June, with trends up by low single digits. That follows slightly negative numbers in May. But the early look at July shows the month got off to a slow start, with the first week down 1.5% against a soft comparison of 1.8% growth from July 2024. So even while demand may have firmed up a bit, we note that increases in tire pricing are also likely shifting the landscape in buyer behavior.

Dealer feedback does note that tire prices are starting to inch higher against tariffs, which are seen as the main cause of price increases. Dealers say those tariffs are further accelerating consumer trade downs to more affordable, lower-tier tire brands.

Raw materials on the decline

Even while dealers note increasing tire prices, the basket of raw materials needed to build a basic replacement tire dropped 3.3% during June, and increased 1.3% from May levels. We note this decline follows a 2.6% year-over-year average increase during the first quarter of 2025. The results so far add up to a 4.2% year-over-year decrease for the second quarter, and a sequential 3.9% drop from the first quarter.

Oil prices have shifted the most dramatically, falling 13.8% year-over-year in June. Natural rubber costs dropped 3.1%, while carbon black prices fell 6.4% year-over-year and tire fabric/cordage costs dipped 6.5%. Synthetic rubber was the one input to experience a price hike, with a 1.65% increase in June.

As we’ve noted previously, given the price acceleration of 2024 and the rapid deceleration in 2023, it’s not surprising to see raw material prices moderate on a year-over-year basis. We continue to see 2025 as a year of ongoing moderation, with some potential declines in the mix as the index laps year-over-year increases. The big picture points to a welcome shift toward stability for the industry.

A welcome new season

Dealer commentary suggests consumer demand for passenger and light truck replacement tires was up low single digits in June, compared to year-ago comparisons. Forty-four percent of our independent tire dealer contacts reported positive demand trends, an improvement from the 25% who saw increases in May. And while consumer deferment has generally persisted, June saw a modest uptick in tire replacements as favorable weather conditions encouraged some buyers to move forward rather than delay the purchase.

Of the consumers who were purchasing, we do note that buyers continued to largely prefer low-end, tier-three tires to tier-one and tier-two options.

Consistency in the mix

Looking at the best and worst performers in our replacement tire survey from a mix point, tier-three brands were once again the most in-demand at the retail level. This marks the 13^th month out of the last 14 where tier-three tire brands were the most sought-after in the consumer market.

Historically, tier-two tire brands have been the most in demand in our decade of surveys. But in June, tier-two tires were in second place and tier-one products were at the bottom of our rankings. Interestingly, a year ago, we were in the same position, with both May 2024 and June 2024 shoppers picking the same mix.

We continue to believe that the consumer in the market right now is looking for high-value tires at the lowest possible cost. Consumers wallets’ are stretched thin and tariffs are still weighing heavily on their minds and purchasing decisions.