John Healy (on right) met with Saul Ludwig at the Specialty Equipment Market Association (SEMA) Show in Las Vegas last November. Ludwig wrote MTD’s Your Marketplace column for almost 40 years before retiring in 2012.
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2018 Was a Year of Change, 2019 Will Be a Year of the Impact

What transpired in the tire industry in 2018 and what will happen in 2019? John Healy, a managing director and research analyst with Northcoast Research Holdings LLC based in Cleveland, Ohio, and author of MTD’s monthly column Your Marketplace, took on our questions and offered his thoughts and predictions.

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Unit Sales Volumes Were Up Nearly 2%

Our recent discussions with dealers leave us with a view that sell-out trends improved in May versus the prior year’s period, re-accelerating from year-over-year contractions early in the year. While always somewhat subjective, we note commentary from installers was at the highest level since October 2017. From a volume standpoint, surveyed dealers reported they saw unit sales volumes up nearly 2% relative to the previous year’s period.

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Dealers Have Upbeat Outlook for Volume Trends Going Forward

According to the results of our survey, demand for passenger and light truck replacement tires at retail was essentially the same in February versus the prior year’s period, which mitigates some of the positive momentum the industry had built since October 2017.

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Demand Trends Continue to Gradually Improve After Challenging Start

According to the results of our survey, demand for passenger and light truck replacement tires improved in August. The latest performance marks the fourth consecutive month of healthier, albeit far from strong, trends after a very challenging start to the year. Anecdotal commentary from dealers indicates that demand was fairly steady throughout the month.

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Weak Sales Trends Will Prove to be Transitory

According to the results of our survey, demand for passenger and light truck replacement tires increased modestly in June. From a volume standpoint, the dealers reported that they sold 0.4% more tires in June relative to the previous year’s period.

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Demand for Passenger and LT Tires Increased Modestly in May

According to the results of our survey, demand for passenger and light truck replacement tires increased modestly in May. From a volume standpoint, the dealers reported they sold 0.8% more tires last month relative to the previous year’s period.  Despite the fact that demand improved in May, sales trends were not significant enough to definitively change the narrative that demand trends have not met expectations for the first half of 2017, which included three consecutive months of negative volumes.

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Dealers Still Speculate Volumes Will increase Going Forward

According to the results of our survey, demand for passenger and light truck replacement tires declined again in April. Indeed, from a volume standpoint, the dealers reported they sold 0.9% fewer tires in April relative to the previous year’s period.

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Cost Pressures Will Likely Continue to Build

According to the results of our survey, demand for passenger and light truck replacement tires declined in March. Indeed, from a volume standpoint, the dealers reported they sold 0.8% fewer tires in March relative to the previous year’s period. The decline marks the third straight month of poor results versus the prior year’s period. However, on more a positive note, trends improved sequentially.

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Higher Raw Material and Tire Makers’ Prices Lead to Increased Tire Costs

According to the results of our survey, demand for passenger and light truck replacement tires declined slightly in January. Indeed, from a volume standpoint, the dealers reported they sold 0.1% fewer tires last month relative to the previous year’s period, following a slight increase in December and November. 

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Dealers Should be Able to Raise Tire Prices to Offset Cost Pressures

According to the results of our survey, demand for passenger and light truck replacement tires was up nicely in December. The latest results benefited from cycling easy comparisons in the Northeast, Great Lakes and Upper Mid-Atlantic regions of the country, including more normal winter weather.

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