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Pile of tires

Tire industry returning to pre-pandemic levels

Sept. 18, 2023
Tire production levels are returning to 2019 levels, though light- and medium-duty truck tire shipment are expected to increase.

There’s no question that for most of this year, demand for tires has been down versus 2022 levels. This is reflected in tire shipment projections, which recently have been dialed back from earlier-year forecasts.

In March 2023, the U.S. Tire Manufacturers Association (USTMA) predicted that we’d end the year with around 334.2 million total tire shipments. Last month, the USTMA bumped that number down to 325.4 million units. By contrast, around 332 million units were shipped during 2022, according to the USTMA.

The USTMA’s full-year 2023 forecast has dropped in four of the six categories that it tracks.

In the OE channel, the USTMA is now predicting passenger tire shipments will total 43.9 million units (up 5.6% versus 2022), light truck tire shipments will total 6.2 million units (down a half-point since 2022) and medium truck tire shipments will total 6.5 million units (flat versus last year.)

Replacement passenger tire shipments will total 210.5 million units (down 1.5% versus 2022), light truck tire shipments will total 35.9 million units (down 3.6% versus 2022) and medium truck tire shipments will total 22.4 million units (down 16% versus 2022.)

If you’re a pessimist, you could say this is a gloomy forecast. I think it’s a positive forecast—and let me tell you why.

It goes without saying that 2021 and 2022 were unusually strong years. The domestic tire industry experienced a massive, across-the-board rebound in 2021, following the initial shock of the COVID-19 pandemic. That momentum carried over into the first part of 2022, especially in the medium truck tire category, which grew by more than 20% versus prior-year levels.

But those numbers are hard to sustain. What we're seeing now is a return to normal—which, in this case, means a return to 2019 levels. And I would argue that this is a good thing.

Once again, let’s look at the numbers. According to the USTMA, 46.3 million OE passenger tires, 5.9 million OE light truck tires and 6.5 million OE medium truck tires were shipped during 2019.

In the replacement channel, 222.6 million passenger tires, 32.5 million light truck tires and 18.9 million medium truck tires were shipped that year.

Based on the USTMA’s 2023 current projections, more units will be shipped in three categories — OE light truck tires, replacement light truck tires and medium truck tires — than were shipped in those same categories in 2019.

During a recent Sumitomo Rubber North America Inc. dealer meeting, Chris de Rosales, the company’s director of market intelligence, said that inventory levels within the industry are stabilizing. “Inventories have now made their way through a normal cycle,” he told dealers.

He also reported that “in the last three months, we've seen PLT shipments come back to life. We’re starting to see sellout come back to life. What’s driving that is vehicle miles traveled.”

Rounding out the year

There are some other reasons why I think 2023 will shake out to be a solid year for the tire industry.

Number one, inflation seems to be under some semblance of control. In July 2023, the overall U.S. inflation rate was 3.2%, up slightly from previous-month levels, but well below its peak of 9.1%, which was reached approximately one year ago. (For the record, in November 2022, the Federal Reserve announced that it seeks to achieve an overall inflation rate of 2% over the long term.) When it comes to the cost of living, less is always better, but I think we’re moving in the right direction.

I also believe the window on tire manufacturers’ ability to take major price increases is closing. After two straight years of virtually non-stop pricing actions, the case for more hikes will be increasingly hard to make. The market simply can’t bear another round — or multiple rounds — of big price increases, which, over time, will cushion the impact of retail sticker shock.

Finally, tire manufacturer investment — whether in new products and/or factory or distribution enhancements — remains robust.

Last summer, Hankook announced it would invest $1.6 billion to expand consumer tire production at its Clarksville, Tenn., plant and enable commercial truck tire production there. Earlier this year, Bridgestone Americas Inc. and Michelin North America Inc. announced a total of $610 million in multi-year, capital investments across several plants. Nokian Tyres recently said it will double the annual production capacity at its Dayton, Tenn., plant by next year.

I’m sure there are other tiremakers that are making big investments in their facilities. Manufacturers invest when they believe market demand will support it. That bodes well for our industry.

Last year and 2021 will be difficult, if not impossible, to top. But that’s OK. In 2023, down will be up and a return to 2019 levels of performance should be viewed as a positive.

This article originally appeared in ModernTireDealer.com, part of Endeavor Business Media's Commercial Vehicle Group

About the Author

Mike Manges

Mike Manges is Modern Tire Dealer’s editor. A 25-year tire industry veteran, he is a three-time International Automotive Media Association award winner and holds a Gold Award from the Association of Automotive Publication Editors. Mike has traveled the world in pursuit of stories that will help independent tire dealers move their businesses forward. Before rejoining MTD in September 2019, he held corporate communications positions at two Fortune 500 companies and served as MTD’s senior editor from 2000 to 2010.

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