Magazine for the professional tire industry
Issue link: https://mtd.epubxp.com/i/244093
Industry analysis Te increased supply from China has defnitely forced these manufacturers to accept the reality that they were pricing their product higher than the brand and product quality would support in the long-run. Te question is how will these manufacturers adjust to the more competitive environment and, unfortunately, I am not sure that they all have found a productive answer to this real problem. MTD: How are premium tire brands, the broad-line brands, and value brands doing in the market? Mitchell: Te strength of the market resembles a barbell right now, with brands at both ends of the market performing much beter than those that constitute the middle. Going forward, I expect that demand trends over the next year will continue to be segmented, with relative strength expected in the Tier One and Tier Tree categories, and relative weakness to continue in the Tier Two bucket. Installers continue to suggest that an aging car parc will continue to place downward pressure on the mix in the coming quarters as more light vehicles are entering the fnal replacement cycle, which typically occurs in year 11 or 12 of the vehicle life cycle. Tis trend clearly plays to the strengths of Tier Tree/opening price point product. However, these same operators believe that the value propositions of Tier One suppliers are strong enough to insulate them from being share donors in the coming years, especially given the fact that the market is shifing to high value-added (HVA) tires at the front-end of the vehicle life cycle. Tis outlook naturally means that Tier Two suppliers as a group are expected to lose share. MTD: What economic factors afected tire sales in 2013, and what do you see afecting the replacement tire market this year? Mitchell: Tere were three main economic factors at play that afected the behavior of consumer demand in 2013: 1) income tax refunds were disbursed later than normal; 2) a return to normalized payroll tax rates; and 3) tires became more afordable. Te frst two items pressured the market at the start of the year, but as we moved into April and May, the lower prices at retail trumped the other headwinds. I expect job growth will have the biggest impact on tire volumes in 2014. While we have seen gradual improvements in labor markets over the past two years, I think we could see beterthan-expected sellout trends at retail this year if job growth accelerates and if gas prices and tire afordability do not move against the consumer. MTD: What is going on in the OE tire market segment? Do you see car manufacturers demanding anything diferent? Mitchell: Te OE channel is clearly a bright spot for the tire manufacturers right now. Te new vehicle market continues to recover, and auto makers continue to turn to the Tier One and Tier Two tire manufacturers for help improving the ride quality and fuel efciency of the cars and light trucks that are being built today. Given the fact the automobile manufacturers can gain decent benefts in these two areas for a marginal cost by leveraging the technology of their tire suppliers, I expect this area of the market will continue to trend favorably for those manufacturers with signifcant OE exposure. TPMS as Simple as ... 1 Scan and Remove Failed Sensor 2 Simply Copy ID CALL: 18 1-800-438-3302 Quik-Link: 800-687-1557 ext. 11109 3 Install and Go www.31inc.com MTD January 2014