Magazine for the professional tire industry
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Your marketplace Dealers report strongest volume growth in more than a year W hile October was a big month for the New tire sales momentum grew tire industry, it appears that NovemAccording to dealer reports, replacement tire ber was even beter thanks in large volume in November improved sharply from the part to Mother Nature. While we did get a lot of demand levels in October. Specifcally, dealers snowfall very late in the winter season last year, reported that they sold 1.9% more new tires last most dealers indicated that it came too late in the month on a year-over-year basis, which compares season to scare consumers into buying the set of to the 0.7% increase reported in October. In adreplacement tires that so many people desperately dition to being the strongest growth that we have need. Tat said, Old Man Winter has been far seen in more than a year, November marked the more helpful to tire dealers as the amount of By Nick Mitchell fourth consecutive month of year-over-year sales snowfall increased signifcantly in many markets increases. Te strength was not limited to passenger during November — a key month for tire sales. tires as truck tire volumes increased 4% following a 2.3% According to our survey, consumer demand for replace- increase in October. In the retread business, volumes were ment tires increased sharply in November as dealers reported essentially fat (declined 0.3%) afer increasing roughly the strongest volume growth that we have seen in more 8.0% in October. than a year. Following the results of our latest study, it is easy to see why the dealers we were talking with at last Dealers' costs stabilized, but retail prices drop month's Specialty Equipment Market Association (SEMA) Dealers reported that tire costs more or less stabilized Show in Las Vegas were so much more optimistic than they in November. While dealers indicated that manufacturers had been a year earlier. Obviously, we would expect to see were still ofering creative incentives (63% of tire dealers strong volume growth if the inclement weather continues. indicated that manufacturer pricing was aggressive), they reported that their efective cost for top-selling branded Monthly survey tires was essentially fat. Te value brands, which have seen A number of independent tire dealers were surveyed the most price degradation over the past year, fell less than concerning current business trends. Except for tire prices 0.5%. On the pricing side of things, consumers continued to beneft as prices on premium brands fell roughly 1% at retail, while value brands were of nearly 2%. How dealers view near-term business Dealers JUL AUG SEP OCT(R) Passenger tire Will improve Will worsen Will stay level 46% 9% 45% 46% 0% 54% 45% 25% 30% 46% 36% 18% 38% 12% 50% 9% 36% 55% Truck tire Will improve Will worsen Will stay level 29% 0% 71% 53% 0% 47% 27% 0% 73% 46% 9% 45% 57% 0% 43% 0% 36% 64% R-Revised NOV(P) NOV(12) P-Preliminary and costs, the results of the November 2013 survey are compared with those of November 2012. Outlook for early 2014 is relatively upbeat According to our dealer survey, 38% of passenger tire dealers believed business would improve over the next six months, 50% believed it would stay about the same, while the rest thought it would worsen. Meanwhile, 57% of the truck tire dealers we spoke with saw business improving, while the rest believed that business trends would stay about the same. Tis as a relatively upbeat outlook for 2014 as dealers clearly felt beter about the future than at this time last year. 22 Dealers thought inventory was too high Slightly more than a third (37.5%) of the dealers that we spoke with indicated that they had the appropriate amount of inventory in stock for demand, while the balance of the dealers cited that inventory levels were too high. Tis compares to October, when 45% of dealers indicated that their inventory level was appropriate and 55% said that it was too high. For the sixth straight month, dealers reported much cleaner inventory levels in the truck tire business. Only 14% of the truck tire dealers we surveyed indicated that their inventory was too high, with the rest indicating that it was at a near-optimal level. Service work helped drive sales Afer hiting a modest speed bump in October, tire dealers reported that service work trends returned to the road they have been on all year: driving sales higher. Sales in the service category, which accounted for almost 25% of the study participants' total revenues, jumped 2.4% on a year-over-year basis. ■ Nick Mitchell is a research analyst with Northcoast Research Holdings LLC based in Cleveland, Ohio. Mitchell covers a variety of subsectors of the automotive industry. MTD January 2014