Magazine for the professional tire industry
Issue link: https://mtd.epubxp.com/i/449261
MTD January 2015 Y es, the United States Department of Commerce's preliminary decision on Chinese tire tarifs drove the market in 2014, and the forthcoming fnal decision will afect the market again in 2015. But there's more to tires than tarifs, and Modern Tire Dealer turned to industry analyst Nick Mitchell to review the last 12 months, and to talk about what's ahead. Tire dealers are optimistic about 2015, and they're expect- ing business in the new year to be beter than it was in 2014, Mitchell says. At the same time, he thinks dealers need to be thinking about how to drive trafc to their businesses. Relying on regular oil changes, especially those of feet vehicles, isn't going to cut it. Since April 2009, Mitchell has studied the industry as part of his work for Northcoast Research Holdings LLC in Cleveland. Mitchell, senior vice president and research analyst, has been honored by the Wall Street Journal and Financial Times for the performance of his investment recommendations. He writes a monthly column, "Your marketplace," for Modern Tire Dealer. MTD: How would you summarize the tire industry in 2014? Where is the industry headed in 2015? Mitchell: All things considered, I think 2014 was a fairly good year for the tire industry, especially in the U.S. where fundamentals remained solid all year, even afer adjusting for the impact of the forward-buying of Chinese tires. Demand for passenger and light truck replacement tires started the year strong in most of the major global markets, but growth trends started moderating in the late second quarter and early third quarter. Te most pronounced slowdown was seen in emerging markets, including Eastern Europe and parts of Latin America, especially in the original equipment channel. Demand in China has moderated relative to recent years; however, the frst nine months of the year turned out to be prety solid. Tat said, demand visibly weakened in the country once it was clear the U.S. would likely implement antidumping and countervailing duties. In the truck and bus radial market, demand has defnitely been the most robust and resilient in North America, especially in the U.S. Shipments in the OE and replacement channel were stable to positive in the frst quarter in most of the major regions across the globe. Trends started deteriorating in the second quarter of 2014, with the most pronounced weakness seen in Latin America and Europe, especially in the OE channel. Fundamentals remained lackluster in the of-the-road (OTR) tire segment all year; the headwind should moderate in 2015. Overall, we expect 2015 will be another exciting ride in the global tire industry, with most markets expected to experience growth — albeit more heavily weighted to the back half of the year. MTD: What are tire dealers saying about the state of their business? What are they expecting in 2015? Mitchell: Most of the retail players I have spoken with since early November have noted they expect unit volumes to increase 2% to 3% in 2015, which would be a step up from the consensus opinion that volumes are running up 1.5% to 2% year-to-date. Te frst half of 2014 was stronger than the third quarter, and volumes were fat to up 2% in 2013. Interestingly enough, members from the dealer community who I spoke with at this time last year indicated retail volume growth would likely range from 0% to 2% in 2014, so it appears 2014 will fnish in-line with expectations. I believe most of the optimism regarding the outlook for What you need to know for 2015: Customers have cash to spend, thanks to low fuel prices. Tire sales are expected to increase, but dealers will have to fnd new ways to get customers in the door By Joy Kopcha feature Leading tire industry analyst Nick Mitchell, senior vice president and research analyst for Northcoast Research Holdings, is expecting 2015 to be another exciting ride. 18