Magazine for the professional tire industry
Issue link: https://mtd.epubxp.com/i/630954
MTD January 2016 Industry analysis Mitchell: Te greatest benefts besides the ones listed are: supply chain optimization via greater use of a near-sourcing production strategy (i.e. shorter lead times), and improved product mix (new plants only support high-value-added machinery). MTD: Which segment of the tire industry will see the most growth in 2016? Mitchell: We expect to see the best volumes in the OE light truck category, as the relentless drop in retail gasoline prices should boost demand for pickups. Meanwhile, we expect the worst trends to be seen in the OTR and agricultural categories. MTD: How 's the auto service repair business? How will the economy afect those profts? Mitchell: Te service business is good, and we expect this to remain the case in 2016, assuming a slowdown in China and falling oil prices do not pull the U.S. into a recession. MTD: W hat are your predictions for the do-it-for-me (DIFM) and do-it-yourself channels for 2016? How have those channels performed in 2015? Mitchell: The DIFM market was red hot through the first three quarters of 2015 on the heels of a very strong performance in 2014. We expect the data will ultimately show trends moderated in the fourth quarter in light of the unseasonably warm weather across the Great Lakes, Northeast and Mid-Atlantic regions. I think this segment of the market will grow 3% to 5% in 2016, assuming the U.S. economy does not slip into a recession. MTD: Are consumers more confdent in the economy? How is that relating to their tire purchases and auto repairs? Mitchell: Notwithstanding the recent weakness in the stock market and retail sales, consumers seem to be fairly upbeat and healthy from an economic standpoint, and this is helping fundamentals across the tire and auto service in the form of stronger volumes, less deferral activity, more proactive maintenance, and a richer sales mix (i.e. consumers are trading up). MTD: With the tarifs on passenger tires now in place until at least 2020, what are the chances tarifs will be leveraged against truck tires? Mitchell: It is tough to say, and speculating on such maters is never fun. Tat said, the International Trade Commission voted unanimously in early 2014 to retain the antidumping and countervailing duties that were levied against Chinese of-the-road tires in response to a 2008 judgment; and similar measures were fnalized against passenger and light truck tires imported from China. As such, I would not be surprised if the next area of focus is on the TBR market. China has the ability to produce over 120 million radial truck tires, so it is clearly a force that needs to be monitored. MTD: Tanks for your insights, Nick. ■ Quik-Link: 800-687-1557 ext. 11114 24