AKRON-Widespread belief that 1995 will be another record year for the U.S. automotive industry has prompted some securities analysts to predict a healthy year for the tire industry. Favorable economic and business conditions point to strong original equipment and improved replacement sales compared to 1994, according to analysts contacted by TIRE BUSINESS.
Coupled with years of corporate belt tightening, those improved sales should allow tire makers to turn in a profitable year despite continued raw material price increases, they said.
Fueled by increased demand throughout most tire-buying segments, overall 1995 shipments should increase between 3 and 7 percent over 1994 levels, according to the three analysts.
But the strongest gains are likely to come from original equipment passenger and light truck tire sales, which could jump as high as 10 percent above last year's levels, according to Harry Millis, an analyst with Fundamental Research Inc.
Although other analysts, including Saul Ludwig of Roulston & Co., predicted more conservative OE increases of between 3 and 4 percent, all agreed that the U.S. auto industry should post sales of between 15.5 and 16 million vehicles this year.
``I think it's a year of modest (tire shipment) growth,'' Mr. Ludwig predicted. ``I expect an aggregate of 2- to 3-percent growth.''
Only rising interest rates, which could lessen consumer confidence, are seen as a threat to a strong automotive selling season, according to Mary Anne Sudol of Fitch Investor Services Inc.
``I think the business climate will be tougher in the U.S. as we go through the year,'' Ms. Sudol said. ``Interest rates will continue to bubble through 1995.''
Prompted primarily by strong employment rates, which suggests a large pool of commuters, the number of replacement tire shipments should increase between 2 and 4 percent, the analysts predicted.
Additionally, the number of vehicles in the 3- to 4-year-old car population, a prime replacement market, will increase in 1995 for the first time in years, Mr. Millis noted.
Manufacturers will continue to face rising raw materials costs, especially through the first quarter of 1995. Each analyst had predicted a round of price hikes would be initiated near the end of the first quarter.
However, as TIRE BUSINESS went to press (Jan. 19), Continental General Tire, Goodyear and Kelly-Springfield Tire Co.-already had indicated their intentions of raising tire prices by March.
Any increase would help compensate for last year's price increases, which appeared in two rounds, that sought to hike prices 5 to 7 percent, but most likely settled around 3 to 4 percent, the analysts speculated.
Should any upcoming price increases help offset materials costs, major tire makers can expect a profitable year with the increased sales, all three of the analysts agreed.
None of the analysts foresaw lingering effects from the recent United Rubber Workers strikes.
Outside of minor supply problems, primarily with snow tires, the strikes had little impact on the tire industry as a whole, Mr. Millis said.
``There were impacts here and there, but they don't seem to have had any impact on the supply- demand relationship,'' he said.