AKRON-Securities analysts are characterizing 1995 as a speed bump in the road of generally increasing tire shipments and are expecting the industry to return to a more typical growth pattern this year. In fact, analysts contacted by TIRE BUSINESS generally agreed that 1995's ``poor'' performance could be attributed largely to an abnormally strong 1994.
When compared with 1995's lower numbers, 1996 should return the industry to its 2-percent-growth trend line. Additionally, like last year, the economic and business conditions in the U.S. in general and the tire industry in particular point to improved original equipment and replacement sales, they said.
But the Tire Market Analysis Committee of the Rubber Manufacturers Association, comprising forecast professionals from 17 tire manufacturers, is predicting a more conservative growth trend-slightly less than 1 percent for the industry overall.
According to the TMAC, the replacement passenger tire market will realize a gain of 1.2 percent, from 165 million to 167 million units, and a healthy 2.3-percent increase for light truck tire shipments, which should reach 26.2 million units.
With gas prices holding steady and an older and larger vehicle fleet, replacement passenger and light truck tires should fair well, the analysts agreed. In addition, January's winter storms, which battered the East Coast and parts of the Midwest, have boosted snow tire sales and helped clear overstocked inventories on the wholesale and retail levels, according to Scott Merlis of MAI Inc.
Passenger tire shipments also should benefit from another year of increased automotive production.
``We should see an increase in OE (original equipment) over the next three or four years as people begin selling their 3- to 4-year-old cars,'' said Harry Millis of Fundamental Research Inc. ``This will put the tire shipments at average to above average. The increases we'll see will be 2 to 2.5 percent rather than 1.5 to 2 percent.''
On the truck tire front, the TMAC said it expects OE and replacement medium truck shipments to plunge a combined 5.3 percent to 16.2 million units, while combined shipments of heavy truck tires should slip 1.9 percent to 317,400.
Although the three analysts contacted in early January generally agreed with the TMAC's passenger numbers, each appeared more optimistic about the truck tire segments.
Wendy Needham of Donaldson, Lufkin & Jenrette in New York, said she believes total OE truck tires will rise 3.3 percent to 12.4 million units, while replacement shipments could jump as much as 8.3 percent to 41.8 million.
Overall, 1995 appeared worse than it actually may have been, the analysts agreed, because it was compared with the industry's strongest year ever.
``1995 was a little disappointing, but a lot of that had to do with the fact that 1994 was better than anyone (had) anticipated,'' Mr. Millis said.
The analysts said tire wholesalers and retailers inflated 1994 numbers when they stocked their inventories to contend with a number of rounds of manufacturer price hikes.
Tire makers probably will try to boost prices on tires again this year. Some already have announced increases to take effect in January or February.
But MAI Inc.'s Mr. Merlis said he believes any price hike will have difficulty sticking, ``because you already had a number of price increases over the past two years. The sky is not the limit with pricing. There will be (an increase), but it will be moderate.''
Manufacturers are still attempting to contend with high raw material prices many thought, erroneously, would have dissipated by the end of last year. Chemical prices have begun to ease, but natural rubber costs continue to remain high, Mr. Merlis said.
``It's not like you can raise crops overnight,'' he added. ``If it continues to rise, I think they'll try growing rubber trees in Akron.''
Crain reporter Jeff Higley in Akron contributed to this story.