WASHINGTON (Aug. 21, 2001)—Tire industry projections for consumer and commercial tire shipments in 2001 have been revised downward due to what the Rubber Manufacturers Association (RMA) called a weaker than expected domestic economy.
Auto and truck tire original equipment and replacement shipments are forecast to decrease by 17.9 million units, or 5.6 percent from 2000's record of 321 million total shipments.
The slumping U.S. economy, along with deep cuts in light vehicle and domestic truck production schedules is expected to significantly decrease 2001 shipments in passenger and medium truck OE sectors, the RMA said. Replacement tires for passenger cars, light trucks and commercial trucks will see only moderate decreases.
The decline in the passenger replacement markets could be offset by growth in the speed-rated performance tire market and increases in the P-metric light truck tire market, thanks to Ford Motor Co.´s campaign to replace 13 million Firestone tires. They were used as original equipment mainly on the car maker's Explorer sport-utility.
However, the RMA's Tire Market Analysis Committee (TMAC) projects a rebound in 2002 and even more growth in 2003 as the economy turns around and the nation's Gross Domestic Product (GDP) becomes stronger. Total 2003 shipments are expected to be about 317 million units, representing 2.2 percent annual growth based on the 2001 figures.
Tire markets with positive growth projections for 2001 and beyond are the H/V/Z speed-rated and cosmetic performance-rated passenger replacement tires growing at a forecasted 7.2 percent and 3.0 percent, respectively, through 2003.
RMA President and CEO Donald B. Shea noted that "many industries and business analysts were expecting the domestic economy to begin its recovery in the third quarter of 2001.
"But, unfortunately, this is now being pushed back to 2002 and as a result, tire shipments will be affected similar to other industrial and service sectors."
Leading economists, according to the TMAC, expect the nation's GDP to grow by an anemic 1.8 percent while its Industrial Production Index (IPI) to be a negative 1.5 percent for 2001.
The following figures for 2001 and projections for 2002 and 2003 were cited by the TMAC:
Original equipment passenger tires: Tire shipments to domestic light vehicle manufacturers are expected to decrease by 11.2 percent in 2001 where OE shipments will be around 53 million units. Growth is forecasted to resume for the following two years by an average of 1.8 percent per year reaching approximately 55 million units by 2003. Again, much of this downturn can be attributed to the economic slowdown and greater volume of light vehicle production apportioned to outside the U.S.
Original equipment light truck tires: After a 12.9 percent drop in shipments in 2000 to 7.3 million units, a further 7.8 percent decline to 6.8 million units has been forecasted for 2001. This is mainly attributed to the maturing market in light truck sales and substitution of passenger P-Metric tires. However, demand is expected to modestly increase over the following two years where 2002 shipments will be slightly over the 7 million units mark for a 4.7 percent increase and then further increase by 2.7 percent in 2003 to 7.3 million units.
Original equipment medium/wide-base truck tires: A combination of continued slow sales of commercial truck vehicles and a large inventory of commercial trucks will lead to a dramatic drop of greater then 32 percent in 2001 of medium and wide-base OE shipments. TMAC is forecasting that approximately 3.8 million medium truck tire units will be shipped in 2001 for a decrease of over 1.8 million units from 2000 levels. But a significant 20 percent rebound is expected in 2002 followed by another nearly 15 percent increase in 2003 at which point total medium and wide-base OE shipments will be slightly greater then 5 million units.
Replacement passenger tires: While the initial 6.5 million Firestone recall effort in 2000 has worked its way through the markets and subsequently bolstered shipments in 2000, the ensuing 13 million Ford replacement program will again "borrow" from shipments in 2002 and 2003 as many tires that would have normally been replaced in those years are being replaced in 2001. In effect, these programs have softened the impact of the weak domestic economy on the passenger tire replacement market in 2001.
As a result, shipments are forecasted to decrease by a modest 2.5 percent to 194 million units in 2001, decrease again by 1.5 percent to 191 million units in 2002 and eventually rebound in 2003 by 3.7 percent to 198 million units. The P-metric light truck tire segment (a subset of passenger replacement tires with light truck appearance and tread characteristics usually found on sport-utility vehicles (SUVs) and the focus of the recall and replacement campaigns) are predicted to increase by 2.1 million units—or 8 percent from 2000's levels—to the 29 million mark.
Thereafter, there will be a nearly 14 percent decrease in 2002 to approximately 25 million units followed by a 20 percent increase in 2003 to 30 million units reflecting the "borrowing" of shipments in 2001. The net annualized growth rate over the 2001-2003 time frame will be just short of 2 percent or a more "normal" year-to-year growth rate.
Replacement light truck tires: Shipments (tires with an "LT" designation) will experience a decrease of 6.7 percent in 2001 to 32 million units as both the SUV and light truck market matures. Nonetheless, this market segment is anticipated to grow in 2002 and 2003 by 6.3 percent and 7.4 percent respectively eventually reaching 36.5 million units in 2003.
Replacement medium/wide-base truck tires: Shipments are forecasted to decrease by 10.2 percent in 2001 to 13.5 million units as a result of the contraction of the manufacturing sector and weak economy in general. But, as is the other tire sectors, a rebound is forecasted for 2002 of 4.6 percent followed by an additional 3.7 percent in 2003 to a level of 14.6 million units.