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January 06, 2003 01:00 AM

Aftermarket expected to drive passenger tire demand-RMA

Bruce Davis
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    A strengthening U.S. economy should boost industrial production and shore up consumer confidence, leading to increases in tire shipments in 2003 and 2004 of about 3.5 percent, according to the Rubber Manufacturers Association's latest forecast.

    Passenger tire demand in 2003 will be driven largely by the aftermarket, where the Washington-based RMA sees annualized growth of 4 percent in the new year to nearly 198 million and in 2004 to 205 million units. Original equipment shipments are expected to be flat in 2003 after growing a healthy 7.3 percent in 2002 to 58.5 million units.

    Replacement market passenger tire shipments in 2002 of 190 million units are down about 0.8 percent-much less than anticipated-as double-digit increases in demand for high-performance and ultra-high-performance tires offset a 17-percent drop in shipments of P-metric light truck tires that were in such high demand in 2001 due to Ford Explorer-related tire recalls.

    OE demand in 2003 is expected to be flat because new vehicle buyer incentive programs are losing their allure, the RMA said. In 2004, though, OE demand for passenger tires should grow to 59 million units due to improved domestic economic conditions.

    The growth in replacement passenger tire shipments in 2004 will be driven in part by the demand for replacements of P-metric tires that were installed in 2000 and 2001 as part of those years' recall and replacement programs and will be wearing out by then.

    Light truck tire shipments to the aftermarket are expected to grow 6 percent annually through 2004-to 38 million units from 34 million this year-while OE demand for LT tires should grow 4 percent a year through 2004, to 9 million units, the RMA stated.

    Increasing replacement market demand for medium truck tires should help boost shipments by about 2.5 percent a year next year and in 2004 to 15.3 million units. Shipments jumped 7.5 percent in 2002 to 14.6 million units, according to the RMA's forecast.

    Original equipment demand for medium and wide-base truck tires will be even stronger, the RMA said, pumping up shipments 17 percent annually through 2004 to more than 5 million units; OE shipments in 2002 are expected finish 8 percent ahead of 2001 at 3.7 million units.

    The bulk of the growth is expected to come from trailer makers, which are expecting demand for their products to rebound during the next two years.

    The RMA's Tire Market Analyses Committee based its forecast on anticipated improvements in the nation's Gross Domestic Product and Industrial Production Index.

    The association's forecast, however, did not make projections about trends in domestic production or imports.

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