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February 14, 2017 01:00 AM

Light truck segment is tire industry star of 2016

Bruce Davis
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    AKRON (Feb. 14, 2017) — While truck and OTR tires grabbed headlines throughout 2017 due to the various import duties deliberations, behind the scenes it was the light truck tire segment that generated the best performance, with U.S. production, shipments and exports — along with imports into the U.S. — all up measurably over 2015.

    This was in contrast to the passenger and medium truck segments, where production and exports fell short of 2015, according to the Rubber Manufacturers Association's preliminary 2016 data report.

    These and other trends can be gleaned from this year's Market Data Book, which appears in the Feb. 13 issue of Tire Business.

    Replacement car tire shipments grew slightly — 1.9 percent to 208.6 million units — but production, export and imports all came up shy of 2015, as did truck tire production and exports.

    Replacement and original equipment light truck tire shipments grew 9.4 and 12.3 percent last year, fed by 7.2 percent greater production (to 28.3 million units) and 13.9 percent higher imports, the data show.

    At the same time, U.S. tire makers exported 7.7 percent more light truck tires than in 2015.

    This trend reflects the growth last year in production and sales of light trucks, commercial vans and larger SUVs. Sales of such vehicles topped 10 million units for the first time and now account for nearly 61 percent of U.S. light vehicles.

    At the same time, sales of passenger cars fell to 6.9 million, the fourth lowest total since 1962.

    Production of passenger and medium truck tires, on the other hand, fell 1.9 percent and 7.3 percent, respectively, to 123.7 million and 13.7 million units, according to the RMA data, but so did imports, according to U.S. Department of Commerce figures.

    The lower production was a bit of surprise, considering the amount of investment that tire makers have committed to their North American manufacturing capacities in recent years.

    Production should be augmented in the coming years, considering that Kumho Tire Co. Inc.'s plant in Macon, Ga., is now on stream and Hankook Tire Co. Ltd.'s plant in Clarksville, Tenn., and Giti Tire Group's factory in Chester County, S.C., are expected on stream this year.

    Those three factories alone represent nearly 20 million units of additional daily car and light truck tire output at full capacity.

    Imports of passenger and medium truck tires fell 2.3 and 5.6 percent, respectively, to 146 million and 13.8 million units, according to U.S. Department of Commerce data.

    Imports of light truck tires, by contrast, jumped 14.4 percent to 27.8 million units.

    Imports of passenger tires from China — which are subject to elevated import duties — fell nearly 30 percent from 2015 to about 16.5 million units, falling to third behind South Korea and Thailand as foreign sources of car tires.

    2016 marks the second straight double-digit decline in imports from China.

    Imports of truck/bus tires from China fell nearly 16 percent last year to about 7.49 million units, reflecting the pending imposition of elevated import duties on them as well.

    Even with the decline, Chinese tires were still more than half of all imports last year, data shows.

    On the sales side, most companies' revenue fell short of the 2015 performance, in large part due to currency translation effects.

    Bridgestone Americas retained the top spot in North America with estimated tire-related sales of $9.5 billion, ahead of Michelin North America Inc.'s $9.2 billion and Goodyear's $6.35 billion.

    On the retail side of the ledger, Discount Tire/America's Tire and Bridgestone are ranked one and two, with $4.56 billion and $4.5 billion in sales, respectively.

    Discount Tire operated 924 stores at year-end 2016, compared with the 2,185 Bridgestone Retail Operations stores, doing business as Firestone Complete Auto Care, Tires Plus and Wheel Works.

    Also worth noting: the RMA's shipment data show the shares of the car and light truck tire aftermarkets controlled by "local dealerships" — those with fewer than 10 outlets in a single regional distribution area — fell by 2 and 8 percentage points, respectively, to 14 percent and 21 percent.

    On the car tire side, the business shifted to "regional dealerships," those with 10 to 40 outlets in at least two regions.

    On the light truck tire side, "national dealerships" — those with 40-plus outlets in three or more regions—picked up four points of share and now control 42 percent.

    Other nuggets gleaned from the Market Data Book include:

    • Demand for high-performance tires in the U.S. continued to increase, especially on the replacement side, where shipments of tires H-rated and higher now represent more than 40 percent of aftermarket shipments. The OE share jumped three points to 53.3 percent.

    • Shipments of aftermarket speed-rated tires rose 7.6 percent to 84.3 million units, while those to OE customers were up 5.2 percent to 26.3 million units.

    •The shift at OE is also reflected in the breakdown of OE tire sizes, where there are now two 20-inch rim diameter sizes among the 10 most popular OE sizes, the RMA data show.

    •Goodyear remained the No. 1 supplier of OE consumer tires last year, outfitting an estimated 28.5 percent of the 18.1 million cars, SUVs and light trucks built in North America last year with its Goodyear and Dunlop brands. Michelin North America was No. 2 with its Michelin and BFGoodrich brands, ahead of Bridgestone Americas (Bridgestone and Firestone brands) and Continental Tire the Americas L.L.C. (Continental and General brands).

    • The roster of OE suppliers grew to an even dozen as Sumitomo Rubber USA L.L.C. started supplying its Falken brand to a few select vehicles and took over supply of the Dunlop brand to the U.S. assembly plants of the Japanese vehicle makers.

    • South Carolina continued as the No. 1 tire-producing state with estimated daily tire production of roughly 107,000 units. This will continue to grow as expansions by Bridgestone Americas, Continental Tire and Michelin ramp up fully and the Giti Tire plant in Chester County comes on stream.

    • U.S. shipments of winter/traction tires fell slightly to about 3.4 percent of all replacement car tire shipments. By contrast, winter tires represent more than 35 percent of aftermarket car tire shipments in Canada. Ironically, unit shipments are roughly 7 million in each country.

    The Market Data Book also contains benchmarking information on the automotive service sector and summaries of Tire Business' retail, commercial and retread rankings from 2016.

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