The demand fears of 2020 have turned into the supply frustrations of 2021. Increased consumer spending has caused an imbalance. Simply put, the supply chain is out of whack.
In the auto and tire industry, the light truck segment is a prime example.
The LT market — trucks, SUVs, CUVs and vans — is hot and has been for a while. The LT segment makes up a majority of vehicles on the road, according to the Specialty Equipment Market Association (SEMA).
SEMA notes in its recent light-truck report that pickups alone make up 20% of vehicles on the road and 31% of aftermarket sales — $14 billion in 2019.
The largest percentage of those sales came from tires.
At Lakeway Tire & Service in Jasper, Texas, light-truck tire sales make up 65-75% of business. Wyatt Pugh, vice president of Lakeway, told Tire Business he has expanded his inventory beyond the brands he usually stocks, because supply is short.
"I've ordered tires that just popped up on our radar, and it might be totally out of character to stock that tire, but we'll buy it," he said. "We buy it and sell it within a week.
"This (shortage) is happening everywhere. I've got a good friend who runs a supply business for water treatment, where you have PVC pipes and all that. He can't get glue. I have a Milwaukee half-inch impact wrench, but I can't find batteries. From chicken wings to baby diapers to PVC pipes, it's everywhere."
Anyone outside of the tire industry — except maybe those getting top dollar selling a used car — would be surprised how big of an impact computer chips are having on the industry. Lack of supplies, like computer chips needed by auto makers, has delayed areas primed for pandemic recovery.
The original equipment market recovery is slow but should return to "normal" production when supply issues are balanced again. And you better believe the recovery will come in the form of a light truck — or possibly a CUV.
SEMA forecasts CUVs will make up half of vehicle sales in the U.S. by 2028.
Sumitomo Rubber North America (SRNA) targeted 55% of its tire business for CUVs, SUVs and light pickup trucks in 2020 in the U.S. and Canada, according to Drew Howlett, product manager of light truck, SUV and CUV tires for SRNA's Falken tires.
Consumers looking for more choices for their on-road/off-road vehicles has led to segmentation in the LT tire product lines.
"At this point all tire manufacturers are further segmenting their product lines and offering consumers more choices, whether it be a mild AT (all-terrain) or an aggressive AT or an RT (rugged-terrain) or an MT (mud-terrain) or an extreme MT.
"All the tire manufacturers are looking for ways to distinguish themselves from other products on the market and offer more choices for consumers," Mr. Howlett said.
As the immediate future may bring frustrations to tire dealers, remember the market is on fire. There are sunny days ahead, soon enough, and the storm clouds will be in our rearview mirror.
