RANCHO CUCAMONGA, Calif. — Sumitomo Rubber North America Inc. (SRNA) predicts U.S. tire sales will improve going forward after suffering a slump during the pandemic.
"The good news is increases are being reported and realized across the board," Matt Leeper, SRNA's director of sales — consumer, said during the tire company's second COVID-19 Dealer Resource Forum, held online April 30.
"In almost every instance, as far as the channel dealer area, there has been an improvement in business. The most accepted explanation is government support, incentive checks or stimulus checks. There's also probably a relaxing or fatigue of shelter-in-place. So we're starting to see that in miles driven as well."
SRNA predicts replacement tire sales for the U.S. industry will drop about 21% for the first half of 2020 but expects a slight rebound in the second half, with a sales decrease of about 13%-14%.
The tire industry could return to a somewhat normal monthly pace by the end of the year, down about 8%-10%, in November and December.
"Our biggest challenge is that the picture changes every day. It's still very unclear on when states will open up," Rick Brennan, vice president of strategic planning, said.
About two-thirds of the states have no official dates for reopening businesses, and much of Canada is in a similar situation.
"These uncertainties really are having an impact on when we see things will open up and when things will get back to normal, which is impacting our vision of what the go-forward looks like," he said.
Nationwide, vehicle miles traveled, which dropped 48% in March, increased during April, he said.
During the last week of April, vehicle miles traveled were off 35%, "so people are starting to move again, and a little bit of it is caused from states opening up. But for the most part, it is people just starting to move around a bit more. But it's so erratic, not just state by state but city by city," Mr. Brennan said.
Commercial truck travel has been impacted less than passenger car travel during the shelter-in-place orders in March and April.
Long-haul trucking mileage was down 9% in early April but has been increasing daily, according to Mr. Brennan.
"So we're seeing an improvement of freight being moved across the country, but it depends on where the manufacturing and the oil people are," he said. Regions with vehicle manufacturing plants and oil refineries that temporarily closed have experienced a greater drop in commercial trucking.
In some states, trucking is down 13% or more, while in other states trucking slipped only 6% or less.
"The regional differences in freight travel are dramatic, from 16-17% fluctuation. Some are down 0-6% and some are down 17% or more, mainly due to the impact of closures of factories or the impact of oil," he said.
Using U.S. Tire Manufacturers Association (USTMA) and non-USTMA manufacturers' data, SRNA determined that replacement passenger/light truck tire sales in the U.S. fell 18% in March and were down 63% in the first half of April. Medium truck tire sales rose 10% in March and fell 0.7% in the first half of April.
Tire sales in Canada in the first half of April mirrored the U.S. market: passenger tire sales plummeted 60%, light truck tire sales dropped 62% and medium truck tire sales fell 35%, according to SRNA.
Mr. Brennan said the drop in truck tire sales was mainly due to the impact of the low oil prices and a slowdown in vehicle manufacturing, causing freight movement to slow much more than in the U.S.
Sales of passenger/LT tires in January-March were down compared with the same period in 2019, Mr. Brennan noted, and he expects a big drop in sales for the full month of April.
"If we normally run 17 (million) to 18 million (tire sales) per month as a total industry replacement, we're going to see numbers around 10 (million) or 11 million, if we're lucky. So it's a big drop for April," he said.
"We're going to see it come back in May as things start to open up. We already see some signs of life," he said, noting the slow rebound in vehicle miles traveled.
"At the end of the year, if we look at the positive view, as an industry we'll be down about 16.4%. If we look at a pessimistic view, we could be down close to 20% (19.6%). This is a big drop. That 20% number is actually around 220 million versus 274 million that we projected at the beginning of the year as an industry. So it's a pretty big drop, but we see that it will improve as we go through the year."