SRNA expects supply increase, sales lag

Strong tire sales in the U.S. appear to be leveling off as the year progresses, just as passenger and light truck tire inventories are improving, according to Sumitomo Rubber North America Inc. (SRNA).

Rick Brennan, SRNA vice president of marketing and strategic planning, predicted inflation and its impact on consumer spending will create a weak market this summer.

How would you describe the passenger/LT tire business in North America in 2022?

The strong sales rate we experienced in 2021 carried into the first quarter of this year, however we are experiencing a slowdown over the last two months. Inventories of many P/LT segments are improving as demand is slowing and supply, especially from imports, picks up.

How would you describe the commercial truck tire business in 2022?

High demand and lack of supply has been the norm for the last year for TBR. We see the same trend so far this year, but signs of softening are starting to appear. We are still experiencing growth, but not at the same rate as we had through the first quarter of this year.

What is your outlook for the remainder of the year?

High gas prices and high inflation puts a drain on the consumer's ability to spend, impacting everything. Our outlook is for a weaker summer market than last year, with a bit of relief in Q3, ending the year with conditions about the same as pre-pandemic (2019 for instance).

How has the COVID-19 pandemic changed the way you do business?

Conducting business is now different for all today. The work-from-home phenomenon has changed many processes and styles of work that were in place for years and years before COVID.

Communication and collaboration are definitely different than pre-pandemic; we have learned how to continue to operate but the way we bring teams together to solve issues and communicate with customers has had to evolve.

What are you telling dealers who are unable to get certain tires?

We tell them what we know. If we cannot get them manufactured due to lack of capacity, or we made them but we cannot get them shipped from overseas, we tell them. We do our absolute best to try and provide a timetable for delivery, but the ocean freight challenges have made accuracy very difficult.

How do you explain recent price increases in the industry?

The recent price increases are the result of cost increases from several directions.

For SRNA, we were hit with raw material increases, Chinese and Thailand tariffs and ocean freight increases.

Raw material increases are a normal part of our business, but the tariffs and ocean freight increases were unprecedented. The Thailand tariffs were a major impact for us, but it was a rather small impact compared with ocean freight increases of six times or more.

What are some of the pleasant surprises you are seeing?

The manner with which the industry has dealt with the challenges of the past two years has been outstanding. In the face of rising prices, short supply and rising demand, tire dealers have demonstrated remarkable ingenuity and commitment to servicing consumers during very difficult times.

Do you expect to roll out any additional products in 2022?

SRNA will launch two new products this year, the Azenis FK460 UHP All Season and the WildPeak R/T in the third and fourth quarters this year, respectively. The FK460 will provide the highest performance ever achieved by a Falken UHP All Season, rivaling Tier 1 competitors. Targeting high performance and EV vehicles, the FK460 will launch in Q3.

The WildPeak R/T will target LT and SUVs looking for ultra-aggressive tread designs and styling, especially lifted trucks. Available in large overall diameter sizes as well as traditional LT fitments, the WildPeak R/T will launch in Q4.