On Friday, American Tire Distributors CFO Jason Yaudes was a special guest on an exclusive teleconference hosted by KeyBanc, sharing his insights on recent trends within the tire industry. The 40-minute conversation provided overview and insights regarding recent developments that may impact tire dealers in North America.

Softness in the replacement tire market – According to Yaudes, the replacement tire market showed softening in year-over-year numbers, with RMA data reporting the market was down 4.5% in March, down 4.8% in April and down 6.6% in May. At the same time, pricing has remained stable with little increase or decrease overall.

Car dealers gain market share – The market-share shift away from tire dealers to car dealers for replacement tires continues, which may be contributing to the softening of sales within the tire dealer environment. Yaudes predicts the focus on OE warranties and services performed by dealerships will continue to fuel the slow-but-steady increases in market share by car dealerships.

Blurring of Tier 2 and Tier 3 – When asked about industry trends, Yaudes sees a blending of Tier 2 and Tier 3 products into a single tier. Much of this is consumer driven as Tier 3 brands may be more highly recognized and seen as Tier 2 by consumers. The tariff-driven shift in manufacturing as well as higher speed ratings of tires sold are also contributing to this trend.

Brexit’s impact on North American tire dealers – The departure of the UK from the European Union (also known as “Brexit”) should have minimal impact on the tire industry in North America. People will continue to look at the replacement tire market and its fundamentals (such as miles driven and employment factors) for insights to the overall economy.