A new Springsteen album is always cause for celebration, and his latest is a mix of new, re-polished older songs and covers. In total, “High Hopes” is a cautionary counter to the foreboding “Wrecking Ball.”
Just enough optimism to make you feel like everything will be OK. Just enough warning to keep you alert.
The title song’s center is a man who has been kicked and crushed by the world, and understands that no gain comes free. Yet his head is high, his chin is up and he is pressing ahead to his future.
“Give me help, give me strength
Give a soul a night of fearless sleep…”
Back in December, the RMA predicted a 1.7% overall shipment increase for this year. A 302-million-tire-year all in, thanks to, as the RMA put it, “A declining unemployment rate, a rebound in housing, increases in vehicle sales and vehicle miles traveled, as well as other macroeconomic factors…”
Very true, based on subsequent stats.
But most of the increase seen in 2013 came on OE shipments. Replacement shipments showed gains on paper, but in terms of actual over-the-counter sales, the evidence was that many dealers saw soft real-world results in their respective markets.
And in 2014, that trend isn’t going to change. RMA sees OE P-metric shipments jumping 3.4% YoY in 2014, and OE LT-metric to follow at 2%.
“Give me love, give me peace…”
U.S. new car and light truck sales leaped 7.6% last year to 15.6 million vehicles – the first time since 2007 that new vehicle sales surpassed 15 million. For 2012, new car and light truck sales hit 14.5 million – a 13% gain from the year prior.
With analysts seeing more of the same for 2014, let’s just say (for the sake of this argument) that new vehicle sales stay dead level with 2013. Looking at those three years – 2012 through 2014 – there will be 45.7 million consumer vehicles on the road that are less than four years old.
Rolling on 182.8 million brand new OE radials.
Where the Great Recession drove drivers to keep their vehicles longer, pent up need (not demand) coupled with upticks in the U.S. crapconomy chauffeured eager car and pickup buyers to showrooms everywhere.
Even allowing that not all older cars are scrapped when new ones are sold, that’s still more than 100 million new consumer tires taken out of the already overly long replacement cycle and rescheduled for a later date. That’s a big chunk of an estimated 660 million consumer radials that were/will be shipped during that period.
I know, so far not sunny news. Nothing to get “High Hopes” over.
But it points to a new equation, so throw out all you thought you knew.
For 2014, RMA sees replacement P-metric shipments moving up 1%, replacement LT-metric up 2%, and replacement medium truck tire increasing two points.
Again, hardly exciting, but any gain is a plus, especially after the last six years. 2013 saw a net 4% gain in total shipments, and RMA predicts a 2% boost this year.
So let’s pick up our chins. I’m calling for a 3% replacement market increase this year. Yes, I got “High Hopes.” I think the sun will shine a bit brighter.
“Don’t you know these days you pay for everything…”
Where will this growth come from?
Not likely from where some tiremakers are espousing. The “new world order” is lining up differently:
- Deflated Premium Segment: A lot of potential “premium segment” replacement sales went with all of the new vehicles sold, and have been effectively de- ferred. And “premium” prices on what consumers see as a par product (see 3 below) are chasing potential buyers away from that imagineered segment.
- A New View: Post recession consumers see the world differently. Brand names lost luster because buyers don’t see enough advantage for the investment. Even though prices were falling rapidly, to them, tires are tires. It’s not about value today, it’s about the most cost effective: What will I get for the money I am investing – and does that matter?
- Tier 2.5 Tires: This new breed of primarily Chinese brands, produced in newer plants, using better technology, are more than competent and more than competitive. Better than Tier 3, not quite Tier 2 but getting there – and a more cost effective alternative. They have become a hot item.
“Got High Hopes.”
More on all of this in the coming months … for now, I’m joining the chorus and say it’s time for “High Hopes.”
We will see record tire shipments – and continued high numbers from China – and more and more will be cost effective lines. Dealers want profitable products to build sustainable repeat business – you can see how those stars will line up.
And hopefully you’ll get “High Hopes.”