Chicken Little - Tire Review Magazine

Chicken Little

Most popular question I am asked these days? “So, what do you hear out there?”

By “out there,” the questioner means “tire sales.” And while I’ve been asked that question for years, it has never come with today’s level of concern, dread and, sometimes out-right desperation.

The answer, I guess, depends on who is doing the telling, or who you want to believe. RMA, for instance, just issued a revised 2008 forecast saying that the industry, on an overall basis, will be off some 4% vs. 2007. Most of that expected decrease, says RMA, is driven by sharp declines on the OE side.

But looking a bit closer, replacement shipments aren’t expected to fare very well, either. Compared to 2007, P-metric will be off 1%, LT-metric will fall 7% and medium truck will drop 3.5%, says RMA. Those aren’t slight declines – that represents some 3.1 million tires. And keep in mind that 2007 was a bad year compared to 2006, and 2006 was way off from 2005.

RMA’s numbers only reflect shipments by manufacturers, not over-the-counter sales. On that side of the ledger, things appear to be far worse. In their first-half financials, tire companies made note of the condition of the North American market, claiming sales declines between 1% and 8%. As I have shared with folks, anecdotal evidence tells me that retail tire sales could finish the year off between 7% and 12%!

A lot of this is regional in nature; some tire sales areas are more sensitive to economic impacts than others. Still, we have a serious problem.

How the rest of the year plays out cannot be predicted. Some economists are calling for the end of the world as we know it, others think things will at least level out by the end of the year. Look, oil prices have dropped sharply over the last two weeks, so who knows what will happen. Recession, inflation, depression – they are all still in the mix, and it is doubtful the first Tuesday in November will bring instant relief.

Dealers need to stay on top of the news, stay on top of their markets, and stay sharp.

If you have comments to share, send to me at [email protected].

– Jim Smith

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