Was having lunch the other day with a good friend and a colleague I respect. Over chopped steak and a good-looking sandwich, he asked how I saw "the market" going for the rest of the year.
My response was somewhat measured, because "the market" can mean so many things. Thinking he was asking about the U.S. replacement consumer tire market, I offered my view that shipments will probably be down 6% to 8% all in for the year.
He about choked on his Reuben, his eyes getting quite wide.
“And if you’re looking at pure over-the-counter retail sales, I think things will be worse,” I continued, because the first bit of sour news wasn’t quite enough.
A conversation then wore on about data resources and OE sales and what his company was doing and so forth, and there were no real points to argue. We agreed to disagree. He saw the market one way, I another.
But word on the street is that Goodyear, Michelin, Bridgestone and Continental (at minimum) are turning North American (and even global) production levels down, and they may stay that way through the fourth quarter. Why? Because tires are backing up in their warehouses, and it seems independent wholesalers are seeing a slowdown in orders.
Why? Because the economy is still stinking lousy.
In a 10-Q filing the other day, Goodyear admitted it was cutting about 5 million tires out of its worldwide production plan for the second half. This came on the heels of its recent second quarter report that said its worldwide unit sales dropped by 3.7 million tires YoY for the quarter and 7.5 million units through the first half.
This is not about Goodyear. It’s about the real or perceived strength of the industry right now.
In its second quarter report, Cooper showed data that said total consumer vehicle tire shipments were down 8.6% year-over-year for RMA members, and 5.8% YoY for all tires shipped into the U.S. That’s for tires shipped, not sold at retail.
And that was just for the first quarter, which anyone will tell you was far better than the most recent one.
Shipments only tell part of the story. Those are the tires that can actually be counted, either by the RMA (which is made up of just 11 tiremakers, some without plants on these shores) or those hitting U.S. ports as non-RMA imports (this is not all China imports; there are well-known tire companies that are not RMA members, like Sumitomo, as well as most private branders).
What cannot be counted are unit sales by wholesalers or actual retail sales. For that we have to rely on anecdotal evidence, including consumer confidence marks, jobless claims, and good old-fashioned conversations with dealers.
And those tea leaves, sorry to say, are not offering positive news.
