Tire Shipments in 2000 Anticipated to Be at Record Levels
30 November 2000
Tire Shipments in 2000 Anticipated to Be at Record Levels, Light Truck Recall Shipments Contributing Factor
WASHINGTON, Nov. 30 The Rubber Manufacturers Association
(RMA) issued its revised shipment projections for 2000 and industry forecast
for 2001 and 2002. In this forecast, RMA's Tire Market Analysis Committee
(TMAC) assessed the twin impacts of the tire recall effort and the softening
of the domestic economic climate taken collectively over this three-year
period. Overall, the tire industry in 2000 will experience its fifth record
year in tire shipments but owes much of this year's growth to the over 6.5
million P-Metric tires replaced as part of the recall effort. Shipments of P-
Metric tires in 2000, those tires involved in the recall campaign, will
undercut replacement shipments over the next couple of years as tires that
would have been replaced in 2001 and 2002 are being replaced in 2000.
Consequently, shipments forecast for 2001 will fall just short of 2000's
record levels. Shipments in 2002 will once again be at historic highs, as
domestic and global economic factors resume their predominant influence.
"The tire industry's continued contribution to the nation's economy is
reflected in this year's record numbers as well as future tire industry
forecasts," said RMA President & CEO Donald B. Shea. "Tire manufacturing is
an important part of the American economy and we anticipate the continued
growth of this industry."
TMAC cites the Gross Domestic Product (GDP) and Industrial Production
Index (IPI) as the basis for continued strong growth in tire shipments where
leading economists expect the GDP to grow by 5.2% in 2000 and then level off
to approximately 3.5% for 2001 and 2002. Similarly, the IPI is anticipated to
also be strong 5.4% in 2000 and then remain level at approximately 3% for the
following two years. Key projections for 2000 include:
* Original Equipment Passenger Tires: 61.6 million units are projected to
be shipped in 2000 as vehicle sales set a record year of more than 17
million units. However, the market is expected to level off for 2001
and 2002 as the economy and vehicle sales slow to a still strong 16+
million unit clip.
* Original Equipment Light Truck Tires: while one of the largest growth
categories in 1999, this category will experience an 11% drop in
shipments in 2000 to 7.5 million units due to a maturing market in
Sport Utility Vehicle (SUV) sales. Domestic tire unit demand will
plateau at this level in 2001 and 2002 as any growth in SUV sales will
be met by imports.
* Original Equipment Medium/Wide-Base Truck Tire shipments will decrease
by nearly 15.7% or 1.1 million units in 2000 as commercial truck
vehicle sales slow dramatically through 2001. However, this category
will experience growth in 2002 at which point shipments will rise to
the 5.7 million unit level.
* Replacement Passenger Tire shipments are expected to leap by nearly 11
million units to reach the 203 million mark in 2000, or 5.8% over
1999's record 191.9 million units. Almost half of this increase can be
attributed to the P-Metric P235/75R15 tire recall effort that began in
mid August 2000 and is scheduled to be completed by the end of this
year. While the recall bolstered shipments in 2000, it will
essentially have "borrowed" from shipments in 2001 and 2002, as many
tires that would have normally been replaced in those years will be
replaced in 2000. As a result, replacement passenger shipments in
total for 2001 are anticipated to decrease by approximately 2% and then
pick up again in 2002 to the 203 million unit mark. In reviewing the P-
Metric Light Truck tires segment (a subset of passenger replacement
tires with light truck appearance and tread characteristics usually
found on SUV's and the focus of the recall campaign) on its own,
estimates are that shipments will jump by over 50% from 1999's levels
to the 27.5 million mark. Aside from the recall campaign, this segment
is one of the fastest growing tire categories due to the SUV and Light
Truck popularity over the past decade, and while retreating by 20% in
2001, will find its natural level of 24 million units in 2002.
* Replacement Light Truck Tire shipments (tires with a "LT" designation),
will experience a strong 3.6% growth for 2000 reaching 35 million units
in 2000. This will continue over the next several years as the
proportion of SUV's and Light Trucks in use will increase relative to
passenger vehicles on the road. For the category, it is anticipated
that 38.6 million units or a 5% annualized growth rate will be realized
in 2002 compared to 2000 levels.
* Replacement Medium/Wide-Base Truck Tire shipments, while setting a
record in 1999 with 14.6 million units shipped, will continue to grow
steadily at a rate of 4.7% in 2000 and 2% thereafter through 2002. In
2000, the number of units shipped will increase by approximately 700
thousand and 300 thousand for each year thereafter through 2002.
Overall, the combined auto and truck tire shipments for 2000 are projected
to exceed 328 million units, up 3.7% from the record 316.6 million units in
1999, eventually reaching nearly 332 million units at the end of 2002 -- a net
15 million unit gain over the forecasted three-year period. Other tire
markets with projected higher-than-average industry growth rates for the 2000
- 2002 will be the "H/V/Z" speed-rated and the performance-rated passenger
replacement tires growing at a forecasted 8.7% and 3.7% annual rate,
respectively.