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August issue.

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2008 Tire Shipments Drop More Than 6%, Says RMA

2/24/2009 - Tire shipments are projected to decline by more than 6% in 2008 compared to 2007, with a further 1% decline predicted for 2009, according to the Rubber Manufacturers Association (RMA). Total tire shipments were below 300 million for the first time since 1997, when shipments were 290 million units. The decrease in tire shipments reflects the sharp downward revisions in the domestic economic conditions predicted for both the consumer and commercial sectors. Overall, the combined OE and replacement tire shipments for 2008 light vehicle and truck categories are anticipated to decrease by more than 20 million units to approximately 290 million total shipments compared to the 310 million total shipments in 2007 The RMA's Tire Market Analysis Committee's revised forecast for key categories and their respective segments for 2008 is summarized. Original equipment passenger tires: This category is projected to decrease by more than 14% to approximately 39 million units in 2008 as a result of continued decreases in domestic vehicle production. A further decrease of approximately 3% is expected for 2009, owing to a delayed economic recovery and continued market share gains for light vehicle imports. Note that this projection does not account for any changes to the automotive industry as a result of recent requests for federal financial assistance or the potential for bankruptcy. Original equipment light truck (LT) tires: Consu-mer demand for vehicles with higher fuel economy, a shift in vehicle fitments to p-metric passenger tires and market share increases by import vehicle manufacturers have combined to significantly impact light truck vehicles fitted with LT tires. As a result, the RMA forecasts a decrease of approximately 34% in 2008 for a total of 2.9 million OE units, representing a 1.5 million unit decrease from 2007's total. For 2009, another 100,000 unit decrease is anticipated, owing to the slow economic recovery and its impact on the commercial sectors that utilize light truck vehicles. Original equipment medium/wide-base/heavy on-highway commercial truck tires: For 2008, this category is predicted to decrease by approximately 16% to nearly 3.9 million units. This decrease is attributed to the larger than anticipated economic slowdown in the commercial sector. This will continue into 2009, and as a result, the RMA forecasts a further decrease of approximately 8%, or 300,000 units, for a total of 3.6 million units. Given this protracted economic downturn, the expected pull-forward effect of truck sales into 2009 owing to anticipated changes in EPA regulations in 2010 has been discounted. Replacement passenger tires: The slowing economy, higher energy costs and declines in miles traveled contributed to this market's decline. As a consequence, this category will realize a nearly 2.7% decrease, or approximately 5.5 million units, reaching a level of 198 million units in 2008. No growth is expected for 2009 due to the soft economic conditions. Replacement light truck tires: The forecast for this market segment is a 4.5 million unit decrease, or nearly 13%, to about 29 million units in 2008. Although the number of vehicles for this market remains steady and largely represented by small commercial vehicles, declining economic conditions and fewer miles driven will contribute to a further projected 4% decline in replacement LT tire shipments in 2009. Replacement medium/wide-base/heavy on-highway commercial truck tires: The RMA forecasts a decline to approximately 15.4 million units in 2008, a decrease of nearly 1.2 million units, or 7.1% over 2007. The market will realize another decrease of 300,000 units in 2009 as fewer goods will be transported as a result of the economic slowdown and protracted recovery. The Rubber Manufacturers Association is the national trade association for the rubber products industry. Its members include more than 80 companies that manufacture various rubber products, including tires, hoses, belts, seals, molded goods and other finished rubber products. The Tire Market Analysis Committee is comprised of tire market analyst professionals representing major U.S. tire manufacturers, which account for over 90% of all U.S. tire shipments. Their analyses and forecasts of current and future industry activity include a review of RMA tire industry and economic data, government trade figures, and vehicle sales and production.

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