Global Demand for Replacement Tires is Down


As the world economy has slowed, so has demand in the largest segment of tire manufacturing: the replacement industry.

Consumers have been driving less and cutting back on their tire purchases. The underlying reasons for this shift in behavior include stubbornly high unemployment, prevailing economic uncertainty, and rising fuel prices, according to a recent report by Standard & Poor’s Ratings Services.

“U.S. replacement tire shipments in 2011 accounted for over 80% of the overall industry, but we expect shipments to fall about 2% in 2012,” said credit analyst Lawrence Orlowski. “And with the weak global economic forecast, there’s not much hope that demand for replacement tires will increase any time soon,” he added.

Standard & Poor’s economist expects GDP growth of just 2.1% in the U.S. this year and only 1.8% in 2013–and our expectations for another U.S. recession remain at about 25%. The picture in Europe is gloomier, as Southern Europe is in midst of serious downturn and even the stronger northern region appears to be succumbing to the spreading weakness. “We expect replacement tire shipments to fall 5% to 10% in Europe in 2012,” he said.

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