Record replacement tire shipments in 1996 leads to conservative forecast for 1997.

The domestic replacement markets for passenger and light truck tires posted very strong gains in 1996, according to the tire market analysis committee (TMAC) of the Rubber Manufacturers Association (RMA).

"Replacement shipments of passenger tires hit an all-time high of 175.3 million units in 1996, three percent higher than the previous industry high of 170 million units shipped in 1994, and five percent more than the 166.8 million units shipped in 1995," said Thomas E. Cole, President of the RMA. "Growth for replacement light truck tires was even stronger, with 1996 industry shipments of 27.6 million units compared to the previous record of 25.5 million tires shipped in 1995, an increase of eight percent," Cole added.

Following these record shipment levels in an economy growing at a rate less than three percent, TMAC predicted replacement passenger tire shipments to increase less than 2 million units in 1997, to an expected 177 million tires. Growth in the replacement light truck tire market is also expected to slow in 1997, with shipments forecast to reach 28 million tires for the year.

While shipments of passenger tires for new light vehicles were virtually unchanged in 1996, with year-end shipments of 57.1 million original equipment (OE) passenger tire units, the industry group expects this segment to rebound in 1997. The forecast of 60.3 million OE passenger tires in 1997 is driven largely by increased production of light trucks filled with passenger tires. This trend is expected to continue driving down demand for OE light truck tires to 5.7 million in 1997, from the 6.0 and 5.8 million, shipped respectively in 1995 and 1996.

TMAC also reviewed industry trends related to import and export activity. TMAC predicted that the 23.7 million passenger tires exported by RMA companies in 1996 would continue to increase at a rate just below one percent per year through the turn of the century. Passenger tire imports, TMAC observed, appear to have leveled off at approximately 43 million tires per year.

Gradual increases in truck and trailer production are expected to support gradual increases of one to two percent per year in the medium and wide-base OE truck tire market. Replacement shipments of medium and wide-base truck tires are expected to grow at a slower rate between one-half and one percent.

TMAC is comprised of forecast professionals from a group of tire manufacturers, who together account for over 95% of all U.S. tire shipments. Their analysis of industry activity, both current and future, entails a review of RMA tire industry reports and other economic data, such as government trade figures, domestic growth projections and forecasted vehicle production. TMAC develops its consensus view for tire demand from this process.

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