Strong replacement demand to spur tire growth.

Tire shipments for 2003 increased by a slight 0.6% compared to 2002 levels as a result of a strong replacement tire market demand being offset by a decline in light vehicle OE tire markets. However, a strong 3.2% overall growth is anticipated in 2004, attributable to a rebound in the commercial trucking sector and a strengthening U.S. economy, according to the Rubber Manufacturers Association.

The group projects continued annualized growth of approximately 2% for total tire shipments through 2009 as the nation's gross domestic product (GDP) and industrial production index (IPI) gain momentum over time.

Overall. the combined shipments (OE + replacement) for 2003 light vehicle and commercial truck categories increased by 1.9 million units to nearly 310 million. A decrease of nearly three million traits in the OE market was offset by an increase of roughly five million units in the replacement markets. By 2009, this combined market figure is forecast to exceed 350 million units.

RMA's Tire Market Analysis Committee forecast for key categories and their respective segments for 2004 through 2009 include:

Original equipment passenger tires

An approximate 5% decline to 54.4 million units was realized for 2003 as a result of declines in domestic light vehicle production of nearly 200,000 units. Little or no growth is anticipated for 2004 through 2009 as increases in domestic light vehicle sales me offset by increases in Mexican and Canadian vehicle production, along with increases in market share by offshore auto manufacturers.

OE light truck (IX) tires

Shipments decreased by over 49% to 7.9 million units for 2003. but will rebound sharply by nearly 6% to approximately 8.4 million traits in 2004, reflecting increases in light truck and sport utility vehicles (SUV) production for 2004 with more of these being fitted with the "'LT" tire. This market will continue to experience a strong 2.7% annualized growth rate through 2009, at which time shipments will approach 10 million units. Note that this market also incorporates service trailer tires, which were reclassified in 2002 from passenger tires to LT OE tires, and comprise a material percentage of the overall LT OE tire market.

OE medium/wide-base truck tires

Shipments in 2003 experienced it 7% growth rate, reaching the 4.2 million unit level as the industrial sector rebounded. Going forward, sales of commercial truck vehicles will increase dramatically, which is in line with the 5% average increases forecast for the industrial production index (IPI) over the next several years. The net effect will be approximately 22% growth, or a 900,000 unit increase in OE shipments for 2004 to 5.1 million units. Growth is expected to continue from 2004 through 2006, topping out at nearly 6.3 million units when stricter Environmental Protection Agency (EPA) emission standards for trucks for 2007 will take effect and curtail shipments through 2009.

Replacement passenger tires

The passenger replacement markets saw most of their increase in the latter half of 2003, resulting in an annual 1.6% increase over 2002, or 193.6 million units. Further increases are expected for 2004, where it is forecast that total units will reach the 200 million mark for a gain of 2.6%. As a result, 2004 will likely set a record by exceeding 198.9 million units achieved in 2000. By 2009, it is forecast that this market will break the 225 million tire barrier for an annualized five-year growth rate of just over 2%.

Replacement light truck (LT) tires

This market segment increased by over 800,000 units over 2002's figures to 34.5 million units. An additional 1.8 million units is forecast in 2004 for a total market of 36.3 million units due to strong economic predictions and more SUV and light truck vehicle owners opting for LT replacement tires in place of P-metric passenger tires. Over the next five years, this market will expand to 42 million units for a five-year annualized growth rate that will be just short of 3%.

Repl. medium/wide-base truck tires

This market grew by 5.5% in 2003 to approximately 15.5 million units mainly its a result of the strong rebound in industrial production in the second half of the year. This will continue through 2006 when shipments are estimated to top out lit 16.5 million units and will remain tit this level through 2009.