Tire shipments forecasted to decline in 2006.

Tire shipments are predicted to decrease by 4.5% in 2006, according to the Rubber Manufacturers Association (RMA). The decrease in tire shipments reflects the overall slowdown in the U.S. economy during 2006. Factors cited for this slowdown include shrinking GDP during the calendar year, higher energy costs and a declining housing market.

However, the RMA projects a modest rebound in 2007, with the total tire shipments expected to increase by nearly 4 million units to 310 million units, or approximately 1.4%. Overall, the combined original equipment and replacement shipments for 2006 auto and truck categories are anticipated to decrease by 14.4 million units to nearly 306 million units.

The RMA's Tire Market Analysis Committee has issued a forecast for key categories and their respective segments for 2006 through 2011.

The original equipment passenger tires market is projected to decrease by more than 8%, or 4.6 million units, to approximately 48 million units in 2006 as a result of a decrease in domestic light vehicle sales and subsequent decreases in domestic light vehicle production. No growth is expected in 2007, with total shipments remaining at around the 48 million unit level.

Approximately 5 million original equipment light truck tire units are projected to be shipped in 2006, to be followed by a 4%, or 200,000 unit, increase in 2007. The increase is owed to the demand for small commercial trucks over the next year. The RMA notes that there has been a change in reporting this category, beginning in 2006, as service trailer tires are no longer included in this category. As such, figures for previous years are not comparable.

Approximately 6.8 million original equipment medium/wide-base/heavy on-highway commercial truck tire units are estimated to be shipped in 2006, for an increase of nearly 9%, or 560,000 units. This increase can be attributed to the significant growth of sales of commercial truck vehicles over the calendar year as a result of continued vehicle replacement demand and response to changes in 2007 EPA emission regulations. A sharp decline of approximately 20%, or approximately 1.5 million units, is anticipated in 2007 to 5.4 million units, given that some pulled ahead truck sales that would have been realized in 2007 are being shifted to 2006. The RMA notes that there has been a change in reporting this category beginning in 2006, as heavy on-highway truck tires are not included to obtain a more accurate portrayal of the commercial tire market.

The passenger replacement market will decrease by approximately 3.2% in 2006 to nearly 196 million units, or 6.5 million units. Nonetheless, the p-metric (for SUV type vehicles) and ultra high performance tire markets are projected to increase by approximately 4% and 12%, respectively, compared to 2005. A modest rebound of over 2%, or approximately 4 million units, is forecasted in 2007 as the effects of higher energy prices wane. As a result, total passenger replacement shipments are anticipated to reach 200 million units again.

The replacement light truck tire market segment is projected to decrease by approximately 7.2%, or nearly 2.6 million units, to 33.4 million units in 2006, due to the increasing popularity and numbers of cross-over vehicles and smaller SUVs that use p-metric passenger tires rather than light truck tires.

The replacement medium/wide-base/heavy on-highway commercial truck tires market is projected to decrease by approximately 2%, or 300,000 units, to 17.2 million units in 2006. However, shipments will increase by nearly the same number of units in 2007 to reach 17.5 million units. The RMA notes that there has been a change in reporting this category beginning in 2006, as heavy on-highway truck tires are now included in order to obtain a more accurate portrayal of the commercial tire market.