Tire shipments up 2%, growth predicted through 2004. (Market Focus).

Tire shipments for 2002 will increase more than 2% due to the high rate of light vehicle production, a rebound in the commercial trucking sector and a strengthening U.S. economy, according to the Rubber Manufacturers Association. The group projects a stronger growth rate in total tire shipments of nearly 3% per year in 2003 and 2004 as the nation's gross domestic product (GDP) and industrial production index (IPI) build significant momentum.

Overall, the combined shipments of original equipment (OE) and replacement tires for 2002 auto and track categories are forecasted to increase to nearly 308 million units, a 2.6% jump, compared to 2001's approximately 300 million total shipments. Similarly, total shipments will grow by 10 million units in 2003 to eventually exceed 330 million units in 2004, or the equivalent of an annualized growth rate of nearly 4% based on 2002's forecast shipments.

Original equipment passenger tires

As a result of the continuing new vehicle buyer incentive programs, OE tire shipments to domestic light vehicle manufacturers are expected to increase by 7.3% in 2002 to 58.5 million units. However, no growth is forecasted for 2003 as vehicle incentive programs lose their allure for vehicle manufacturers.

In 2004, tire shipments are expected to grow to 59 million units due to improved domestic economic conditions.

Original equipment light truck tires

The total light truck (LT) OE market for 2002 is expected to be 8.4 million units and grow at an annualized rate of over 4% to reach nine million units in 2004. Comparisons to 2001 for this market cannot be discerned as service trailer tires have been reclassified from passenger tires to LT OE tires and comprise a significant percentage of the overall size of the IT OE market.

OE medium/wide-base truck tires

Sales of commercial truck vehicles have picked up as a result of stricter emission standards that began in October, but orders for class 8 trucks have declined recently. However, the truck trailer market is expected to rebound during the next two years and it is this segment that will cause increased demand for truck tires during this period. As a result, this sector will grow strongly by approximately 8% in 2002 to 3.7 million units. However, an even stronger 17% annualized growth rate is expected through 2004 as a greater number of trucks are sold to meet economic and industrial growth, at which point total medium mad wide base OE shipments will be slightly more than five million units.

Replacement passenger tires

The pull forward effect of P-metric tire shipments from 2002 and 2003 into 2000 and 200I from the Firestone recall and Ford replacement programs was originally thought to have a large negative impact on overall 2002 passenger replacement shipments. However, the nearly 17% decrease in P-metric tire shipments forecasted for 2002 has largely been offset by increases in other tire categories such as the ultra high performance and high performance tires, which will experience increases of approximately 13% and 16%, respectively. As a result, the overall replacement passenger tire segment in 2002 is forecasted to decrease less than 1.5 million units to a total of a 190 million units. The forecast for 2003 and 2004 calls for an annualized growth rate of nearly 4%, reaching a level of approximately 205 million units in 2004. This is mainly attributable to a rebound in the economy in combination with increased replacement of P-metric tires that were part of the recall and replacement programs reaching the end of their product lifecycle.

Replacement light truck tires

Shipments will realize an increase of over 5% in 2002 to approximately 34 million units as both the SUV and light truck markets mature and light truck tires are viewed as a replacement alternative to P-metric tires. This market segment is forecasted to grow at an annualized rate of over 6% through 2004, eventually reaching 38 million units.

Replacement medium/wide-base truck tires

Shipments are projected to increase by a strong 7.5% to 14.6 million units in 2002 and then, mainly as a result of the forecasted strong rebound in industrial production, maintain a 2.5% annualized growth rate through 2004 to reach 15.3 million units.