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Passenger replacement shipments set 2005 record.

Passenger replacement tire shipments are anticipated to grow to a record-setting 205 million units this year, marking the first time shipments have exceeded 200 million units in any given year, according to the Rubber Manufacturers Association. Similarly, tire shipments for the combined original equipment (OE) and replacement consumer and commercial sectors are expected to increase by 2.2 percent compared to 2004 as a result of continued steady economic growth.

Citing the minimal impact of rising energy costs on driving behavior, steady growth in tire shipments is expected to continue through 2006 as the moderate economic expansion continues.

Overall, the combined OE and replacement shipments for 2005 auto and truck categories are anticipated to increase by approximately 7 million units, or 2.2% to over 325 million units. Tires sourced through imports will fulfill all of the increase in domestic shipments for 2005 and 2006 for all categories.

The group projects continued growth in total tire shipments of approximately 2% in 2006, reflecting increases in the nation's gross domestic product (GDP) and industrial production index (IPI).

RMA's Tire Market Analysis Committee forecasts for key categories and their respective segments for 2005 and 2006 include the following:

For original equipment passenger tires, the number of units shipped in 2005 will be unchanged from 2004's 53 million units, as domestic auto and light truck production remains constant. A slight decrease of less than one-half of one percent is forecast in 2006, in line with the decrease in vehicle sales. This forecast was made before General Motors' recent announcement to close plants, and may need to be revised when a clearer understanding of the dynamics between domestic sales and production by U.S. and foreign manufacturers can be ascertained.

A decrease of 2.5% for original equipment light truck tires is expected for 2005, to approximately 7.7 million units, as consumers opt for smaller-sized crossover utility vehicles (CUVs) that use passenger tires. Similarly, a further 2.6% decrease is anticipated for 2006 as CUVs gain in popularity.

Regarding original equipment medium/wide-base truck tires, sales of commercial truck vehicles will experience solid growth through 2006, due to replacement demand and in response to future changes in EPA regulations. The net effect will be a 10.3% growth in OE shipments for 2005 to 6.3 million units. Growth is expected to continue in 2006 at greater than 6%, after which growth will be curtailed as EPA regulations take effect.

The passenger replacement tire market will increase by 3.2% to more than 205 million units for 2005, the first time that this market will exceed the 200 million mark, and over 6 million units more than the 198.9 million-unit record set in 2000. Shipments of replacement passenger tires designed for sport and CUV applications jumped by 15% to 40 million units. Additionally, the high and ultra high performance markets increased 5% and 14%, respectively, compared to 2004. Growth is expected to moderate slightly in these categories for 2006. Steady growth in this segment is attributed to continued growth in the number of vehicles on the road and increasing vehicle miles traveled.

The replacement light truck tire market segment is projected to decrease by 1.4% to approximately 36 million units in 2005, but rebound by 2.7% in 2006, reflecting the greater number of vehicles on the road and growth in the commercial sector.

The replacement medium/wide-base truck tire market is forecast to grow to 17 million units, or 4.5%, in 2005, mainly as a result of the continued growth in industrial production and freight movement. Further growth of approximately 2% will be realized for 2006.
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Title Annotation:Perspectives
Publication:Rubber World
Date:Dec 22, 2005
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