Rising disposable income has stimulated consumer demand for tire replacements
New York, NY (PRWEB) March 07, 2014
Revenue for the automobile tire retail market experienced volatility over the past five years, largely driven by income and vehicle mileage movements. Per capita disposable income declined during the recession, causing consumers to cut back on tire purchases. Additionally, gasoline prices increased at an average annual rate over the past five years, and consumers responded by driving less. On the other hand, the recession caused consumers to hold off on new vehicle purchases. Older vehicles are more likely to require replacement tires, helping maintain demand for tire retailers. Overall, revenue sharply declined in 2009 before rebounding strongly in 2010 and 2011.
The tire retail market has since stabilized, with low single-digit growth in each of the past three years. Vehicle mileage has picked up in line with the growing economy, while rising disposable income has stimulated consumer demand for tire replacements. Additionally, recovering industrial production has resulted in greater demand for freight and truck transportation, bolstering demand for truck tires offered by industry operators. Demand from downstream markets is expected to drive industry revenue growth in 2014. In the five years to 2014, IBISWorld expects revenue for the auto tire retail market to grow at an average annual rate.
Similar to revenue, profit margins for industry operators were volatile over the past five years due to unstable demand and rubber prices. Upstream tire manufacturers passed on costs to tire retailers, who in turn passed on some costs to consumers. Nevertheless, according to IBISWorld Industry Analyst David Yang, “profit growth was strained by rising rubber prices.” However, “during the latter half of the past five years, rising disposable income stimulated consumer demand for premium fuel-efficient tires, which command higher margins,” says Yang. Therefore, profit is anticipated to increase in the five years to 2014.
The Retail Market for Auto Tires industry has a low level of concentration, with the three largest players accounting for an estimated percentage of industry revenue. The tire retail market will return to stable growth over the next five years as demand picks up across all sectors of the economy. In particular, shifting consumer preference toward fuel-efficient tires will present a growth market for tire retailers. Government fuel-efficiency regulation will also stimulate demand for high quality tires. Fuel-efficient tires require frequent replacement, thereby driving revenue growth for the industry. In the five years to 2019, IBISWorld forecasts that revenue for the auto tire retail market will grow at an average annual rate.
For more information, visit IBISWorld’s The Retail Market for Auto Tires in the US industry report page.
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IBISWorld industry Report Key Topics
Tire retailers in The Retail Market for Auto Tires in the US Industry sell automobile tires and tubes that are used on all types of passenger vehicles and freight vehicles. This report shows the size of the retail market for this product and includes sales from all major retail channels, including specialty stores, general merchandisers and internet retailers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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