Growth in employment and disposable income will revive driving rates, bolstering demand.
New York, NY (PRWEB) March 11, 2014
Shifts in consumer preferences toward more fuel-efficient tires and pent-up demand for tire replacements have helped the Tire Dealers industry make a quick turnaround from recession-induced declines. According to IBISWorld Industry Analyst Brandon Ruiz, “After suffering through the downturn, revenue bounced back in 2010 and is expected to experience further growth of 0.1% in 2014, to reach an estimated $27.4 billion.” Still, the recession plagued the entire automotive sector, including industry operators; in light of rising unemployment and diminishing disposable income, consumers chose to maximize the longevity of their old tires and forego replacement, hurting tire sales in the process. As a result, the industry endured serious revenue losses during the recession. However, as consumers travel more and wear out old tires, and per capita disposable income continues to rebound, industry revenue is expected to increase at an annualized rate of 3.1% over the five years to 2014.
Furthermore, in the five years to 2014, volatile input costs have translated to unstable profit margins. In line with growing global demand, rubber, a major input for the industry, continues to climb in price. For example, the world price of rubber is expected to increase at an annualized rate of 7.6% in the five years to 2014. Nonetheless, tire dealers' average profit margins are expected to increase in 2014, largely due to sales of low-rolling resistance tires. Generally, these tires are less expensive to produce but are also less durable, leading to more frequent replacement.
The Tire Dealers industry will experience greater economic growth in the next five years. “As the US economy picks up, disposable income will rise, bolstering tire sales,” says Ruiz. In addition, as unemployment decreases, more people will commute to work. The anticipated growth in miles driven will lead to increased tire demand. Furthermore, federal mandates on fuel efficiency will increase demand for the already-popular low-rolling resistance tires, which require replacement more often. Consequently, industry revenue is forecast to rise over the five years to 2019.
For more information, visit IBISWorld’s Tire Dealers in the US industry report page.
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IBISWorld industry Report Key Topics
The Tire Dealers industry retails tires and tire tubes for passenger cars, sport-utility vehicles and commercial trucks. Businesses that offer maintenance services in addition to tire sales are included in this industry; however, mail order and online tire sellers are excluded.
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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