Economic woes and decreased spending has kept demand low over the past five years
New York, NY (PRWEB) March 04, 2015
Over the past five years, revenue for the Tire Dealers industry is expected trend higher. As economic conditions, such as disposable income and unemployment improved in 2011, consumers released pent-up demand for replacement tires. However, fewer replacement tires were needed as new vehicle sales increased, which slightly inhibited industry revenue growth. Nevertheless, industry revenue is expected to grow at an average annual rate of 3.1% to $4.2 billion, including an estimated 1.9% increase in 2015.
Going forward, potential threats exist that could hamper industry revenue growth. According to IBISWorld Industry Analyst Brandon Ruiz, “The industry faces high competition, primarily from car dealerships, but also from alternative modes of transportation.” Car dealerships typically have a competitive advantage over industry operators because vehicle warranties include tire replacement. Moreover, when consumers take alternate modes of transportation, demand from tire dealers diminishes. For example, when fuel prices increase, consumers generally avoid driving vehicles and instead opt to use more affordable alternatives, such as public transportation. With less car use, wear and tear will not be as prominent and demand for replacement tires will decline.
Over the five years to 2020, industry operators are expected to experience mixed results from improvements in the overall domestic economy. On one hand, as disposable income and unemployment continue to improve, consumers will release pent-up demand for tires, benefiting industry operators. On the other hand, improvements in the overall economy will likely increase new vehicle sales. “A rise in new vehicle sales will increase the total pool of vehicles that use tires; however, it will also likely inhibit growth in the short term because new vehicles come ready with factory-issued tires,” says Ruiz. Nevertheless, this trend is not expected to weigh down the industry. As a result, IBISWorld expects the Tire Dealers industry to grow over the five-year period.
For more information, visit IBISWorld’s Tire Dealers in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry retails tires and tire tubes for passenger cars, sport-utility vehicles (SUVs) and commercial trucks. Businesses that offer maintenance services in addition to tire sales are included in this industry; however, car dealership tire services 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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