2017 Facts: Overview What to expect in 2017 · MTD26 January 2017 2017 Facts: Overview What to...

MTD January 2017

2017 Facts: Overview

What to expect in 2017Despite mixed signals, there is a lot to be optimistic about By Bob Ulrich

Even before the 2016 presidential election was over, there were signs 2017 might be a good one for the automotive industry. According to the NPD Group’s Holiday Purchase

Intentions report, Donald Trump supporters were almost twice as likely to say they planned to spend more on automotive products in 2016 than Hillary Clinton supporters.

What will actually happen when Trump becomes president is unknown, although he clearly favors conservative policies. But there are other sources that will give you insight into what will affect your business in 2017.

Nathan Shipley, director of U.S. automotive industry analysis at the NPD Group, says the combination of declining retail prices in 2016 and a slowdown in miles driven growth are pointing to a decline in retail sales in 2017.

At the Automotive Aftermarket Products Expo’s 2017 Aftermarket Outlook session in November, he shared results from NPD’s 2017 Consumer Outlook Survey with attendees. “Our forecast for 2017 is that our industry is going to shrink a bit. It’s going to decline 1.9%.”

Shipley sees ride-sharing, car-sharing services and autonomous vehicles as “industry disruptors” further down the road.

There also are some positive signs. Through September 2016, vehicle miles driven was on a record pace: close to 3.2 trillion miles, even though the 3% growth rate reportedly decreased as the year wound down. Entering the year, AAA’s average price for a gallon of gasoline was $2.34. That’s higher than last year at this time, but still more than $1 a gallon less than the 2014 average, a year in which total miles driven still outpaced the previous year.

NPD research indicates do-it-for-me oil change service has taken two share points from the do-it-yourself consumer market segment.

Nick Mitchell, senior vice president of research for Northcoast Research Holdings LLC, says the drive toward high-value-added (HVA) tires — those 17 inches and larger — will require more production capacity to serve the U.S. market. “Approximately four new tire plants will be needed over the next five years.”Now trending: CUVs, online sales and you

The Ford F-150 was once again the best-selling vehicle in 2016. However, the fastest growing vehicle segment was the CUV segment.

Vehicle registration data compiled by the R.L. Polk Division of

0

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Farm $ 512 millionOTR $1.6 billion

Light truck $5.1 billionTruck $6.3 billion

Passenger $24.6 billion

Chart 12016 U.S. REPLACEMENT TIRE SALES

( a $38.1 billion industry)

26

27www.moderntiredealer.com

2017 Facts: Overview

IHS Inc. shows crossover utility vehicles now comprise 27% of the total automotive market in the U.S.

Considering the CUV market was virtually non-existent 20 years ago, that is significant, says Mike Antich, editor of Automotive Fleet magazine.

“As a consequence, OEMs are adjusting future product plans to meet this ongoing trend. Likewise, commercial fleet sales are also reflecting an increased acquisition of crossover vehicles. Today, as a percentage, fleet registrations of crossover models such as the Chevrolet Equinox, Ford Edge, Dodge Journey, etc., are beginning to mirror the market share found on the retail side of the business.”

The top 10 CUV tire sizes represent 50% of the total CUV tire population, says Rick Brennan, vice president of marketing for Falken Tire Corp. The most popular is size 225/65R17, followed by 215/70R16, 235/65R17, 235/70R16, 225/60R17 and 235/55R18.

There are 3.7 million more vehicles on the road with size 225/65R17 tires than there were in 2012, he adds.

Another trend is the marketing emphasis on millenials, defined by the U.S. Census Bureau as people born from 1982 to 2000. Their $1 trillion in buying power and affection for both digital technology and social media have led tire manufacturers like Goodyear Tire &

Rubber Co. and Michelin North America Inc. to sell tires directly to consumers from their websites, much to the chagrin of some of their dealers. (Nick Mitchell estimates Goodyear sold 200,000 tires online last year.) Other tire manufacturers are expected to follow suit and sell online as well.

“Millennials will form 75% of the workforce by 2025 and are actively shaping corporate culture and expectations,” says Goodyear.

As for Bridgestone Americas Inc.’s approach to online sales , CEO Gordon Knapp says the company’s online platform is designed to drive traffic to tire dealerships. “We want you to participate in it,” he told dealers at the recent Bridgestone Consumer Tire Business Meeting.

Modern Tire Dealer estimates online sales to consumers represents between 5% and 6% of the 236 million domestic replacement consumer tire market.

Despite the increased competition, independent tire dealers remain the strongest of the tire distribution channels. They represent 61% of all consumer tire retail sales and 78% when wholesale distribution is taken into account. Both are increases from 2015.

Retailers average $1.9 million in sales per outlet, and sell 14 to 15 different brands. Wholesalers average $5.2 million in sales, and offer 11 to 12 different brands to their retail customers.

2006

Rank by No. of dealers Dealers/outlets

1. Michelin 71/3,318

2. Goodyear 64/3,035

3. BFGoodrich 53/2,757

2008





4. Dunlop 52/2,969

2010





4. Bridgestone 62/2,928

5. Continental 55/3,293

6. Dunlop 52/3,301

2012







6. Firestone 54/3,003

7. Yokohama 51/3,784

Chart 2BRANDS LISTED BY 50 OR MORE OF THE MODERN TIRE DEALER 100, 2006-2016

2014









8. Cooper 51/3,308

8. General 51/3,176

2016









8. General 56/3,582

9. Cooper 55/3,822

10. Uniroyal 52/2.623

MTD January 2017

2017 Facts: Shipments

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150

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250

2013201420152016

49.0

205.

0

205.

9

206.

6

192.

0

49.0

46.3

44.0

4.90

4.60

4.80

4.20

31.0

29.0

28.8

28.8

18.4

18.0

17.3

15.7

5.005.

806.30

5.40

0

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10

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20

25

30

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OEReplacement OEReplacement

2013201420152016

Medium/Heavy truck tiresLight truck tiresPassenger tires

0

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OEReplacement

2013201420152016

Chart 3U.S. REPLACEMENT AND OE TIRE UNITS SHIPPED, 2013-2016

(in millions; imports included)

Year Units Yr./yr. change2016 19.0 -37.0%2015 30.2 -50.0%2014 60.5 +17.9%2013 51.3 +57.8%2012 32.5 +25.0%2011 26.0 -16.1%2010 31.0 -27.9%

Consumer tire demand varied in 2016T ire dealer inventories were over-flowing to start 2016. Demand took care of that, but a mid-year glut again curtailed shipments a

bit. When the year was over, passenger tire sales were good, but passenger tire shipments were down slightly, from 205.9 million units to 205 million. Original equipment shipments were also down, from 49.1 million to 49 million. Well stocked or not, tire

dealers could sell all the LT tires they wanted: Shipments were up nearly 7%, from 29 million to 31 million units.Tariffs reduced U.S. consumer tire imports from China drastically. As a result, overall imports were down slightly, although other

countries almost picked up the slack. The new tire export leader to the U.S. is Thailand, followed by South Korea, China and Canada.

Chart 5WORLD LEADERS IN NEW TIRE SALES

(fiscal year 2016; in billions of U.S. dollars1)Tire company 2016 2015Bridgestone Corp. $25.8 $26.2Groupe Michelin $21.7 $22.3Goodyear Tire & Rubber Co. $14.8 $15.9Continental AG $11.7 $11.6Pirelli & Cie SpA $6.7 $7.0Sumitomo Rubber Industries Ltd. $5.9 $6.0Hankook Tire Co. $5.8 $5.7Yokohama Rubber Co.2 3 $4.0 $4.1Cheng Shin Rubber Ind. Co. Ltd.4 $3.8 $3.8Cooper Tire & Rubber Co. $2.9 $3.0Toyo Tire & Rubber Co. Ltd. $2.7 $2.7Kumho Tire Co. Inc.2 $2.5 $2.71 The average exchange rates between foreign countries and the U.S. dollar differed from 2015 to 2016 as follows: European euro, up 0.2%; Japanese yen, down 10.2%; Korean won, up 2.4%; Taiwan dollar, up 1.6%.2 In 2013 Yokohama Rubber Co. and Kumho Tire Co. Ltd. signed a memorandum of understanding to share resources and “jointly pursue research and development of tire-related technologies to compete with the Big 3.”3 Yokohama Rubber Co. Ltd. acquired Alliance Tire Group B.V. on July 1, 2016.4 The Cheng Shin Rubber USA Inc. subsidiary does business as Maxxis International.5 Sumitomo Corp. of America is run independently of Sumitomo Rubber Industries.

Chart 6U.S./CANADIAN LEADERS IN NEW TIRE SALES

(fiscal year 2016; in billions of U.S. dollars1)Tire company 2016 2015Bridgestone Americas Inc. $7.7 $7.9Goodyear Tire & Rubber Co. $6.7 $6.9Michelin North America Inc. $6.5 $6.7Continental Tire the Americas LLC $2.9 $2.9Cooper Tire & Rubber Co. $2.1 $2.2Hankook Tire America Corp. $1.6 $1.2Toyo Tire Holdings of America Inc. $1.4 $1.4Yokohama Tire Corp. $1.1 $1.2Sumitomo Rubber Industries Ltd.5 $.8 $.8Pirelli Tire North America Inc. $.5 $.6Kumho Tire USA Inc. $.5 $.6

Year Units Yr./yr. change2009 43.0 -7.5%2008 46.5 +14.8%2007 40.5 +50.0%2006 27.0 +28.0%2005 21.0 +44.0%2004 14.6 +36.0%Source: U.S. government, MTD.

Chart 4U.S. CONSUMER TIRE IMPORTS FROM CHINA

(in millions of units)

28

MTD January 2017

2017 Facts: Market share

All mixed up:Price and size will affect shareThe demand for Tier 1 tire brands was often overshadowed by demand for lower-priced Tier 3 brands in 2016, according to Nick

Mitchell, senior vice president of research for Northcoast Research Holdings LLC. Based on results from the monthly Northcoast Research Tire Demand Index, Tier 1 tires finished third behind both Tier 3 and Tier 2 tires six out of the first 10 months of the year.

The ongoing trend toward larger diameter consumer tires also is affecting the mix in the aftermarket. Tire manufacturers are emphasizing these “high-value-added,” or HVA, tires in production; Mitchell predicts annual domestic shipments of HVA passenger and light truck tires will increase by 54.2 million units by the end of 2021.

Chart 102016 U.S. REPLACEMENT

PASSENGER TIRE BRAND SHARES

(based on 205 million units)Brand % of totalGoodyear 13.0%Michelin 9.5%Bridgestone 8.0%Firestone 7.5%Cooper 5.5%BFGoodrich 5.0%Hankook 4.5%Continental 4.0%Yokohama 4.0%Falken 3.0%General 3.0%Toyo 3.0%Kumho 2.5%Multi-Mile 2.5%Nexen 2.5%Pirelli 2.5%Primewell 2.0%Sumitomo 2.0%Uniroyal 2.0%Dunlop 1.5%GT Radial 1.5%Hercules 1.5%Mastercraft 1.5%Nitto 1.5%Big O 1.0%Cordovan 1.0%Delta 1.0%Fuzion 1.0%Kelly 1.0%Sailun 1.0%Sigma 1.0%Others 3.0%All brands listed own at least 1% of the market.

Chart 92016 U.S. REPLACEMENT LT TIRE BRAND SHARES

(based on 31 million units)Brand % of totalGoodyear 12.0%BFGoodrich 8.5%Bridgestone 7.5%Michelin 7.5%Firestone 7.0%Cooper 6.5%General 5.0%Hankook 4.0%Multi-Mile 4.0%Toyo 4.0%Yokohama 4.0%Kumho 2.5%Pirelli 2.5%Dunlop 2.0%Hercules 2.0%Mastercraft 2.0%Uniroyal 2.0%Continental 1.5%Cordovan 1.5%Falken 1.5%Kelly 1.5%Maxxis 1.5%Nexen 1.5%Big O 1.0%Delta 1.0%Eldorado 1.0%GT Radial 1.0%Others 5.0%All brands listed own at least 1% of the market.

Chart 82016 BRANDS LISTED

BY THE MTD 100(total outlets: 6,004)

Rank by numberof dealers Dealers/outlets1. Michelin 89/5,0592. BFGoodrich 78/4,8703. Goodyear 73/4,7164. Continental 66/3,8955. Bridgestone 65/4,3866. Yokohama 60/4,2666. Firestone 60/2,7948. General 56/3,5829. Cooper 55/3,82210. Uniroyal 52/2,62311. Hankook 48/3,93712. Dunlop 43/4,01313. Kelly 41/2,30614. Pirelli 40/4,23515. Toyo 33/2,39516. Kumho 31/2,67717. Nexen 25/1,62518. Falken 24/2,37419. Nitto 22/2,20020. Fuzion 20/922

Chart 7CONSUMER TIRE MARKET SHARE

BREAKDOWN BY BRAND CATEGORY(based on 236 million units)

Note: Due to rounding of percentages, totals may not equal 100%.

30


2017 Facts: Market share

CHRYSLER/FIAT (FCA)

Goodyear 53%

Michelin 15%

Firestone 7%

BFGoodrich 4%

Continental 4%

Bridgestone 3%

Kumho 3%

Pirelli 3%

General 2%

Nexen 2%

Yokohama 2%

Falken 1%

Hankook 1%

FORD

Michelin 24%

Goodyear 21%

Continental 20%

BFGoodrich 9%

Pirelli 8%

General 7%

Hankook 7%

Bridgestone 2%

Cooper 1%

Toyo 1%

GENERAL MOTORS

Goodyear 40%

Michelin 20%

Bridgestone 17%

Firestone 13%

Continental 6%

Hankook 3%

General 1%

BMW

Pirelli 30%

Bridgestone 24%

Continental 22%

Dunlop 20%

Michelin 4%

Chart 11 2016 OE BRAND SHARES (U.S./CANADIAN LIGHT VEHICLES, EXCLUDING IMPORTS)

HONDA

Michelin 42%

Goodyear 32%

Bridgestone 17%

Continental 3%

Firestone 3%

Hankook 2%

Yokohama 1%

HYUNDAI/KIA

Hankook 39%

Kumho 32%

Nexen 15%

Continental 14%

MERCEDES-BENZ

Continental 29%

Pirelli 26%

Dunlop 15%

Bridgestone 11%

Michelin 10%

Goodyear 9%

NISSAN

Continental 34%

Michelin 29%

Goodyear 15%

BFGoodrich 6%

Toyo 6%

Bridgestone 3%

General 2%

Hankook 2%

Dunlop 1%

Falken 1%

Kumho 1%

SUBARU

Bridgestone 67%

Continental 30%

Goodyear 3%

TESLA

Goodyear 49%

Michelin 49%

Pirelli 2%

TOYOTA

Bridgestone 33%

Michelin 24%

Goodyear 12%

BFGoodrich 8%

Dunlop 8%

Firestone 5%

Toyo 3%

Continental 2%

General 2%

Yokohama 2%

Hankook 1%

VOLKSWAGEN

Continental 53%

Hankook 32%

Bridgestone 15%

Chart 13U.S./CANADIAN LIGHT VEHICLE MARKET SHARE

(based on production)

OEM 2016 2015

GM 21.0% 19.0%

Ford 18.6% 18.6%

FCA 14.5% 17.0%

Toyota 13.6% 13.6%

Honda 11.7% 11.7%

Nissan 6.9% 6.6%

Others 13.7% 13.5%

Chart 12U.S./CANADIAN OE

CONSUMER TIRE MARKET SHARE(excluding imported

vehicles)

Goodyear 27.1%

Michelin 21.5%

Bridgestone 13.3%

Continental 11.4%

Hankook 4.9%

Firestone 4.7%

BFGoodrich 3.7%

Pirelli 3.6%

General 2.4%

Kumho 2.3%

Dunlop 2.0%

Toyo 1.2%

Nexen 1.0%

Others 0.9%

MTD January 2017

2017 Facts: Distribution

Turn, turn, turn, turn your inventoryHow often should tire dealers turn their inventories? No less

than four times a year, says Dennis McCarron, executive director of Dealer Strategic Planning Inc. Scheduled

deliveries could increase that to eight times a year.“Inventory should turn frequently enough so that cash is

always available.”

Chart 16U.S. CONSUMER TIRE RETAIL MARKET SHARE

(based on retail sales)

Distribution channel 2016 2014 2012

Independent tire dealers

61.0% 60.5% 60.5%

Mass merchandisers 12.0% 13.0% 14.0%

Warehouse clubs 9.0% 9.0% 8.5%

Auto dealerships 8.5% 8.0% 7.0%

Tire company-owned stores

7.0% 7.5% 7.5%

Miscellaneous outlets 2.5% 2.0% 2.5%

Chart 15CONSUMER TIRE DISTRIBUTION CHANNEL

MARKET SHAREInitial channel 2016 2014 2012 2010

Independent tire dealers

78.0% 77.0% 77.0% 75.0%

Tire company stores

7.5% 8.0% 8.0% 8.5%

Miscellaneous* 14.5% 15.0% 15.0% 16.0%

* Miscellaneous includes mass merchandisers, warehouse clubs, automobile dealerships, auto parts chains, muffler shops and oil com-panies/service stations.

Chart 14COMPANY-OWNED STORES IN THE U.S.

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20Mass merchandisers

Auto dealers

201620142012201020082006200420022000

Chart 17MARKET SHARE: AUTO DEALERSHIPS VS. MASS MARCHANDISERS

(based on retail sales)

Chart 18U.S. NEW-CAR FRANCHISES

Year Number

2016 16,680

2015 16,545

2014 16,396

2012 17,545

2011 17,700

2010 18,460

2009 20,010

2008 20,770

2007 21,200

2006 21,495

2005 21,640

Source: National Automobile Dealers Association

Actual store numbersBridgestone 2,200Goodyear 600Nokian/Vianor 76

32

MTD January 2017

2017 Facts: Commercial

Low-cost imports affected new and retreaded tires I n 2016, replacement truck tire shipments were up 2.2%, to 18.4

million units. Some of those were low-cost imports, which adversely affected the number of retreaded truck tires sold. As the year was

ending, however, preliminary tariffs imposed by the U.S. Department of Commerce were helping retreaders.

According to “Profile of the U.S. Commercial Vehicle Market” by MacKay & Co. and Heavy Duty Trucking magazine, the Class 8 vehicle universe increased 5.8% from 2011 through a near-record 2015, which helps explain the increase in replacement truck tire shipments. Class 8 vehicle registrations were down in 2016, however, which is why OE truck tire shipments were down 14.2%.

The average sales margin for independent truck and wholesale truck tire dealers was 15% and 9.5%, respectively. The margin on commercial light truck tires was 19.1%.

Chart 212017 U.S. REPLACE-

MENT MEDIUM/HEAVY TRUCK TIRE

BRAND SHARES(based on 18.4 million units)

Brand 2017

Bridgestone 16.0%

Michelin 16.0%

Goodyear 11.5%

Yokohama 8.5%

Firestone 7.0%

Continental 6.0%

Hankook 3.5%

Double Coin 3.5%

Hercules 3.0%

Roadmaster 2.5%

Sailun 2.5%

Aeolus 2.0%

General 2.0%

Toyo 2.0%

Dynatrac 2.0%

BFGoodrich 1.5%

Dayton 1.5%

Duraturn 1.0%

Dynacargo 1.0%

Sumitomo 1.0%

Gladiator 1.0%

Kelly 1.0%

Kumho 1.0%

Samson 1.0%

Westlake 1.0%

Others 4.0%

All brands listed own at least 1% of the market.

0%

10%

20%

30%

40%

50%

60%

Local tire outlet 52%

Tire mfr. through dealer 28%

Tire mfr. direct 12%

Other 1%

'Truck stop 1%

Emergency road service 1%

'Local retread shop 5%

Chart 23COMMERCIAL TIRE DISTRIBUTION CHANNEL MARKET SHARE

(new and retreaded truck tires)

Source: MacKay & Co.,www.mackayco.com

Chart 19U.S. RETREADING, 2016

Truck tire units 14.5 million

Sales (with casings) $3.2 billion

Average casing price $63.84

% precure units 94%

Average sales margin 21.6%

No. of plants, truck tires 650

No. of plants, OTR tires 18

Chart 22U.S. TRUCK TIRE

IMPORTSFROM CHINA

(in millions of units)

Year Units Yr./yr. change

2016 7.8 -17.0%

2015 9.4 +14.6%

2014 8.2 +30.1%

2013 6.3 +0.1%

2012 6.3 +13.5%

2011 5.5 +37.5%

Source: U.S. government, MTD figures.

Chart 20 2016 U.S. MARKET SHARE, RETREADED TRUCK TIRES

(based on 14.5 million units)

Bridgestone (Bandag)

43.5%

Goodyear 23.0%

Michelin/Oliver 23.0%

Marangoni 5.0%

Continental 2.0%

Others 3.5%Note: Due to rounding of percentages, totals for some charts may not equal 100%.

34

MTD January 2017

2017 Facts: Commercial

Fighting forsmall farm tiremarket shareL ook for added competitiveness in the

replacement front and implement farm tire market in the future. “I think that’s a

developing market, especially on the radial side,” says Steve Campanella, business intelligence manager for Alliance Tire Americas Inc. “It’s an opportunistic area.”

Bill Haney, off-highway tire manager for Apollo Vredestein Tyres North America Inc., agrees with the radialization trend in the replacement small farm tire segment.

“The market made a jump from U.S. standard bias tires to improved premium bias and implement flotation bias tires, and is now making the next jump to radials in these segments with good results.”

Chart 252016 U.S. REPLACEMENT

FARM TIRE MARKET SHARESRADIAL REAR, REPLACEMENT

2016 shipments: 289,100

Firestone 31.0%

BKT 23.0%

Michelin 17.5%

Goodyear 12.5%

Alliance* 7.0%

Titan 4.0%

Trelleborg 2.0%

Mitas 1.5%

Others 1.5%

Total 100.0%

BIAS REAR, REPLACEMENT2016 shipments: 464,000

BKT 38.0%

Firestone 24.0%

Alliance* 11.0%

Goodyear 7.0%

Harvest King 5.0%

Titan 4.5%

Trelleborg 2.5%

Akuret 2.0%

Carlisle 2.0%

American Farmer 1.0%

Others 3.0%

Total: 100.0%

SMALL FARM, REPLACEMENT2016 shipments: 1.22 million

Firestone 22.0%

BKT 17.0%

Goodyear 15.0%

Titan 13.0%

Carlisle 12.0%

Harvest King 8.0%

Akuret 4.0%

Alliance* 3.0%

Trelleborg 2.5%

American Farmer 1.0%

Others 2.5%

Total 100.0%

Source: Modern Tire Dealer* Yokohama Rubber Co. Ltd. purchased Alliance Tire Group B.V on July 1, 2016.

Chart 262016 U.S. OE FARM TIRE

MARKET SHARES RADIAL REAR, OE

2016 shipments: 168,000 Firestone 40.0%Goodyear 32.0%Michelin 14.0%Titan 5.0%BKT 3.0%Mitas 2.0%Trelleborg 2.0%Others 2.0%Total 100.0%

BIAS REAR, OE2016 shipments: 277,000

Titan 35.0%Firestone 30.0%Goodyear 25.0%Alliance* 6.0%BKT 1.0%Trelleborg 1.0%Others 2.0%Total 100.0%

SMALL FARM, OE2016 shipments: 263,000

Goodyear 32.5%Titan 20.5%Firestone 15.0%Carlisle 12.0%BKT 7.0%Alliance* 6.5%American Farmer 2.0%Trelleborg 1.5%Mitas 1.0%Others 2.0%Total 100.0%

20%

30%

40%

50%

60%

Replacement

OE

2016201520142013201220112010200920082007

Chart 24REAR FARM TIRE RADIALIZATION TRENDS

Source: Modern Tire Dealer

36

MTD January 2017

2017 Facts: Pricing and sizes

Large rim diameterstake overL arge rim diameters are the new normal for passen-

ger tire sizes. Defined as 17-inch sizes and above, they represent 56.4% of all 351 sizes. They also

are known as high-value-added tires, or HVA for short. Wal-Mart Stores Inc. still advertises smaller sizes. For

example, Walmart has been offering the Goodyear Eagle RS-A in size 195/60R15, still the ninth most popular size, for at least five years. In that time, the price has steadily dropped from $65 in 2011 to $54 in 2016.

Its $37.50 Douglas Xtra-Trac II in size 155/80R13 is no longer available, but the size has not disappeared. It is now known as the Douglas All-Season ($40.91) on walmart.com. Eight other lines also are available in size 155/80R13, ranging from the Evergreen EH22 ($28.70) to the Cooper Trendsetter SE ($70.95).

Chart 29 TOP U.S. REPLACEMENT PASSENGER TIRE SIZES,

20161. 205/55R16 2. 215/60R163. 195/65R15 4. 215/55R175. 265/70R17 6. 225/65R177. 225/60R16 8. 225/50R179. 195/60R15 10. 235/70R16

Source: RMA, MTD

Chart 30 TOP U.S. REPLACEMENT LT

TIRE SIZES, 20161. LT265/70R17 2. LT245/75R163. LT265/75R16 4. LT225/75R165. LT235/85R16 6. LT275/70R187. LT285/70R17 8. LT245/75R179. LT285/75R16 10. LT215/85R16

Source: RMA, MTD

10

15

20

25Prices in dollars

20162015201420132012201120102009200820072006

Chart 31 ADVERTISED OIL CHANGE PRICES

Source: Modern Tire Dealer statistics

Chart 27NEW P-METRIC AND LT TIRE SIZES/SKUS IN 2017

(not counting spares or 17 additional load ranges added to existing LT sizes)

P255/80R17 P275/45R18 P325/35R18

LT355/40R26 LRF 35x11.50R17LT LRE 33x11.50R20LT LRE

37x13.50R26LT LRE 36x15.50R20LT LRE 40x15.50R26LT LRE

Source: Tire and Rim Association

Chart 322016 AVERAGE ADVERTISED TIRE PRICES

(in the U.S.)

Size Major brand Low-cost Overall

205/55R16 $137.23 $77.14 $123.98

215/55R17 $153.27 $88.39 $136.87

215/60R16 $126.89 $78.15 $112.15

235/75R15 $137.27 $100.10 $123.20

275/65R18 $230.62 $211.30 $221.06

LT225/75R16 $172.60 $123.74 $155.88

LT245/75R16 $180.39 $127.30 $162.92

LT245/75R17 $213.73 $150.61 $195.81

31x10.50R15 $182.17 $139.29 $167.01Source for Charts 32-34: Tire Intelligence LLC, www.tire-intelligence.com

Chart 33ADVERTISED PRICING BREAKDOWN,

215/55R17Speed Major Low Cost Radial Overall

V-rated $157.60 $90.59 $140.87

H-rated $151.75 $100.43 $146.44

T-rated $139.78 $106.86 $132.24

$19.54

12-inch: 1

13-inch: 13

14-inch: 26

15-inch: 56

16-inch 57

17-inch: 59

18-inch: 67

19-inch: 25

20-inch: 29

21-inch: 2

22-inch: 7

23-inch: 2

24-inch: 6

26-inch: 1

Source: Tire & Rim Association

Chart 28AVAILABLE SIZES BY RIM DIAMETER

38

MTD January 2017

2015 OE P-metric/metric

Size % of total

P215/55R17 4.1%

P265/70R17 3.4%

P215/60R16 3.2%

225/65R17 2.8%

215/55R17 2.8%


Size % of total

P215/55R17 5.0%

P215/60R16 3.4%

215/55R17 2.7%

P265/70R17 2.7%

P275/65R18 2.6%


Size % of total

P215/55R17 6.1%

P265/70R17 4.0%

P275/55R20 3.2%

P275/65R18 3.1%

P215/60R16 3.1%

Chart 36PROJECTED DEMAND FOR THE TOP 7 MASS MARKET FORD F-150 SIZES ON 2012-2014

MODELS(includes 2WD and 4WD)

Top sizes Estimated unit sales, 2017

235/75R17 260,312

245/75R17 70,530

265/70R17 6,615,436

255/65R17 659,592

275/65R18 1,071,650

265/60R18 1,176,025

275/55R20 2,502,360

Combined, these seven sizes, which also can be found on other vehicles, total 12.3 million tires, or close to 5% of the projected replacement con-sumer tire shipments in 2017.

Chart 34PRICE POINT BREAKDOWN OF SIZE 265/70R17 BY REGION

Region OPP Value Better Best Winter Average

East North Central $111.81 $141.96 $168.60 $177.55 $145.21 $164.84

East South Central

$114.85 $126.80 $160.83 $178.30 $146.18 $159.37

Middle Atlantic $122.00 $137.03 $174.31 $185.61 $144.14 $170.72

Mountain $110.24 $142.29 $151.72 $168.60 $157.11 $153.76

New England $134.04 $157.54 $180.74 $194.82 $134.39 $179.33

Pacific $105.11 $164.89 $158.81 $175.75 $175.40 $164.73

South Atlantic $118.40 $134.98 $170.31 $180.28 $146.89 $166.20

West North Central

$114.34 $107.94 $148.12 $163.11 $147.53 $146.51

West South Central

$108.20 $134.17 $163.44 $176.09 $160.64 $161.19

Nationwide $115.36 $136.00 $167.37 $178.87 $150.35 $164.45

Source for Charts 34 and 36: The Fitment Group, www.fitmentgroup.com

Ford F-150

size and price breakdown

T he Ford F-150 pickup has been the most popular vehicle in the U.S. for 35 consecutive years. That is why you

can expect to see a lot of 2012 and 2013 models — maybe even heavily used 2014 models — in your dealership in 2017.

There are seven mass market original equipment sizes on all Ford F-150 models from 2012-2014. That includes the Super Cab and the Super Crew.

Here are the estimated shipments in those sizes for 2017, courtesy of The Fitment Group (see Chart 36). In the spirit of inventory man-agement, we also broke down the most popular size, 265/70R17, into five price points in nine regions (see Chart 34).

Not surprisingly, two of the sizes, 265/70R17 and 275/65R18, were among the seven most popular OE sizes in all three model years. And they are also OE options on the 2015-2016 models.2012 OE P-metric/metric

Size % of total

P215/55R17 6.1%

P265/70R17 4.4%

P215/60R16 3.8%

P275/65R18 3.4%

P205/65R16 3.1%

2015 OE light truck (LT)

Size % of total

LT245/75R17 18.6%

LT225/75R16 9.8%

LT265/70R18 9.7%

LT275/70R18 7.9%

LT245/75R16 7.6%


Size % of total

LT245/75R17 21.7%

LT245/75R16 12.0%

LT225/75R16 11.4%

LT265/70R18 10.3%

LT275/65R18 7.8%


Size % of total

LT245/75R17 21.9%

LT245/75R16 14.0%

LT225/75R16 11.3%

LT265/70R17 8.9%

LT265/75R18 8.1%


Size % of total

LT245/75R17 22.1%

LT245/75R16 14.7%

LT225/75R16 11.1%

LT265/70R18 8.1%

LT265/70R17 7.7%

LT245/75R17 has been the No. 1 OE size from 2011-2015. The second most popular size, LT245/75R16, was No. 1 from 1993-2010.Source: Rubber Manufactur-ers Association

Chart 35MOST POPULAR DOMESTIC OE PASSENGER AND LT TIRE SIZES

2017 Facts: Pricing and sizes

40

MTD January 2017

2017 Facts: Plant capacities

Wow, a 4.6% rise in capacity!Y early tire capacity, not produc-

tion, in North America totaled 324.5 million tires in 2016, a

whopping 4.6% increase over 2015. And there is more to come; at least 22.3 mil-lion more tires will be available by 2023. The majority of the increases were the result of new plants and facility upgrades in the U.S. and Mexico. U.S. capacity rose nearly 5%. None of the four new plants are unionized. Since 2000, 10 consumer tire plants in the U.S. have been closed. Eight of them were union facilities:

• Goodyear: Union City, Tenn. (2011), Tyler, Texas (2008), and Huntsville, Ala. (2003).

• Continental: Charlotte, N.C. (2006), and Mayfield, Ky. (2005).

• Michelin: Opelika, Ala. (2009), and Reno, Nev. (2002).

• Bridgestone: Oklahoma City, Okla. (2006).

• Cooper: Albany, Ga. (2009).• Pirelli: Hanford, Calif. (2001).

The plants produced an estimated 263,000 passenger and light truck tires a day.

Chart 37NORTH AMERICAN PLANT CAPACITIES as of Jan. 1, 2017 (in thousands of units)

Plant location/Year constructed

Non-union ISO QS

Pas-senger

per day:

Light truck per day:

Truck per day:

Others per day: Total

Bridgestone Americas Inc.Aiken, S.C., 2013 x 0.0 0.0 0.0 0.03 0.03La Vergne, Tenn., 1972 x x 0.0 0.0 6.2 0.0 6.2Warren County, Tenn., 1990 x x 0.0 0.0 9.0 0.0 9.0Bloomington, Ill., 1965 x x 0.0 0.0 0.0 0.29 0.29Des Moines, Iowa, 1945 x x 0.0 0.0 0.0 4.57 4.57Wilson City, N.C., 1974 x x x 32.0 0.0 0.0 0.0 32.0Aiken, S.C., 1999 x x x 25.5 10.2 0.0 0.0 35.7Joliette, Quebec, 1966 x x 9.3 7.2 0.0 0.0 16.5Monterrey, Mexico, 2007 x 8.0 0.0 0.0 0.0 8.0Cuernavaca, Mexico, 1980 x x 11.0 4.4 0.0 0.0 15.4Total: 85.8 21.8 15.2 4.89 127.69

American Industrial Partners (formerly Carlisle Tire & Wheel Co.)Jackson, Tenn., 2009 x 0.0 0.0 0.0 26.0 26.0Clinton, Tenn. (Dico), 1974 x x 0.0 0.0 0.0 15.0 15.0Total: 0.0 0.0 0.0 41.0 41.0

Continental Tire the Americas LLCSumter, S.C., 2013 x 7.4 2.1 0.0 0.0 9.5Mount Vernon, Ill., 1973 x x x 29.0 4.0 8.0 0.0 41.0Total: 36.4 6.1 8.0 0.0 50.5

Cooper Tire & Rubber Co.Findlay, Ohio, 1917 x 7.0 16.0 0.0 0.0 23.0Texarkana, Ark., 1964 x 24.0 8.0 0.0 0.0 32.0Tupelo, Miss., 1984/1960 x x 42.0 0.0 0.0 0.0 42.0Total: 73.0 24.0 0.0 0.0 97.0

Goodyear Tire & Rubber Co.Danville, Va., 1966 x x 0.0 0.0 11.0 2.0 13.0Fayetteville, N.C., 1969 x x 30.5 10.5 0.0 0.0 41.0Gadsden, Ala., 1928 x x 14.5 11.5 0.0 0.0 26.0Lawton, Okla., 1978 x x x 64.0 0.0 0.0 0.0 64.0Topeka, Kan., 1945 x x 0.0 0.5 5.5 0.1 6.1Medicine Hat, Alberta, 1960 x x 0.0 0.0 0.0 13.0 13.0Napanee, Ontario, 1990 x x x 19.0 0.0 0.0 0.0 19.0Total: 128.0 22.5 16.5 15.1 182.1

GTY (General/Yokohama)Mount Vernon, Ill., 1988 x x x 0.0 0.0 3.9 0.0 3.9

Hankook Tire America Corp.Clarksville, Tenn., 2016 x 10.0 5.0 0.0 0.0 15.0

Kumho Tire Co. Inc.Macon, Ga., 2015 x 8.0 3.0 0.0 0.0 11.0

Michelin North America Inc.Ardmore, Okla., 1969 x x x 40.5 3.5 0.0 0.0 44.0Dothan, Ala., 1979 x x 1.2 4.3 0.0 0.0 5.5Fort Wayne, Ind., 1961 21.0 9.5 0.0 0.0 30.5Greenville, S.C., 1975 x x 28.0 0.0 0.0 0.0 28.0Greenville, S.C. (C3M), 1997 x x x 7.0 0.0 0.0 0.0 7.0Greenville, S.C. (Tweel), 2014 x 0.0 0.0 0.0 0.07 0.07Lexington, S.C., 1981 x x 19.0 5.0 0.0 0.0 24.0Lexington, S.C., 1998 x x 0.0 0.0 0.0 0.1 0.1

42


2017 Facts: Plant capacities

Goodyear Tire & Rubber Co.New plant: San Luis Potosi, MexicoCost: $550 millionCompletion date: Not specifiedAnnual capacity: 6 million

Giti Tire (USA) Ltd.New plant: Chester County, S.C.Cost: $560 millionCompletion date: Not specifiedAnnual capacity: 5 million

Michelin North AmericaNew plant: Leon, MexicoCost: $510 millionCompletion date: 4Q 2018Annual capacity: 4-5 million

Pirelli Tire North AmericaNew plant: Silao, MexicoCost: $200 millionCompletion date: By 2019Annual capacity: 2.5 million

Sumitomo Rubber USAPlant: Tonawanda, N.Y.Cost: $87 millionCompletion date: By 2020Annual addl. capacity: 1.8 million

Bridgestone AmericasPlant: Wilson, N.C.Cost: $344 millionCompletion date: By 2018Annual addl. capacity: 1 million

Plant: Joliette, QuebecCost: $250 millionCompletion date: By 2023Annual addl. capacity: 1 million

Added capacity: up to 22.3 million

Plant location/Year constructed

Non-union ISO QS

Pas-senger

per day:

Light truck per day:

Truck per day:

Others per day: Total

Spartanburg, S.C., 1978 x x 0.0 0.0 7.0 0.0 7.0Starr, S.C., 2013 x 0.0 0.0 0.0 0.01 0.01Tuscaloosa, Ala., 1945 x 23.0 7.0 0.0 0.0 30.0Bridgewater, Nova Scotia, Canada, 1973 x x 11.0 3.0 0.0 0.0 14.0Granton, Nova Scotia, 1971 x x 2.0 0.0 0.0 0.0 2.0Waterville, Nova Scotia, 1982 x x 0.0 0.0 4.5 0.5 5.0Queretaro, Mexico x 6.0 0.0 0.0 0.0 6.0Total: 158.7 32.3 11.5 0.68 203.18

Pirelli Tire North America Inc.Rome, Ga., (MIRS), 2002 x x 1.2 0.5 0.0 0.0 1.7Guanajuato, Mexico, 2011 x 8.0 3.0 0.0 0.0 11.0Total: 9.2 3.5 0.0 0.0 12.7

Specialty Tires of America Inc.Indiana, Pa., 1915 x 0.92 0.18 0.05 2.35 3.5Unicoi, Tenn., 1997 x 0.3 0.5 0.05 .25 1.1Total: 1.22 0.68 0.1 2.6 4.6

Sumitomo Rubber USA LLC (Sumitomo Rubber North America Inc.)Tonawanda, N.Y., 1923 x 3.0 2.0 2.3 5.0 12.3

Titan Tire Corp.Bryan, Ohio, 1967 x x 0.0 0.0 0.0 0.33 0.33Des Moines, Iowa, 1943 x 0.0 0.0 0.0 11.25 11.25Freeport, Ill., 1964 x x 0.0 0.0 0.0 8.1 8.1Total: 0.0 0.0 0.0 19.68 19.68

Toyo Tire North America Manufacturing Inc.White, Ga., 2005 x x 8.8 8.8 0.0 0.0 17.6

Trelleborg Wheel SystemsSpartanburg, S.C., 2015 x 0.0 0.0 0.0 0.06 0.06Charles City, Iowa, 2012 0.0 0.0 0.0 0.5 0.5Total: 0.0 0.0 0.0 0.56 0.56

Yokohama Tire Corp.West Point, Miss., 2015 x x x 0.0 0.0 2.0 0.0 2.0Salem, Va., 1968 25.7 1.1 0.0 0.0 26.8Total: 25.7 1.1 2.0 0.0 28.8

Grupo Carso/Euzkadi (Continental AG)San Luis Potosi, Mexico 15.0 5.0 0.0 0.0 20.0

JK Tyre & Industries (formerly CIA Hulera Tornel)Mexico City, Mexico 0.0 1.0 1.0 0.14 2.14Tultitlan, Mexico 7.0 1.5 0.5 0.0 9.0Tacuba, Mexico 8.0 2.5 0.0 0.0 10.5Total: 15.0 5.0 1.5 0.14 21.64

Corporacion de Occidente SA de CV (Cooper Tire)Guadalajara, Mexico, 2005 x x x 10.0 7.2 2.8 0.0 20.0

U.S. totals: 473.52 113.18 55.0 76.01 717.71Canadian totals: 41.3 10.2 4.5 13.5 69.5Mexican totals: 73.0 24.6 4.3 0.14 102.04TOTAL: 587.82 147.98 63.8 89.65 889.25

35Non-union

25Union

Chart 38PLANT UNIONIZATION

BREAKDOWN

Chart 39ADDITIONAL CONSUMER

TIRE CAPACITYTARGET DATES

MTD January 2017

2017 Facts: Auto service

Chart 40SERVICE WORK: AVERAGE

ANNUAL SALES PER SERVICE PER DEALER

Service Average annual sales

Visibility (wipers) $10,037

Electronic diagnosis $21,196

Ignition and spark $22,073

Exhaust systems $28,320

Cooling system $28,920

TPMS $29,287

Chemicals $30,210

Bearings/seals $47,669

Batteries/electrical $50,246

Oil and lubrication $60,651

Engine repair $61,426

Shocks/struts $62,379

Alignment $69,509

Air conditioning $83,744

Chassis/suspension $126,459

Brakes $151,768

Mount/balance $170,280

Source: MTD research

Chart 42SERVICE WORK: AVERAGE ANNUAL PROFIT PER SERVICE PER DEALER

Service Average annual profit

Visibility (wipers) $4,015TPMS $12,008Electronic diagnosis $12,718Cooling system $13,882Ignition and spark $13,906Chemicals $14,803Exhaust systems $15,010Batteries/electrical $17,586Oil and lubrication $21,228Bearings/seals $22,881Shocks/struts $28,071Engine repair $38,698Alignment $47,266Air conditioning $47,734Chassis/suspension $64,494Brakes $80,437Mount/ balance $105,574Source: MTD research

Where dealers find dollars and profitsThe latest MTD research shows automotive service sales, on

average, generate 45% of total sales and 44% of total earnings for independent tire dealers. The most revenue comes from mounting

and balancing, brake systems service and chassis and suspension work, which bring in $4.8 billion, $4.2 billion and $3.3 billion, respectively, of all independent tire dealer sales. Margins of 68% make alignments the most profitable service category, followed by the engine repair/diagnostics and ignition and spark plug categories, both with margins of 63%. Dealers report margins of 62% for mounting and balancing services.

0

50K

100K

150K

175K

Annual profit

Annual sales

Dol

lars

Mount/balance

Brake system

Chassis/suspension

Air conditioning

Alignment

Shocks/struts

Engine repair

Lubrication

Electric system

Bearings/seals

Chemicals

TPMS

Cooling system

Exhaust system

Ignition system

Diagnosis

Wipers

Chart 41SERVICE WORK AVERAGE ANNUAL SALES AND PROFIT

PER SERVICE PER DEALER

44

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