If there is one constant, even in a tumultuous year such as 2020, it is the need for transportation.
So as numerous businesses had to shut down or curtail services during the pandemic, the tire industry was deemed "essential" to continue to provide first responders, trucking fleets and the general public with tires and vehicle maintenance/repairs.
As many consumers were encouraged to stay home and work from home last year, vehicle miles driven across the U.S. plummeted. However, those homebound consumers turned to online ordering of products, creating an uptick in truck deliveries, especially in final-mile deliveries. Many tire dealerships enjoyed a surge in tire and vehicle service business after the state-mandated shutdowns lifted in May — and after citizens received stimulus checks from the government, which some chose to spend on vehicle maintenance. But tire makers were unable to meet the tire demand. It's a problem that is expected to carry over into 2021.
Riccardo Cichi, president and chief sales officer, North America, for Bridgestone Americas Inc., said his firm's research shows dealers are reporting 70% to 75% fill rates, down from the 90% most dealers had come to expect in recent years.
Many tire makers had to temporarily close or slow down production at their plants in the spring due to pandemic restrictions, creating back orders downstream.
Adding to the shortage problem is that North America has distinct tire sizing, which makes it difficult for U.S.-based manufacturers to source certain SKUs, especially the larger rim-diameter SUV/CUV sizes, from overseas.
Some tire importers are experiencing delays in receiving shipments, especially from Asia, due to bottlenecks at U.S. shipping ports.
Entry-level product prices increased in anticipation of the antidumping/countervailing-duty determination that would be due before year-end on passenger and light truck imports from South Korea, Taiwan, Thailand and Vietnam. On top of all this, several U.S. tire makers implemented tire price increases in the fourth quarter. Goodyear and Michelin North America cited the "changing market dynamics" in the industry for the increases.
Among the price hikes announced recently are: