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January 14, 2008 01:00 AM

RMA projects rebound in tire shipments

Bruce Davis
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    The U.S. tire market, showing little growth in 2007 after a dismal 2006, should rebound in 2008, according to the Rubber Manufacturers Association.

    Replacement tire shipment growth in the light vehicle market will be 2.5 to 3 percent, the RMA said in its year-end 2007 summary.

    Aftermarket passenger tire shipments are expected to rise about 2.5 percent next year, or about 5 million units, and light truck tire shipments are forecast to climb 2.9 percent, or 1 million units, over 2007.

    At the same time, the RMA revised its earlier projections of a decline in 2007 shipments, saying now the replacement passenger and light truck tire markets should end the year up 3.3 percent and 1.8 percent, respectively, over 2006.

    Replacement shipments of commercial truck tires, on the other hand, should fall 2.7 percent, or 500,000 units, from 2006, reflecting a weaker economic environment in the fourth quarter. Increased industrial activity should provide momentum for a rebound in 2008 back to the 2006 plateau, the RMA said.

    The RMA cited revised economic growth forecasts for both the consumer and commercial sectors for its own shipment revisions. Overall, replacement shipments should be up about 2.7 percent over 2006, while original equipment shipments will fall 8.2 percent short of 2006.

    In addition to rising vehicle registrations, the RMA said studies show U.S. consumers´ driving habits have not been affected significantly because of higher fuel costs for its 2008 market demand forecast.

    The industry trade group also sees OE demand rebounding in 2008 moderately from a down year in 2007. Despite the projected recovery, OE shipments in all three categories will fall short of the 2006 level.

    The RMA did not comment on production for 2007 or 2008, but the group´s data through August showed production down from the comparable 2006 level across the board.

    Optimistic tire makers

    Individually, tire makers still are concerned about the volatility of raw materials prices and energy costs.

    In North America, Cooper Tire & Rubber Co. is looking forward to 2008 based on its relationships with "solid customers in all channels who respect our ability to deliver quality tires with exceptional service," according to a statement by Roy Armes, chairman, president and CEO.

    The company sees the economy in an election year as a "wild card" but expects shipments of light-duty vehicle tires to grow on higher vehicle registrations and continued vehicle usage at or above historical rates.

    Armes also anticipates significant growth in Mexico for both Cooper and associate brands following its agreement last year with local tire maker Corporacion de Occidente S.A. de C.V. to set up a commercial joint venture, which includes some off-take production.

    Bridgestone Americas Holding Inc. views escalating raw material prices and energy costs and record weakness of the U.S. dollar as creating unprecedented challenges for 2008.

    The company said it will focus on controlling expenses to ensure it remains lean and strategic, while also continuing to build demand for its larger, higher-margin tires, such as high-performance, luxury touring and winter tires.

    In data posted on its Web site, Michelin said the aftermarket light-duty vehicle market in North America through November grew 1.3 percent, whereas the OE market fell 1.6 percent. On the truck side, Michelin´s data show a 2.2-percent decline in aftermarket demand and a 31.1-percent drop on the OE side.

    Farm and off-the-road tire and wheel maker Titan International Inc. should approach $1 billion in sales next year and achieve a pretax earnings ratio of 15 percent or better, according to Chairman and CEO Maurice Taylor Jr. He bases his prediction on strong demand for off-the-road mining tires and pent-up demand for farm tires, as well as Titan´s decision to broaden its product portfolio to include 63-inch OTR tires.

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