Tire demand, sales hold up despite price hikes

PORT WASHINGTON, N.Y.—Despite elevated prices and altered driving behaviors, unit demand for tires nearly returned to pre-pandemic levels in 2021, according to NPD Group L.P.  

Prices for consumer replacement tires grew 13 percent in 2021, compared with 2019, according to the research firm.

Sales growth in 2021 came almost entirely from full-price tire sales, which increased 36 percent year over year, while the volume of tires sold on promotion grew just 1 percent. As a result, full-price tire sales made up 80 percent of unit volume sales in 2021, compared with 73 percent in 2019, according to NPD.

"The tire industry, like many others, is experiencing the effects of a shift in overall consumer behavior as it relates to pricing and demand," said Nathan Shipley, automotive industry analyst for NPD.

"Driving behavior has changed over the past two years but the needs are still there. Consumers are currently focused on getting what they want, while they can, with what is available to them at retail stores."

Tire sales volume swung dramatically over the past two years of the pandemic, which were attributed in part to related store closures that affected much of the retail industry.

NPD's assessment aligns closely with U.S. Tire Manufacturers Association data, which show replacement passenger tire shipments in 2021 grew 10.3 percent (20.9 million units) to 224.8 million units over 2020 and exceeded the 2019 total by nearly 1 percent as well.

Average prices for passenger and light truck tires soared in 2021, NPD said, with all major brands implementing a series of the price increases.

In a comparison of the fourth quarter of 2021 alone with the same period in 2019, average prices of passenger car and light truck tires increased by more than 20 percent, NPD said.

Tire makers attributed the price hikes to supply issues, raw-materials costs and less retail promotion. These factors may have impacted the availability of certain tires at retail stores, NPD said.

More expensive tires, priced at $140 and higher, contributed significantly more to sales in 2021 and gained more than 10 unit-share points in the fourth quarter, when compared with 2019, according to NPD, noting that higher-priced tires also sold faster, by a rate of nearly 40 percent.

"Consumer behavior has taken a wild ride since the start of the pandemic, and many behavioral changes surrounding recreation and mobility are here to stay, greatly benefiting the automotive aftermarket," Shipley said.

"While factors like miles driven and gasoline consumption are near pre-pandemic levels, the makeup of that consumption looks very different, in terms of where drivers are headed, what they are driving or pulling, and why.

"While we are keeping a close eye on rising gasoline prices, all of these other factors contribute to a continued bullish outlook for retail sales in the automotive aftermarket."