The tire industry sees the impact of changing consumer habits on sales

2022-05-17 0 By

Akron — The COVID-19 pandemic is affecting many things, including consumer buying and driving behavior, according to researchers.After deep diving at the height of the epidemic in early 2020, vehicle miles traveled (VMT) have rebounded to 2019 levels, but how and when those miles are traveled has changed.Tire replacements are on the rise, despite price increases over the past year, as drivers earn more miles.Tyre makers and marketers have implemented a series of price increases over the past year and in 2022, citing supply chain disruptions and higher raw material costs as factors affecting their production costs.However, higher retail prices do not seem to have deterred consumers from buying tyres.”Like many other industries, the tire industry is experiencing the effects of a shift in overall consumer behavior related to pricing and demand,” said Nathan Shipley, auto industry analyst at NPD Group LP.”Driving behaviour has changed in the last two years, but the demand is still there.Consumers are currently focused on getting what they want, and they can buy what they want in retail stores.”Despite higher prices and changes in driving behavior, unit demand for tires nearly returned to pre-pandemic levels in 2021, according to NPD.Tire business Consumers are paying 13% more for tire replacements in 2021 than in 2019, according to the research firm.Sales growth in 2021 came almost entirely from full-price tire sales, up 36 percent year-on-year, while sales of promotional tires rose just 1 percent.As a result, full-price tire sales accounted for 80 percent of unit sales in 2021, up from 73 percent in 2019, according to NPD.Tire sales have fluctuated dramatically over the past two years of the pandemic, in part because store closures affected much of the retail sector.The average price of passenger cars and light truck tires soared in 2021, with major brands implementing a series of price increases.The average price of tires for passenger cars and light trucks rose more than 20 percent in the fourth quarter of 2021 compared with the same period in 2019, NPD said.Tyre makers attributed the price increases to supply problems, raw material costs and fewer retail promotions.Those factors may have affected the availability of certain tires in retail stores, NPD said.Pricier tires priced at $140 or more contributed significantly more to sales in 2021, increasing their unit share by more than 10 percentage points in the fourth quarter compared to 2019, according to NPD, which noted that pricier tires also sold faster, at a rate of nearly 40 percent.”Consumer behavior has changed dramatically since the beginning of the pandemic, and many of the behavioral changes around entertainment and mobility will continue to be there, which greatly benefits the aftermarket,” Shipley said.”While factors such as miles traveled and gasoline consumption are close to pre-pandemic levels, the composition of that consumption looks very different in terms of where drivers go, what they drive or pull and why.”While we are closely watching higher gasoline prices, all of these other factors contribute to a continued bullish outlook for aftermarket retail sales.”Driving habits Consumers are changing their behavior when it comes to driving, especially in urban areas.VMTS have almost returned to pre-pandemic levels, but when and how they were created has changed, according to Arity LLC, a wholly owned subsidiary of Allstate Insurance Co., which uses vehicle telematics data to track driving behavior.Because a large percentage of the US population still works from home, “peak hours” are less well defined and highways are less crowded, says Jeff Schlitt, director of sales engineering at Arity.VMT has declined since early 2020, when many businesses temporarily closed during the pandemic and more people worked from home, but then picked up over the summer.VMT accelerates to 2021, but involves more travel than commuting.Now, VMT is making a spring break comeback.”Mileage is definitely coming back,” Schlitt reported at the Automotive Maintenance Association’s webinar, “Driver Behavior Trends and Their Impact on Parts and Service Opportunities in 2022,” on March 16.”Everybody, we have a new normal, and I think the new normal is probably going to be there until some stimulus makes it change again,” he said.He noted that by the end of February, nearly 80 percent of drivers were back behind the wheels on the road in 2019.”People tend to drive more,” he said.VMT increased in both urban and rural areas;Some areas have more drivers and some areas have fewer.However, Schlitt points out that many urban areas no longer experience the typical morning and evening rush hours.More miles accumulated during the afternoon rush hour than during the morning rush hour, he said.”People are out driving, but they don’t commute to work.They’re doing different things..People go out at different times of the day.That would explain why we’re not seeing as much congestion on the roads, but we’re seeing more miles.Another trend observed by Arity through telematics data collection is that the incidence of hard braking habits appears to have disappeared during the pandemic.Before the pandemic, he said, the frequency of screeching to the brakes was high, especially during rush hour traffic in urban areas.People are anxious and trying to get to work on time, so they are in a cycle of speeding and hitting the brakes.That disappeared during the nationwide lockdown, Mr. Schlitt said, noting that people returned to those urban areas last September but did not brake as before.He speculated that this changed driving behavior might affect auto parts sales.If people brake less hard, brake pad sales might fall;But if that means drivers are driving at higher speeds, it could accelerate tire wear, he suggested.That’s why it’s important for car service companies to track driver data in their markets to gauge trends that could affect sales of certain parts and services, Schlitt said.