The U.S. truck tire industry has faced a challenging year in 2024, with market shifts influenced by inflation, fluctuating demand, and ongoing labor shortages. In an interview with Modern Tire Dealer (MTD), top executives from some of the largest U.S. commercial tire dealerships shared their perspectives on these issues and their expectations for the coming year.
Lingering Inflation and Demand Challenges
Inflation is affecting the entire trucking industry, from tire costs to operational expenses. Carson Wright, Executive Vice President of Nebraskaland Tire, shared that demand has softened significantly across their markets. As their stores are primarily located in agricultural regions, the decline in the farming economy has had a direct impact on tire sales. For many farmers, challenges such as low grain production have led to reduced trucking demand, affecting the entire supply chain from farms to transport fleets.
Wright also highlighted the increased demand for lower-tier tires. As a result of inflation, customers are gravitating towards more affordable options, such as tier-three and tier-four tires, which are primarily imported and must be ordered months in advance due to offshore manufacturing. This adds logistical complexity for Nebraskaland Tire, especially given the wide geographical spread of their stores, which increases transportation costs for deliveries.
Labor Shortages and Recruitment Challenges
Recruiting skilled labor, particularly for after-hours service roles, remains a significant challenge. Wright noted that while his company has a strong team, finding technicians willing to work challenging hours has proven difficult. Despite offering competitive incentives, the company still struggles to attract workers willing to handle the demands of service truck work, especially during overnight hours.
These labor shortages not only slow down service delivery but also increase operational costs as companies are forced to spend more on recruiting and incentives.
Rising Operational Costs
For Brian Chase, President of Rice Tire, rising operational costs are a major concern. From rent to insurance, the cost of running a tire dealership is climbing faster than revenue. Chase noted that tire dealerships with leased locations face significant financial strain, as rent increases often outpace profit growth. In addition, insurance costs, whether for health coverage, business policies, or vehicles, have seen substantial increases in recent years.
Chase also pointed out the challenge posed by low-cost tire imports, which are undercutting retread pricing and making it harder to sell higher-tier, domestically-produced tires. Customers are increasingly focused on price, often opting for the lowest-cost tires, which impacts the profitability of selling premium or tier-one brands.
Market Outlook for 2025: Flat but Flexible
Both Wright and Chase agreed that the market will likely remain flat next year, with minimal growth expected. Election results and potential policy changes, such as the Farm Bill and new tariffs on imported tires, could impact the industry, but uncertainty makes it difficult to predict specific outcomes. However, dealerships are preparing to remain flexible to adapt to changing market conditions.
Chase expressed hope for more stability in tire pricing, which has been volatile due to ongoing supply chain issues and pricing surcharges. Consistent pricing would help dealerships better plan their inventory and pricing strategies. Wright echoed this sentiment, noting that demand needs to stabilize to help get fleets back on the road and restore steady growth in the tire industry.
Moving Forward
Despite these challenges, executives remain committed to finding ways to improve operations, serve customers, and navigate uncertain times. By adapting to changes in customer demand, optimizing logistics, and managing rising operational costs, dealerships are positioning themselves to weather the current economic environment and prepare for a potentially more stable future.
The U.S. truck tire market in 2024 may be facing headwinds, but dealerships are taking strategic steps to manage costs, attract talent, and provide affordable, quality tire options. With an adaptable approach and an eye on economic trends, they hope to emerge stronger and more resilient.
source: MTD, published Nov.6