PORT WASHINGTON, N.Y.—Consumer prices for replacement tires grew 13% in 2021 compared with 2019, while average selling prices within the total auto aftermarket segment increased 14% in 2021 over the same time period, according to The NPD Group. However, despite elevated prices and altered driving behaviors, unit demand for tires neared pre-pandemic levels in 2021.
"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 swings in the modern trade channel, which includes tire replacement retailers that are not dedicated solely to selling tires, have been dramatic during the past two years. These fluctuations can be attributed to the pandemic and related store closures that affected much of the retail industry, says NPD.
Average prices for passenger-car and light-truck tires soared in 2021. When comparing the fourth quarter of 2021 to the same period in 2019, average prices of passenger car and light truck tires increased by more than 20%.
Several factors played a role in these price hikes in 2021, including supply issues, raw materials costs and less retail promotion. These factors may have impacted the availability of certain tires at retail stores.
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. In addition to the fact that higher-priced tires sold more units than before the pandemic, they also sold faster—increasing at a rate of nearly 40%.
Sales growth in 2021 came almost entirely from full-price tire sales, which increased 36% year over year, while the volume of tires sold on promotion grew just 1%. As a result, full-price tire sales made up 80% of unit volume sales in 2021, compared with 73% in 2019.
"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."
A recent Convenience Matters podcast episode dove into what’s affecting vehicle retail sales now, and what could change in the next five years.