With record new car sales and a strong aftermarket, tire producers had a good 2014 and they are predicting similar results for this year. Total US tire shipments were nearly 310 million units in 2014, according to the Rubber Manufacturers Association.
Passenger original equipment shipments are expected to increase in 2015 due to anticipated growth in auto sales while replacement tire shipments are expected to decline less than one percent.
Light truck and commercial truck original equipment and replacement tire shipments are expected to grow in 2015.
Other initiatives that will boost tire sales in the US are actively promoted by the RMA, including tire aging standards and restrictions on used tire sales. Several states are considering banning the sale of unsafe used tires.
Scrap tire data analyzed by the RMA suggests that 30-35 million used tires are available for sale every year. A motorist survey found that nearly 1 in 10 motorists said their car is currently riding on tires that were bought used.
From Singapore to South Carolina: Giti to build tires in the US
Singapore-based Giti Tire wants a piece of the US market’s strong affinity for offshore brands and has begun construction of a new manufacturing plant in South Carolina. Giti Tire executives were joined by South Carolina Governor Nikki Haley along with state and county officials in a groundbreaking ceremony for the company’s new facility in Chester County. “We are excited to celebrate this key milestone with many of the folks who have worked so hard in this important project”, said the Governor.
The first North America plant for Giti Tire will produce passenger and light truck tires for the replacement and original equipment markets. It is expected to be operational in 2017. The plant will generate 1,700 new jobs over the next 10 years.
The new plant is a significant step for the Asian tiremaker since US production allows product to ship to US assembly plants on a just-in-time basis. This allows Giti to compete for lucrative OEM tire contracts as well as feed the replacement aftermarket. Giti may follow Korean tiremaker Hankook in securing Detroit OEM business, further breaking down the domestic auto firms' traditional preference for US-based brands.
Shipping costs are a significant factor in locating tire factories. The current trend toward high margin, large diameter low-profile tires means shipping costs are higher. These types of tires have a poor “packing fraction”, meaning that fewer tires can fit in a shipping container, which means containers can’t reach an economic gross shipping weight for their volume.
Shipping tires is essentially shipping air when containerized, while truck transport directly to OEM assembly plants and distribution centres is comparatively inexpensive. Unless tires get thinner and smaller, which is unlikely, future trends favor local production. Giti’s facility will enjoy these benefits and also will neatly circumvent US tire tariffs which threaten the replacement market competitiveness of Chinese-made tires, especially at the low end of the retail market.
Giti Tire Group, headquartered in Singapore, has been in the tire business since 1951. Giti Tire operates 8 manufacturing plants and produces a broad range of tire products with sales in more than 130 countries worldwide.