Retail sellout dropped for a second straight month in March, with average declines of 3.6% for the month — more severe than the 0.2% decline measured in February.
Regionally, tire dealers in the Southwest and Northwest fared the best — meaning their declines were mild, while tire dealers in the Midwest reported a drop of 5.3% year-over-year.
Tax refunds usually start to fuel some improvements in March, but we believe those refunds had a minimal impact on retail activity during the month as many consumers who needed replacement tires had already been forced to make purchases during the winter months.
Looking ahead to April, we see a 5.1% comparison which is one of the strongest comps, and given the trends of March we would expect retail sellout likely will remain negative for the month.
The miles driven trends don’t offer much to conflict with that outlook, unfortunately. Miles driven trends were flat to only slightly positive in March, compared to a low-single digit gain in February. The early results from April indicate the month got off to a soft start, with a 4.9% drop against a soft comp from April 2024.
Oil prices declining
The collective price of raw materials needed to build a basic replacement tire fell 1.8% in March, a drop of 0.8% from February levels. For the first quarter, that equates to a 1.6% average increase so far in 2025. That slight increase follows a 5.3% year-over-year average increase from the fourth quarter of 2024.
Holding raw material pricing steady would equate to a 2.5% year-over-year decrease in the input costs to build a tire in the second quarter of 2025, and a 1.1% sequential decline from the first quarter.
When we look at specifics, the ongoing pressurized supply of natural rubber in Southeast Asia continues, and natural rubber costs grew 8.5% year-over-year in March. Synthetic rubber costs also increased 8.3% in March, while the other inputs all dropped in price. Oil prices dropped most dramatically, with a 15.4% year-over-year decline, while carbon black prices fell 7.0% and tire fabric/cordage prices were 4.8% lower than the prices recorded a year ago.
This moderation isn’t much of a surprise, and we expect those trends to continue during the year ahead as the overall index laps a cycle of year-over-year increases. We see this as a potentially welcome shift toward stability for the industry.
A dealer consensus
Dealer commentary suggests consumer demand for passenger and light truck replacement tires was down by the single low digits compared to a year ago. Our contacts were 100% united in reporting negative demand trends for March 2025.
So what’s driving that uniformity? Dealers reported slower traffic among amid consumer concerns about tariffs and a poor macroeconomic environment. Add to that the fact that customers who had planned to replace their tires likely had already done so during the winter months, which means recent rainy days didn’t provide much of a boost in demand.
One thing that remains consistent — the consumers who are shopping for tires are still largely choosing tier-three tires, rather than the pricier tier-two or tier-one products.
Shopping on price
Our latest survey shows that from a mix point of view, tier-three tire brands were again the most in demand among consumers in March 2025. That means for the 10th time in the last 11 months, tier-three tire brands were the most popular among shoppers.
As a reminder, it’s usually tier-two tires at the top of our demand charts, but tier-three products have had a stronghold in these current market conditions. In March 2025, tier-two and tier-one tires tied for second place in our rankings.
We believe the type of consumer in the market right now is prioritizing high-value tires available for the lowest price available. Consumers’ wallets are stretched thin and tariffs are weighing heavily on shoppers’ minds. With that in the background, we expect tier-three tires to remain at the forefront in the near- to immediate-term. Yet, we still expect tier-two tires to remain the top performer in the long term, as consumers typically balance price and quality.
