Brantford, Ontario

2021 Fall/Winter Tire & Automotive Outlook


The ability for each of us as consumers to get products or services we want, or need, has been disrupted across many markets for a variety of reasons. The tire and automotive business has not been immune and there is cause for concern for the upcoming season. Please find below our Winter Tire & Automotive Outlook for the upcoming season you may want to consider for your customers needs.

Right now, and over the coming months, there are five trends that are going to negatively impact consumer’s ability to source tire and automotive products & services in order to meet their mobility needs.

1. Retail Talent shortage

Long before early 2020 there was a labour shortage across the tire and automotive markets. Today this has multiplied as it has in many other industries. Retailers are extremely challenged to find experienced technicians to inspect, maintain, or install the same products that are becoming hard to source.

With a talent shortage across both the Original Equipment and After Market segments, the industry will experience a reduced capacity for how many customers you can serve during the rush. In a traditional year waiting too long can leave consumers waiting two to three weeks to be able to get an appointment for tire or automotive needs. We expect given the reduced capacity across the industry that these wait times will be extended further than traditional waiting times.

2. Product shortages

Manufacturers across most industries are facing the same talent shortage as retailers. Operating plants with reduced work force also results in less capacity resulting in long lead times to fulfill orders.

3. Shipping delays

We can conservatively say that 35%+ of tire and automotive products are produced outside the North American market to satisfy consumer demand within North America. Sourcing containers to ship product in along with space availability on Ocean Freight Liners is limited creating long delays in shipping. Not only are we seeing long delays but the fright costs are continuing to increase.

Large organizations have resorted to having to invest in buying containers and/or Freight Liners in order to try and control their own fate with product shipments. Many others will have to wait until late in the season to see their inventories arrive.

Whether organizations own containers and/or Ocean Liners, or not, port shut downs off shore are creating further delays in product fulfillment to the North American markets.

4. Geography

Where you operate will play a role in your ability to source what you need for your customer this winter season. Operating in Canada, we will all experience winter weather, but as we know some will see the shift in weather earlier and longer. As winter weather rolls in, supply chains will shift inventory to markets that present the first opportunity to sell their inventory putting even more pressure on markets who get the winter shift in weather later.

5. Price changes

With all the above impacting product availability and capacity for businesses throughout the supply chain we can expect higher prices increases. The tire and automotive industry has seen arguably the most price fluctuation with the highest increases in prices in a single year. As manufacturers have a limited capacity to produce they will continue to have to charge more for the products they do sell. At the same time, as talent continues to be difficult to source the cost of labour from Manufacturers to Retailers will also continue to rise resulting in both higher prices for products and services.

We refer to the closing months of each calendar year as “the fall rush” for a reason. The majority of consumers wait until the day, or leading days, into the first snow fall before they act. This as mentioned earlier leads to over capacity issues within a normal year and this will be no normal finish to the year for your customers who choose to wait.

Please find below our recommendations to prepare your customers to ensure they get what they need while there is product and time available.

  • Pre-book appointments

    If not done already start working the phones, e-mails, and text messages to communicate the challenges we all face and have them reserve what will be valuable time. Once booked provide confirmations leading up to the date/time to make sure they don’t get left out in the cold with no shows.

 

  • Tire Storage

    If not complete already inspect every set for replacement requirements due to wear or tread depth. Contact, communicate concern, and secure inventory early to ensure consumers get what they need while at the same time reducing time for your team out back during the rush.

If you are contacting a customer about pre-booking an appointment and they store their own tires ask them to inspect, or offer to have them inspected, so you can help now.

 

  • Offer Finance Options 

    There is a lot financial pressure on many consumers who may be opting to put off their vehicle requirements until as late as they can. While reaching out to customers be sure to make mention of consumer centric finance options (asset based, credit card like rates, open loans).

 

  • Time  

    As you know many of your customers have a long established pattern of waiting right until the last minute. Be sure to educate customers that time may not be an option at the last minute. Create confidence that inspections along with installations are better handled early, will not impact any warrantees, and for a short period of time will not have a negative impact on their vehicle. Safer to be ready for winter before it gets here than wait until long after it has been on us.

 

  • Fleet

    For those customers that operate multiple vehicles set up fleet inspections to determine needs. Not just now but on an ongoing basis to ensure you can secure what they need not only for today but tomorrow.

 

  • Review Labour Rates

    Your labour expense may have only increased slightly in the last 18 months but it will continue to increase at potentially a steep rate. We will also continue to see increases in other operating expenses. Continue to prepare your business for the increased costs you will incur by reviewing your labour rates on a quarterly basis.

 

Until we see supply chains normalize the game will continue to change. Continuing to operate this fall as many have in past years will lead to disappointment. Those who are actively planning, proactively scheduling, and securing both products along with time for their customers future needs will enjoy the remainder of 2021.

Thank you for reading our Winter Tire & Automotive Outlook article. If you have any questions please contact us today!

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