Lower Demand for Tires

• With ongoing travel restrictions, the US government has begun implementing domestic travel bans. As a result, there has been a decline in transport, and as such a reduction in the demand for tires.
• While some US tire manufacturers such as Kenda Rubber Industrial stated their services as essential, and have continued operations, many others have been forced to shut their doors.
• A decline in the number of tires needed will result in a decline in the demand for C4 and its derivatives, including rubber.
• Cooper Tire & Rubber Co said they would temporarily close operations in the US and other countries as a result of the COVID-19 pandemic. This was done in an attempt to keep staff members safe, and as a result, in a decline in market demand for tires.
• Manufacturers, Bridgestone said they would be scaling down operations to align their supply with what is predicted for the market demand.
• With a surplus of supply to cater to the demands of their consumers, Bridgestone said they would continue to fill orders through its distribution centers and warehouses.
• Goodyear is another company that mentioned the decline in demand for tires, due to COVID-19, as one of the reasons for the closing down operations in the US. They, like Bridgestone, will monitor their supplies to know when they should restart operations.

A Decline in Road Accidents

• As a result of many states being on lock down, fewer people are traveling on a daily basis.
• With the canceling of events, the closing of schools and businesses, and the ban placed on public gatherings over ten persons, fewer automobile fatalities will be seen.
• Persons are traveling fewer miles and there are fewer vehicles on the roads, as a result, there are fewer chances of crashes, injuries, or fatalities.
•  Fewer road accidents are expected in countries like the US who have implemented stay at home policies as a result of the COVID-19 outbreak.
• The Consumer Federation of California Education Foundation has signed petitions in support of the companies refunding insurance payments and providing credit premiums to customers.
• This is based on organizations realizing that fewer accidents will mean more profits for insurance companies.
• Major insurance companies have not yet responded to these claims, but have begun implementing measures to assist their customers.
• Companies such as Farmer’s and Geico have promised not to cancel subscriptions that are unpaid since April.
• Other known insurance brokers such as All-State and Progressive have also implemented steps to provide financial assistance for customers.

Financial Support and Buying Deals

• Many companies in the automotive and tire industry have extended help to staff and customers during the COVID-19 outbreak.
• COVID-19 has created a lot of uncertainty in the economy with many persons even losing their jobs. As a result, many automotive companies have extended a helping hand to those affected.
• Automotive firms have realized that the ongoing pandemic will affect consumers’ ability to pay for services in the future. As a result, they are finding and implementing new ways to keep business going.
• General Motors, which fosters the Cadillac, GMC, Buick, and Chevrolet brands, are lending not only financial assistance to customers but are implementing ways to keep them connected.
•  Ford, Honda, Hyundai, and Toyota, are among well-known US manufacturers that are providing car payment plans and programs for customers affected by the outbreak.

Research Strategy

Fewer Accidents Due To Less Travel

• Many cities in the US are seeing decreased traffic accidents in the midst of the COVID-19 outbreak.
• Businesses, schools, and colleges being closed, gatherings restricted to under ten persons, and many events being canceled, citizens are limited to only essential travel during this time. As a result, fewer road fatalities are seen.
• In California, the lowest number of collision calls received in seventeen years occurred this year between the period of March 17th and 23rd. Analysts link this to the reduced road traffic as a result of COVID-19.
• A study from the University of California showed that there is a 50% reduction in traffic accidents in California since their governor implemented a stay-at-home order for the state.
• The report further shows a decline in the traffic volume, explaining the reduction in accidents.
• Many debates are being made about insurance companies benefiting at the hands of suffering consumers during this time. A petition signed by The Consumer Federation of California Education Foundation, speaks to insurance companies refunding or crediting premiums to customers.
• This is a result of fewer claims being taken out from insurance brokers, due to the decrease in road accidents.
• Insurance companies are yet to respond to these public requests.
• Many are, however, taking steps to provide financial assistance and leniency to customers that may be in need during the pandemic.
• Companies such as AllState are providing payment plans for customers upon request while others, such as Geico have extended payment periods and discontinued cancellations.

Less Long Road Trips

• With the continued rapid spread of the COVID-19 virus, many travel restrictions have been put in place in the US.
• Compulsory social distancing has changed how Americans are currently traveling, eliminating unnecessary driving which was once popular.
• A number of states have also implemented stay-at-home orders, restricting citizens to only leave their homes for essential purposes like groceries and health appointments.
• Many popular events have been canceled, and many attractions such as movie theaters, and malls have closed due to restrictions. As a result, many people no longer have reason to take long drives.

Increased Personal, Short Trips

• With the importance brought on social distancing, many persons are shying away from using public forms of transportation. Consequently, more persons are driving their personal vehicles.
• Statistics show that 57% of persons are less likely to take public transport as a result of COVID-19.
• While restrictions are still being put in place, essential travel for groceries and health purposes is still allowed and highly supported.
• Vehicles provide social distancing. As a result, many persons who often utilize public transport, but own a car, are now choosing this more isolated form of transport.
• This has led to a reduction in the use of commuter, subway, and bus services to fight the spread of the virus.
• In addition, the Greyhound has discontinued its services in many cities in the Northeast and reduced schedules in others due to the decrease in demand for the service.

Research Strategy

VEHICLE USAGE IN A POST-CORONAVIRUS WORLD

• The use of vehicles for commuting to work is likely to decrease significantly. Businesses that may previously have been hesitant to allow employees to work remotely now have no choice in the COVID-19 crisis. Workers considering abandoning their daily commute and working full-time from home are doing just that.
• Harvard Business School professor Prithwiraj Choudhury, who studies remote work makes the point that there will be two main drivers in reducing commuting, including by car. Now that workforces have sampled working from home they may resent the time and cost expense of driving to work each day, leading to greater demand for such facility from employers. Choudhury also points out that managers may realize their teams worked effectively remotely and view their offices as an unnecessary expense. It is expected that as businesses reduce their office footprint, the number of car journeys required will be diminished.
• Transportation analytics firm INRIX found that the San Francisco Bay Area saw a bigger drop in car traffic in mid-March than any other major urban area nationwide. Silicon Valley Leadership Group CEO Carl Guardino predicts the temporary change could catch on with some companies that will lead to "permanent shifts that will lead to positive impacts on traffic congestion".
• Choudhury predicts a more gradual shift rather than overnight change that is led by workers seeking out employers that offer them the flexibility working from provides, whilst businesses benefit from lower overhead costs and a wider talent pool available to them. The Harvard professor believes that in 10 years how and where people work will be remarkably different from the present day.
• In the immediate aftermath of the pandemic, the country will face the threat of an economic depression. John Goodwin of the Metropolitan Transportation Commission asserts that "when the economy is good, more people are driving to jobs and traffic tends to be worse; when it’s bad, fewer people drive to work and highways are clearer". It stands to reason that vehicle trips will decline in the face of financial strife and reduced employment.
• Journalist Kea Wilson observes that the overnight sacrifice of nonessential car journeys in response to the COVID-19 outbreak has conditioned Americans to forfeit the easily avoidable car trip. Wilson posits that "As a nation, we’re all getting a crash course in being a little more conscientious when we make our weekly shopping lists" and as a consequence Americans will be more judicious on the use of their car in the future.
• In its 'Predictions for a post-Coronavirus world', technology publication Diginomica presents the view that societal attitudes will have been permanently altered in relation to travel and driving. The prevalence of virtual events whilst people self-isolated amidst government has been a success with the effect that in-person events will be less frequent, more targeted, and high value. People are less likely to travel, even relatively short distances for entertainment options accessible at home.
• Businesses will have examined the art of the possible with the aid of new technology, such as instant messages on Slack or video conferences using Zoom or GoToMeeting. The pandemic-enforced period of trialing multi-location working will have demonstrated to people that expending quantities of time traveling isn’t entirely necessary.

RESEARCH STRATEGY

Decrease travel including road trips

•  Centers for Disease Control and Prevention (CDC) has put in place a travel advisory for New York, New Jersey and Connecticut which says people should avoid non-essential domestic travel unless necessary.
• Whilst the CDC has not specifically advised against all domestic travel it has issued wider advice to travelers to consider the impact of them traveling to another area of the country and the potential impact this could have on others and the spread of the disease. They note that travelers may choose to cancel or delay their trip.
• Specific states or areas have also issued their own advice which would limit travelers options on where they may want to go. For instance three counties in Moab, Utah have advised its hotels when checking in a traveler they need to ask for proof that the person is there for business related purposes or that they can prove they are related to someone in the area. This is again to limit the spread of COVID-19.
•  Colorado has specifically stated on its web page giving advice to travelers that 'now is not the time to vacation in Colorado'. Another message driven by the desire to limit the spread of COVID-19.
•  Visit Seattle's website notes that a number of hotels and attractions within the area are closed and that travelers should check availability before they travel. This is likely to put off travelers making plans to go to the area if things they might want to see and do are not open for business.
•  California State Park press release advised it was not the time to take a trip to a local park or beach. But the same article which quotes this also notes that if people are going out they should drive there and back.
•  Adara.com has collated data relating to the reduction in flights and hotel usage since the outbreak of COVID-19. It highlights the use of hotels for leisure use and how this has reduced. Whilst this focuses on flight as the mode of travel, it is possible that some hotel usage would have been in relation to road trips which are not taking place due to the advice to not travel.
•  WebMD has an article that asks well you can't fly but maybe you could go on a road trip. It's analysis outlines the potential impact of taking a road trip including that you could unwittingly transmit the disease or put pressure on local services where there are less healthcare facilities available.
• Telemetry data from mapbox.com shows general car usage down. As the quarantine measures were put in place in the USA the data shows that car usage dropped therefore, it is likely that people are taking less road trips.

Alternatives to long road trips

•  WebMD gives a 'backyard trip' as potential alternative to a long road trip. This is a shorter road trip to the coast or the mountains within reach of your home, where you can go with your own family, stay in the car and open the windows for fresh air. Whilst overall there may be a reduction in road trips, it may be that these types shorter road trips see an increase. This would be dependent on locations and time to reach a coast or mountain range from a person's home.

• Another option to take a road trip without going too far is to visit a national park. However, travelers would need to consider if the number of users and space would allow them to practice the social distancing measures advised by the CDC.
• Overall short local road trips could be considered. These would need to avoid the need to refuel and buy food whilst also considering the impact on local services and the fact they may not be available. Travelers also need to be aware of the need to plan more fully as services will not be available, such as cafes and service stations, as they respond to the lock down measures to prevent the spread of COVID-19.

Planning ahead and potential increase in road trips

•  WebMD points out that people should plan for the future when travel is again possible without the risks that exist just now during the COVID-19 outbreak. It notes that the likelihood is that people may be less keen to take a plane and highlights the benefits of taking a road trip.

• People may well be planning future road trips for when quarantine is lifted as people are likely to be less keen to use air travel because of the bigger risks of going further afield and being in an aircraft.
•  Mark Wong an executive of Small Luxury Hotels of the World commented in a piece on CNBC that they expect the domestic market to recover more quickly and so are focusing on people taking stay cations.

Research strategy

Impact

• In 2009, during the Great Recession, "more than half of all independent tire retailers reported unit sales were down by an average of 15%."
• Additionally, in 2009, "nearly all of the domestic tire manufacturers recorded, at the very least, decreases in sales and, at most, net losses."
• From 2008 to 2009, "domestic replacement passenger, light truck and truck tire shipments were down 8.3%."
• Currently, due to the coronavirus, the Michelin Group reported a drop of 9% year-on-year for the global passenger car and light truck tire markets.
• For the current coronavirus crisis, tire sellers are expecting a negative hit to their retail businesses. In the words of Ziegler Tire owner, John Ziegler, who owns six retail outlets (as well as wholesale and distribution centers): "Car count at our retail stores has been a little soft... This is the time of the year when things start firing up. I do believe it will impact our retail business because of the precautions that people will — and should — take [such as deferring non-essential car maintenance and repairs]. It’s a wait-and-see [situation]."

Mitigation

• Due to the loss in demand in 2009, tire dealers and suppliers had to decrease their inventories.
• In response to the Great Recession, many tire manufacturers turned "extremely technical and forward-thinking...as manufacturers look[ed] to push the boundaries of what can be achieved through new technologies. Whether it’s improvements in fuel economy, handling performance or safety, technological developments in the tire world are making a big difference."
• In response to the current coronavirus pandemic, some tire manufacturers, including those that make tires for regular passenger vehicles, are suspending manufacturing.

Recovery

• The automotive industry and related industries, like the tire industry, was one of the first sectors to emerge from the Great Recession, with recovery beginning as early as 2010.
• The tire industry actually recovered more quickly than the automotive industry for two reasons. First, more consumers chose to simply replace the tires on their older vehicles and repair them, rather than purchasing a new vehicle (as they might have done in better economic times). Secondly, many consumers had put off purchasing replacement tires during the worst of the recession years and therefore as consumers earned more money there was a bump in the number of consumers looking to replace worn tires.
•  Passenger tire shipments in the US in 2010 totaled 233.3 million units, compared to 209 million units in 2009. However, passenger tire shipments then dropped slightly again in 2011 and held steady in 2012, not exceeding 2008 levels until 2013, then shipments totaled 242.7 million units.

Research Strategy