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Tires Getting Expensive And Hard To Find, Even For Automakers


Michelin Tire

Michelin Tire

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If you’ve shopped for tires lately, you’ve probably been surprised by the sheer number of tire sizes now available, as well as the increasing price for tires of all sizes.

Manufacturers are feeling the pain as well, and while no one is reporting production delays due to tire availability, this much is clear: even automakers are paying more for tires, and may be buying them from secondary suppliers as primary suppliers run short on inventory.

Demand in the U.S. is up from 55 million tires in 2010 to 62 million tires in 2011, and the trend shows no sign of reversing any time soon. By 2016, demand is expected to hit 79 million units annually, and manufacturers are scrambling to maintain pace. Both Continental Tire and Michelin report that they’re running three shifts per day and are at maximum capacity, and a planned expansion by Continental won’t come on-line until 2013. Did industry analysts under-forecast demand?

Not exactly. In 2006 and 2007, four tire manufacturing plants in the United States were shuttered, in favor of plants with cheaper labor in China. Those plants represented capacity of some 71 million tires per year, more than enough to meet current and future production demands. Rising labor costs caused manufacturers to look East, and China seemed like the land of opportunity. It may have been, except for a three year tariff imposed on Chinese tires by the Obama administration.  In 2010, the tariff was 35 percent of a tire’s value; in 2011, this fell to 20 percent and by next year it will fall to 25 percent before being eliminated entirely. The move may have saved U.S. manufacturing jobs (at least temporarily), but it created a product shortage that no one saw coming.

As if a short supply and high demand wasn’t enough to raise prices, raw material prices have shot up at alarming rates. Component prices jumped 47 percent in 2009, and grew another 56 percent last year. The numbers aren’t in for 2011, but the cost of everything has grown in the past year, so it’s likely the trend will continue. Michelin, Continental and Goodyear have all raised prices several times in recent years to account for rising raw material costs, and even automakers are paying more for tires (although they’re still paying far less than consumers). That cost gets passed along to consumers with new car price increases, and most automakers  have raised prices at least once in 2011.

[Automotive News]

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Comments (3)
  1. One reason for price increasing, aside from what the story tells, is TOO MANY MODELS. In manufacturing, there are delays and costs everytime you change or adjust the tooling. It was not so long ago that all tire/rim combinations were English-inches and there were just a few rim diameters and aspect ratios. We're lucky that tire makers gave up on the idea of colored tires. That was considered when synthetic elastomers were being investigated. Buying replacement tires would have been like going into a clothing store!

    It was a blessing that white side wall branding finally went away.
     
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  2. DO I HAVE AN OPINION? YES I DO, ALONG WITH ABOUT 85% OF THE AMERICAN PEOPLE. ANY TIRES THAT ARE MADE IN CHINA, I WON'T BUY. NOW THAT I KNOW THAT TIRE MANUFACTURES LIKE MICHELIN ARE HAVING THEIR TIRE'S MADE IN CHINA. I WILL NOT BUY MICHELIN, EVEN IF THE ARE 1/2 PRICE
     
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  3. @Kenneth, I agree with you in principle, but do you realize how difficult it is to find goods not made in China? Even "made in the U.S." cars and trucks often utilize Chinese manufactured parts.
     
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