MTD asks -- Are tire price increases sticking? (Part Five)
On the final day of our exclusive week-long pricing survey, we find you have to be a strict disciplinarian to make tire prices stick in California.
Amid stories of heavy passenger and light truck tire discounting, 20% is not unusual, according to dealers. Some are happy if they can make $20 a tire, others will take $5 to $10 a tire and call it a day.
Alan Tindall, general manager of the Tred Mill Tire Mart in Sacramento, says tire dealers in his market are giving tires away. "But we are not," he says, "because we want to stay in business and are not willing to sell a premium tire product for $5 to $10 over cost just because some magazine gave it rave reviews."
On the strength of that statement, Tindall says he passed along the recent round of price increases to his customers immediately. "We buy direct from Dunlop and are a member of the Tire Pro's program where we can buy other brands. I will not play the cost-cutting game and those who do run the risk of closing their doors someday."
Located near I-50, the Tred Mill Tire Mart moves lots of motorcycle tires. "We make 35% to 45% profit on those tires, so it's a healthy part of our business."
Down in Bullhead City, Ariz., Superior Tire & Auto Center Owner Rod Burgess is also holding the line. "We received notice of the 3% to 5% price increases around the first of the year and passed them along to our customers right away," he says. "You have to do that or go out of business."
The Cooper and Yokohama dealer, who also is a Delta distributor, operates two retail stores, the other in Hurricane, Utah, along with a wholesale operation in Phoenix. Gross sales from his two retail outlets are $3.5 million a year.
"We aren't about to cut prices and we don't believe the discounters are going to be able to retain customers. We have made a total commitment to the tire, brake and frond-end business and to taking care of our customers. The discounters haven't and that's what makes us different."
At Graham Tire & Automotive in Sioux Falls, S.D., General Manager Mike Owens confirms that price hikes announced by his suppliers, Goodyear, Kelly, Cooper and Michelin, were put in place and passed along to customers as quickly as they were announced.
"The first round of increases, 3% to 5% came in Nov./Dec. 2000 and the second round, about 3%, came in January," he says. "These increases were for passenger and light truck tires.
"In the medium truck tire market, tire price hikes are not sticking," says Owens. "Everyone seems to be discounting these tires and prices have dropped dramatically. Right now, it's a buyer's market for medium truck tires."