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MTD asks -- Are tire price increases sticking? (Part Two)

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Today, in part two of our exclusive series, we asked dealers in Vermont, Virginia and Tennessee if they felt the tire price increases instituted earlier this year are holding.

In the far northeastern corner of Tennessee, Larry Garland, president of Garland Tire Co. in Erwin, says he can't think of one tire supplier that has backed off the last round of price hikes.

"We sell Firestone (30%), Mastercraft (50%) and Pirelli (20%) passenger and light truck tires," he says. "All three raised prices at least 5%. We raised our prices immediately, choosing not to absorb any of the hike. So far they are sticking."

Garland, who does about $850,000 yearly from one outlet, adds that he is not hearing much about tire discounting and believes the price hikes were long overdue. "It helps our gross profit picture," he says. "We haven't heard any consumer complaints, so if they're out there shopping they must be finding the same prices just about everywhere."

Lewis Crowder, owner of Crowder Tire Center Inc. in Kenbridge, Va., does 80% of his business with Micelin Americas Small Tires and concurs with Garland. "We buy our tires from Heafner Tire," he says. "The recently announced 3% to 4% price increase, which was really more like 5% to 6%, is sticking for us." And he reports that so far he is enjoying his best sales year ever.

Crowder says about 90% of his business is retail while 10% of his business includes medium truck tires sold to local carriers and loggers. "We sell Bridgestone, Michelin and some Kelly medium truck tires," he says, "but I only buy them when I see they are marked down, and I have noticed that they are costing me about 2% more than before the price hike."

At Cheever Tire Service in Bellows Falls, Vt., owner Dennis Albro splits his business right down the middle. "Half of it is passenger and light truck, the other half is medium truck," he says. "That's because logging and the sand and gravel business is big here."

Albro, who sells Jetzon passenger and light truck tires and Dunlop medium truck tires, does more than $1 million out of his two stores, the second in Newport, N.H.

"When Jetzon announced a price increase of 5% to 6% we chose to sell our Jetzon inventory before changing the selling price to our customers," he says. "After all, market share is important and we don't want to lose any. Still, our old inventory is just about gone, so I feel certain that we will soon be moving our Jetzon tire prices higher."

Albro's story is different in the medium truck tire market. "After announcing a 6% to 7% increase on the cost of their medium truck tires, Dunlop offered me a spiff of 7%, which effectively negated the price hike. Because of the spiff, we have not yet passed along the 7% price increase to our customers," he says.

Tomorrow, Modern Tire Dealer will talk with three more dealers about tire price hikes.

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