MTD asks -- Are tire price increases sticking?
Tire manufacturers say that price increases announced late last year, which ranged from 2% to 6% and went into effect in 2001, are sticking. In our exclusive, five-part series running each day this week, MTD asks independent tire dealers if they agree.
Sandy Winn, owner of Hub Tire Center in St. Johns, Mich., says tire price increases are not sticking. She does $2 million a year out of one location about an hour north of Detroit.
Winn sells mainly Michelin products and a small amount of Firestone and other brands. She says her price on the Firestone 235/75R15 Wilderness AT is $9 or $10 higher than it was before Bridgestone/Firestone Inc.'s announced price hike of 3% to 4%. Her solution has been to buy the same size tire from other manufacturers at $5 less per tire than the Firestone price.
"As for the price hike from Michelin Americas Small Tires (MAST), I can say the effect on me has been very minute. I believe the announced price hikes were in the 3% range, but we have only seen price increases on MAST products in the 1% range. Our customers aren't complaining, and neither are we."
In Decatur, Ind., Greg "Townie" Townsend, owner of Townsend's Tire Service, says he feels tire prices are sticking.
Townsend does $1.7 million out of his one-outlet dealership, buying direct from MAST and Cooper, and also selling some Kelly-Springfield tires.
"Even though Fleetwood Motor Homes closed a plant here and Strick Trailers and Thunderbird Boats have cut their work forces costing us 1,200 jobs, I'm making tire price hikes stick."
How can that be? "In my market area, cut-throat pricing is not as bad as it used to be.
"One thing I've noticed since the last round of price hikes is that any discount I'm offered doesn't get me back to where I was on price before the hike. Even overstock prices are discounted at only 10% to 15% when they would have been deiscounted 15% to 30% before."
Olin Mott, owner of Olin Mott Tire Co. in Tampa, Fla., says tire price increases are not sticking because mass merchandisers will not allow tire companies to raise their prices to acceptable levels. "I wish tire prices would go up 10% to 20%, but right now the monkeys are running the zoo."
Mott operates seven outlets and does $7 million a year.
Click on again tomorrow, when we'll be talking with three more dealers.