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Ludwig: Expect more price increases

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In his most recent "Tire & Rubber Quick Alert," tire industry analyst Saul Ludwig says recent tire price increase announcements are all good.

"Within the last several days, several tire manufacturers have announced price increases in North America to cover the cost of rising raw materials," says Ludwig, a managing director with KeyBanc Capital Markets. "This is positive for the industry and consistent with the note we wrote in early November following our trip to the SEMA show.

"We expect several other manufacturers, including Cooper and Michelin, to join the others and announce their own price increases within the next several weeks."

Consumer tire price increases by Yokohama Tire Corp., Bridgestone Americas Tire Operations LLC, Continental Tire North America Inc. and Nexen Tire America Inc. will go into effect Jan. 1, 2010. Goodyear Tire & Rubber Co. and Falken Tire Corp. raised consumer tire prices on Dec. 1.

"Tire demand is improving, and manufacturers with whom we have spoken are struggling to keep up with demand.  With September inventory levels remaining very low -- down 25% from September 2008 -- it could be six to nine months before inventory levels return to normal rates," he adds.

KeyBanc continues to rate Goodyear and Cooper stocks as "Buy."

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