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Price hikes were needed to offset raw material costs, says Ludwig

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"Several suppliers of raw materials have announced substantial price hikes. Carbon black, steel, polyester and rubber chemicals are all going up. This will probably lead to another round of tire price hikes early in 2008 as the manufacturers must offset these higher raw material costs. Natural rubber has also increased," analyst Saul Ludwig reported in the latest installment of the Ludwig Report in Modern Tire Dealer magazine.

(Those companies that have already announced price increases this year include Toyo Tire U.S.A. Corp., which will increase its consumer and commercial tire prices up to 6% on March 1; and Continental Tire North America Inc. (CTNA), which has announced a price increase of up to 7% on all Continental, General and proprietary brand passenger and light truck tires sold in the U.S., effective April 1, 2008. Also, Goodyear Tire & Rubber Co. raised prices on all of its passenger and light truck Goodyear, Kelly and Dunlop brand tires sold in North America up to 7% on Feb. 1. On the same day, Kumho Tire U.S.A. Inc. raised its consumer tire prices by up to 8% and Cooper Tire & Rubber Co. raised its consumer tire prices up to 5%. Continental had previously announced truck tire price increases of up to 6%, which were effective on Feb. 1.)

His advice to tire dealers? "To help explain higher tire prices to your customers, just post a chart on you wall showing how oil has moved higher for all your customers to see."

Ludwig is a managing director with KeyBanc Capital Markets Inc. based in Cleveland, Ohio. Look for the full "Ludwig Report" in the February issue of Modern Tire Dealer magazine.

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