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

May 9, 2001

Part Three of our exclusive report running each day this week has dealers from Maryland, Delaware and Illinois weighing in on

the question "Are tire price hikes sticking?"

Jay Lauterbach, president of Lauterbach Tire & Auto Service in Springfield, Ill., says they are. "We saw a 3% to 8% price increase on passenger and light truck tires early this year, an increase we passed along to our customers. There was a 30-day period before our distributor, Wholesale Tire in St. Louis, passed along the increase to us, but when they did we instituted the hike immediately."

Lauterbach, who does business out of a one-store, six-bay outlet, grosses $1.5 annually. "Our major tire line is Hercules, but we also sell quite a few Uniroyal, BFGoodrich and Michelin products along with some General, Firestone and Continental," says Lauterbach.

Of interest, the Illinois tire man says his business is booming thanks to the recent closing of a nearby NTB store, a Montgomery Wards store and three gasoline service stations.

Don Lowe, manager of a five-bay K store in Newark, Del., says he, too, passed along a 3% to 4% price hike to his customers just as soon as his supplier made the announcement.

"Lancaster, Pa.-based K," says Lowe, "is the largest Cooper Tire distributor in the U.S. In the past three or four years they branched out into retail and own eight or 10 stores. We also sell MAST tire products and some Bridgestone/Firestone offerings."

Did the price hikes upset his customers? "To the contrary, I think the recent Firestone problem has caused the tire buying public to be extra careful about what kind of tires they are putting on their vehicles. They don't seem to be as price sensitive because they want the best tires available."

In Pocomoke, Md., Chuck Barnes, general manager of Nocks Tire Service Inc., says he saw the price hikes come through, but continued to sell out his inventory purchased on the old pricing system before initiating the price hike to his customers.

"Prices went up around 3% to 4%," says Barnes, "and they are now firmly in place," Nocks Tire Service sells the full Goodyear line as well as the Michelin Americas Small Tires line, the latter purchased through Witco. The 12-bay, 12,000-foot Goodyear Gemini Auto Care store at Nocks Tire, in concert with a Jiffy Lube franchise also on the premises, is currently doing $1.7 million a year and climbing.

We'll talk with three more dealers tomorrow.