The cost of the car's wheels continues to rise.
04 december 2009
Taxes on imports combined with limited supplies and increased demand have led to rising prices for tires in the United States, according to the Associated Press.
Goodyear, the largest U.S. tire maker, has just announced that it will increase the cost of its products, and other manufacturers are likely to follow suit to compensate for the effect of additional tariffs on Chinese-made tires and rising raw material prices, such as oil and natural rubber. KeyBank analyst Saul Ludwig is confident that in January of next year, prices will rise by 5-10%, with the U.S. Tire Manufacturers Association (RMA) forecasting that Americans will buy around 210 million tires in the secondary market in early 2010. President Barack Obama recently introduced additional 35% tariffs on Chinese tires after the United Steelworkers union (USW) claimed in its petition that increased imports had led to the dismissal of more than 5,000 U.S. workers since 2004. Chinese tires accounted for 17% of the U.S. secondary market, up 12% from five years ago.
The new tariff law applies to tires produced in China by the world's largest manufacturers, such as Michelin and Pirelli, as well as tires produced directly by Chinese companies and imported into the U.S. market under brands such as Ling Long, Wanli, and others.
However, prices have begun to rise not only for Chinese tires. Goodyear Tire & Rubber Co. has announced that it will increase the cost of all consumer tires in the secondary market by 6% starting December 1 of this year. The company's statement cites rising raw material costs as the reason. About 2% of Goodyear's tires are made in China, which may help offset the costs associated with increased tariffs. According to Tire Rack, the 6% price increase means that a set of 16-inch Goodyear Ultra Grip tires will cost $432.48.
In turn, Cooper Tire and Rubber Co. has also raised prices on some of its products due to the new tariffs. Mr. Ludwig predicts that in the first quarter of next year, Cooper tires will become 5-10% more expensive, citing the situation on the raw materials market as the reason. Currently, a set of budget-friendly 16-inch Lifeliner GLS tires costs around $350 in the U.S. Experts note that while all tires meet U.S. safety standards, quality can vary significantly.
Jennifer Stockburger, a tire test engineer at Consumer Reports, stated that 6 out of 10 all-season tires that topped the magazine's ratings in recent tests were made in China by major manufacturers. However, the editors decided not to test tires imported by small tire companies that had already had problems with safety services. In 2007, for example, around 225,000 tires produced by Hangzhou Zhongce Rubber Co. were recalled due to possible tread separation. At the same time, Ms. Stockburger emphasizes that tires do not have to be expensive to be of high quality, and Chinese tires can be significantly cheaper - their cost is 25-50% lower compared to tires from well-known major brands.
After the introduction of new tariffs, a set of Chinese tires in the U.S., which previously cost $280, will now cost almost $100 more. Matt Edmonds, vice president of Tire Rack, stated that the tariffs will hit consumers who want to buy the cheapest tires the hardest. He also noted that some manufacturers have delayed shipments to relocate production from China. These measures, combined with increased demand for winter tires, will also affect the rising cost of consumer tires.
Dealers are also expecting an increase in "deferred demand" from buyers who refused to buy tires last year, as they can no longer wait on the eve of the new winter season. According to online retailer PriceGrabber.com, tire sales have increased by 43% compared to October last year.
However, despite the increase in consumer activity, sales of tires in the U.S. secondary market, according to RMA forecasts, will still be 6% lower than in 2009.
At the same time, the RMA predicts that next year, sales in the U.S. secondary market will grow by 3% due to economic recovery and consumers replacing tires on old cars instead of buying new ones.
Goodyear, the largest U.S. tire maker, has just announced that it will increase the cost of its products, and other manufacturers are likely to follow suit to compensate for the effect of additional tariffs on Chinese-made tires and rising raw material prices, such as oil and natural rubber. KeyBank analyst Saul Ludwig is confident that in January of next year, prices will rise by 5-10%, with the U.S. Tire Manufacturers Association (RMA) forecasting that Americans will buy around 210 million tires in the secondary market in early 2010. President Barack Obama recently introduced additional 35% tariffs on Chinese tires after the United Steelworkers union (USW) claimed in its petition that increased imports had led to the dismissal of more than 5,000 U.S. workers since 2004. Chinese tires accounted for 17% of the U.S. secondary market, up 12% from five years ago.
The new tariff law applies to tires produced in China by the world's largest manufacturers, such as Michelin and Pirelli, as well as tires produced directly by Chinese companies and imported into the U.S. market under brands such as Ling Long, Wanli, and others.
However, prices have begun to rise not only for Chinese tires. Goodyear Tire & Rubber Co. has announced that it will increase the cost of all consumer tires in the secondary market by 6% starting December 1 of this year. The company's statement cites rising raw material costs as the reason. About 2% of Goodyear's tires are made in China, which may help offset the costs associated with increased tariffs. According to Tire Rack, the 6% price increase means that a set of 16-inch Goodyear Ultra Grip tires will cost $432.48.
In turn, Cooper Tire and Rubber Co. has also raised prices on some of its products due to the new tariffs. Mr. Ludwig predicts that in the first quarter of next year, Cooper tires will become 5-10% more expensive, citing the situation on the raw materials market as the reason. Currently, a set of budget-friendly 16-inch Lifeliner GLS tires costs around $350 in the U.S. Experts note that while all tires meet U.S. safety standards, quality can vary significantly.
Jennifer Stockburger, a tire test engineer at Consumer Reports, stated that 6 out of 10 all-season tires that topped the magazine's ratings in recent tests were made in China by major manufacturers. However, the editors decided not to test tires imported by small tire companies that had already had problems with safety services. In 2007, for example, around 225,000 tires produced by Hangzhou Zhongce Rubber Co. were recalled due to possible tread separation. At the same time, Ms. Stockburger emphasizes that tires do not have to be expensive to be of high quality, and Chinese tires can be significantly cheaper - their cost is 25-50% lower compared to tires from well-known major brands.
After the introduction of new tariffs, a set of Chinese tires in the U.S., which previously cost $280, will now cost almost $100 more. Matt Edmonds, vice president of Tire Rack, stated that the tariffs will hit consumers who want to buy the cheapest tires the hardest. He also noted that some manufacturers have delayed shipments to relocate production from China. These measures, combined with increased demand for winter tires, will also affect the rising cost of consumer tires.
Dealers are also expecting an increase in "deferred demand" from buyers who refused to buy tires last year, as they can no longer wait on the eve of the new winter season. According to online retailer PriceGrabber.com, tire sales have increased by 43% compared to October last year.
However, despite the increase in consumer activity, sales of tires in the U.S. secondary market, according to RMA forecasts, will still be 6% lower than in 2009.
At the same time, the RMA predicts that next year, sales in the U.S. secondary market will grow by 3% due to economic recovery and consumers replacing tires on old cars instead of buying new ones.