03/06/2010: How will increasing tyres prices affect you?
Whenever you see news of car tyres prices increasing you might naturally think you will end up paying more but that is not necessarily the case. This is because retailers do not automatically pass on increases in car tyres prices from the manufacturer due to competition in the market place. In fact there are a number of things that affect car tyres prices from manufacturers such as volatility in the raw materials markets and changes in manufacturing processes and labour costs.
The market has recently seen a new round of increasing car tyres prices issued by a number of leading manufacturers but these do not automatically mean they are making more profit. In fact because both wholesalers and retailers always buy at discount prices, the manufacturers listed price is almost never paid. And because the car tyres prices retailers are able to charge depends to a great extent on competitors’ pricing, the end price that you pay may not be higher.
Another key factor that will affect car tyres prices to the end user is that the recent round of price increases affords an extraordinary opportunity for ‘non-premium’ manufacturers to increase their market share across Europe. In fact increasing home market prices actually encourages foreign manufacturers, from the far East for example, to actively seek distributors in the UK in order to take sales away from leading makers by offering you reduced car tyres prices to tempt buyers.
Since EC law means that imported tyres must meet quality standards this can be a car tyres prices bonanza for the average motorist who will increasingly be offered excellent imported products at home market quality standards. The effect of this is to drive down car tyres prices across the entire market as retailers will inevitably pressure manufacturers to reduce car tyres prices in order for them to be able to preserve a respectable margin when selling leading brands.
The biggest factor behind increasing car tyres prices – which affects all manufacturers globally - is the increasing cost of rubber due to climate changes that have affected the natural yield of the plantations. There are likely to be further increases as a result of this, although it has to be said that manufacturers, wholesalers and retailers will all strive to find efficiencies and economies to keep car tyres prices down rather than simply pass them on to customers.