What happened to the cheap tires?
You’ve probably already noticed. You go to the grocery store and your bill is way more than you had to budget a few years ago. You walk out of the store to fill up the car and find that you have to spend almost $ 80-100 each time just to fill up the tank. You come home and open the mail to find that your electric bill is over $ 200. Prices are going up. Haven’t you noticed yet? Well then try to go buy some new tires for your car.
The situation
That’s how it is. Along with everything else that has gone up in price in the last 10-12 years, the tires have followed the trend. According to the US Bureau of Labor Statistics (6), the median price of a tire has risen from $ 97.10 in January 2000 to $ 134.91 in September 2012. That might seem quite modest. But remember, you have to buy four of those things! With that in mind, the average consumer is likely to spend over $ 150 more on a new set of tires than a few years ago. Why has the price of commercial truck and consumer vehicle tires continued to rise over the years? In a quick and easy analysis, it can be summarized into three main factors: tariffs, trees, and trade.
Rates
One of the largest exporters of cheap entry-level tires is China. During the darkest days of the recent US economic downturn, the Obama administration imposed heavy tariffs on all tire imports from China in a bid to protect US-based manufacturing jobs. Tariffs, if you didn’t know, are basically taxes that people in China have to pay to the United States government to bring their tires to the United States to sell. According to an article in Tire Review (1), tariffs started with a 35% increase in September 2009 and fell 5% each year until they were supposed to end in September. Think about it; That’s an extra $ 35 for every $ 100 of tire that comes from China! In order for the company in China that makes the tire to make a profit and the US-based store that sells the tire to make a profit, they are forced to raise the price. Who gets that extra $ 35? Not you, but the government. Where does that extra $ 35 come from? It comes from the potential savings that you, the consumer, could have had with a cheaper tire.
Trees
A surprising fact about tire production is that a good part of the rubber used for tire production comes from simple rubber trees grown in Thailand, Indonesia, and Malaysia. According to Wikipedia (2), 72% of all the rubber in the world comes from just these three countries. Unrest in these countries can affect rubber prices around the world (remember the riots and violence in Thailand in recent years?). Floods, typhoons and heavy rains can also affect production, as it relies on real people approaching trees to ‘touch’ them daily for gummy latex sap. You don’t want to walk around in a typhoon. Them neither.
Nature and politics can affect the delicate tire rubber harvesting process in these countries. But another aspect of the process can affect the ability of rubber producers to respond quickly to increased demand for their product. Rubber relies on natural processes for production through the growth of trees. These trees take up to seven years from when they are planted until they begin to produce.
So let’s say you have a dramatic increase in demand for rubber around the world, like when China started producing an army of cars for its own domestic use in the last 5-7 years. All these cars need tires, they need rubber, they need trees, they take seven years to grow before they produce latex … The reality is that a sharp increase in demand for rubber around the world cannot be accompanied by a rapid increased rubber production. , and in this document related to an important factor in the increase in tire prices.
What about the synthetic rubbers you say? Can we continue to rely so heavily on tree rubber for our consumer tires, truck tires, and tractor tires in this modern age? Synthetic rubbers are generally produced from oil by-products. Do you remember how much it cost to fill your gas tank in the example above? Relying on synthetics when crude oil is at $ 88.62 a barrel in 2012 compared to $ 25.40 a barrel in 2002 (3) will not help you get cheaper tires.
Commerce
The world has only a few countries with limited land and trees that provide rubber for a rapidly growing tire market around the world. The inevitable result is competition in world markets for the limited supply of rubber as demand increases, driving up the prices of raw materials for everyone. These fluctuations can be dramatic and sudden. According to an analysis article by Brett W. Fawley and Luciana Juvenal of the Regional Economist (4), during 2010 the price of rubber increased by 114 percent. Guilty?
“The price hike was largely attributed to bad weather, tight stocks and growing demand from China’s auto industry,” Fawley said.
Consider this for the current situation. The cost of a pound of raw rubber in October 2002 was just $ 0.37 cents. Today in 2012? Try $ 1.45 a pound (5). That’s almost a 300% increase in 10 years! This increase due to market competition, limited supply and regional weather issues inevitably translates into a narrower profit margin for US tire companies and the need to continue increasing consumer prices.
What can we do to find cheap tires?
So what can I do to find cheaper tires, be it car tires, truck tires, or tractor tires? While you can’t go out and grow your own rubber trees, you can do a few things.
First, you can shop around for seasonal or ongoing tire sales and special offers. You can find them for consumer tires or even discounted truck tires at some specialty dealers. Sometimes a tire dealer may have too many tires in stock and need to make room for the newer models, which motivates them to have a discount tire sale. If you are patient and shop online and in local stores, you can often find a great deal.
Second, you can limit your tire purchases to online tire sales from web-based stores. These are true tire dealers who generally work with a large national supplier, but they sell to you straight from the warehouse without a showcase to finance and manage. Without the cost of having to maintain a traditional store, they save money, and you do too!
Third, you may consider purchasing used consumer tires, used discount tractor tires, or used discount truck tires. While that may sound strange, it is an increasingly popular market for people with little money but who need better tires than they currently have. Quality, of course, varies based on wear and tear, but you can sometimes find a great deal. Let’s say someone buys a new car but wants a different type of tire. “Old” tires that are only a few miles loose and go to the used tire dealer, like new, but only a fraction of the purchase cost! If you are diligent in your search, used tires can save you a lot of money.
As the cost of everything continues to rise, consumers need to get creative to save money on groceries, gas, and of course tires. If you have other tips for saving money on tires, please contact the author of this article and their suggestions could be included in future articles.
1. “Tire Rates and Other Ways to End Retail Tire Sales” July 18, 2012. Jim Smith, Tire Review Magazine. tireview.com/Article/102759/tire_tariffs_and_other_ways_to_kill_retail_tire_sales.aspx
2. “Natural rubber” November 9, 2012. Wikipedia. en.wikipedia.org/wiki/Natural_rubberâ € ¨Chart Data of WTI Crude Oil Prices from ycharts.com. November 14, 2012. â € ¨ycharts.com / indicators / crude_oil_spot_price
3. Rubber data table, smoked sheet # 3 (RSS3) from indexmundi.com. November 9, 2012. â € ¨indexmundi.com / commodities /? Commodity = rubber & months = 120
4. “Rising Commodity Prices: Speculation vs. Fundamentals,” July 2011, The Regional Economist, Brett W. Fawley and Luciana Juvenal. stlouisfed.org/publications/re/articles/?id=2122
5. US Bureau of Labor Statistics Serial ID: CUSR0000SETC01 Item: Tires Period: 2000-2012 data.bls.gov/pdq/SurveyOutputServlet