The scramble for scarce tires

Automakers pay more as supply tightens

North American automakers are struggling with a nagging shortage of tires, caused in part by tire plant closings and rising demand for low-volume specialty tires.



Automakers are paying much higher prices -- double-digit percentage increases from a year ago -- as tire makers gain pricing power.



"We have been bombarded from every side for additional tires, and we can't keep up," said David O'Donnell, Continental Tire's vice president of original equipment in the Americas. "We are at maximum capacity, and all shifts are maxed out."



The shortage doesn't appear to have significantly crimped production plans, though automakers are scrambling to secure supplies. Earlier this year, Dan Knott, Chrysler Group's senior vice president of purchasing and supplier quality, said the company was short of premium tires for some nameplates.



"The tire shortage will not clear up over the next year," Knott predicted. "It's going to take awhile."



Automakers pay as little as $75 per tire for low-end models to as much as $300 or more for high-performance tires.



To meet demand, Continental will expand plants in Illinois and Brazil and will build a factory somewhere in North America. But this will take time. The new lines in Illinois and Brazil won't hit full production until 2013, O'Donnell said.



Continental is investing $224 million to expand its plant in Mount Vernon, Ill., plus $210 million to expand its plant in Camacari, Brazil.



Other tire makers also are maxed out. Michelin is running its North American plants at full capacity, although it has met some requests for more tires, Vice President Rob Murray said in a recent interview.



The shortages come at a time when demand is rising. According to a forecast by consulting firm IHS Automotive, automakers in the United States and Canada will buy 62 million tires for new vehicles this year.



That's up from 55 million tires in 2010. By 2016, North American demand for original equipment tires will rise to 79 million units, IHS estimates.



Fewer tire factories

Bruce Harrison, IHS Automotive's director of North American consulting, says the shortage won't be solved any time soon.



"There are a lot more tire sizes in the marketplace now, and it doesn't look like that trend is slowing," Harrison said. Producing extra tire sizes and low-volume specialty lines reduce a standard tire plant's capacity.



To make things worse, tire makers had been cutting back on North American production capacity before the recession. In 2006 and 2007 alone, four U.S. tire plants were closed, according to The New York Times.



Plant closures eliminated about 71 million units of U.S. capacity, John Baratta, president of replacement tire sales for the United States and Canada at Bridgestone Americas Tire Operations, said in a June article in Automotive News' sister publication Tire Business.



Meanwhile, tire manufacturers were opening factories in China that flooded the U.S. market with cheap tires. But in September 2009 the Obama administration slapped a three-year tariff on imported Chinese tires.



The tax started at 35 percent of a tire's value declining to 30 percent and 25 percent in the second and third years. The import tax expires in September 2012.



Tire prices have "moved up very sharply" since 2009, said Saul Ludwig, an auto analyst at Northcoast Research, an equity research firm in Cleveland. Increases in the cost of rubber and other materials used in tire manufacturing, including steel, have tightened supplies and driven costs higher.



Soaring costs

Since 2005, the combined prices of natural and synthetic rubber, carbon black, steel cord, fabric and other materials have risen nearly every year, with jumps of 56 percent in 2010, and 47 percent in 2009, Bridgestone's Baratta said.



Continental, Michelin North America Inc., Goodyear Tire & Rubber Co. and other major tire makers have raised prices several times in the past few years to offset rising raw-materials costs.



Automakers and tire companies don't disclose original-equipment prices. But rising prices for replacement tires suggest what's going on in the original-equipment market.



For example, Michelin said the company has raised prices three times over the past year on car and light-truck replacement tires: an 8.5 percent increase on May 1; a November 2010 increase that the company wouldn't quantify; and a 6 percent increase last June.



Despite the headaches, automakers appear to be muddling through. During an interview last week, Tony Brown, Ford's group vice president of global purchasing, said Ford's vehicle production plans this year will not be affected by tight supplies of tires or other components.



"We have enough tires," Brown said. "We will deliver the production plan, with the tires to support those plans."

Home of the Free Alignment just a myth?

If you live in the US and ever listen to the radio you can't help but hear one of the great commercial going on and on about a free alignment with the purchase of new tires. So we want to clear the air about this free alignment business.



1) they do provide an alignment if you purchase 4 New Tires (PAY the operative word) the price is built in dummy!!



2) Did you wreck your car or have front end work done recently that requires an alignment? Probably not, so you do not need an alignment. Now you are paying more for your tire than you need to so you can get an alignment you don't need. Smart on the advertisers part. Most people do not know that they do not need an alignment.



3) Well my car is pulling? Again, if you didn"t wreck it... you just need tires replaced and no need for over priced tires to get an alignment.



How much do they charge for an alignment without purchasing tires? $69.95. So divide that by 4 and that's about $17.50 per tire. Could you buy tires for $17.50 a tire less. YES, so I am going to have to say that you are not getting a FREE Alignment. Don't let shifty advertising convince you otherwise. Stay alert when dealing with Big Brand Tire Stores.

Has anyone put snow tires on a minivan?

We're considering snow tires for my Honda Odyssey, but wondering if it's worth it. The minivan just seems to need more grip even though we have all-weather tires on there now. Depending on any bells and whistles we get it will cost from $650 to $1,100 with installation - yikes! We've been told it's best to get wheels *and* tires, since it makes changing them not as expensive each time it's done.



I understand you can get two, maybe three, years out of them, but I haven't had this verified. And when you're not using them is it okay to store them in the garage? Or will they deteriorate there with the heat of summer?



Please chime in if you have experience with snow tires (cost, durability, handling, tire brand, etc), especially if you have an Odyssey.



Response:

What part of the country do you live in? How much snow do you get in an average winter? Is your car front or rear wheel drive? I'm near Detroit and the last time I had snow tires was 1961, and will never use them again. Tires will age, and most mfrs will advise between 6-10 years. The are starting to put expiration date. on the now instead of the date they were made.





I haven't heard much about putting snow tires on the front of minivans but it would give you more traction in the snow and mud. But it may affect the handling and stopping of the van. Buying new rims for the tires is the way to go. That would save the cost of remounting them each year. Seems like a regular set of snow tires should work without having to special order some.