Predicting future tire costs is very difficult due to the many variables that influence tire pricing.
The unpredictable cost variable for tire prices is the price of commodities, such as oil, rubber, and steel, which are three key ingredients needed to manufacture tires.
“The cost of synthetic and natural rubber prices has risen in 2019,” said George Albright, director of fleet maintenance for Merchants Fleet.
“Overall, tire prices increased slightly in 2019 – likely influenced somewhat by trade tariffs – but the increase was relatively minimal, ranging from approximately 2 to 4% on average,” said Chris Foster, manager, truck & equipment maintenance for ARI.
LeasePlan USA also predicts price increases for replacement tires in calendar-year 2020.
“Tire prices will continue to increase well into 2020 and possibly beyond due to continued raw material challenges and shortages,” said Mark Ackerman, director, maintenance and repair for LeasePlan USA.
Agreeing is Donlen. “A number of manufacturers have been in the news recently announcing tire price increases for U.S. and Canada. So, a continued trend upward in tire price. Also, a continued trend in tire strategy that includes both price strategy and emphasis on proper maintenance. Also, there’s been an emphasis on vendor management and choosing cost-effective vendors for oil changes, tires, and tire rotations,” said John Wuich, vice president of strategic consulting for Donlen.
EMKAY offered this assessment of the probability of price increases for replacement tires in calendar-year 2020.
“It appears price increases will continue. If commodities and transportation costs continue to rise, we could see national vendors passing more of the expense onto the consumer. With tires already being a large expense, especially for an aging fleet, we may see fleets testing different solutions to counteract the growing cost. One example may be the purchasing of a higher-cost tire with a longer tread-life,” said Mark Donahue, manager of fleet analytics for EMKAY.
Tire operating costs are a perennial concern with fleets, which can be effectively addressed by driver attention to tire inflation levels. Most instances of tire wear and higher fuel costs are directly associated with the fleet not properly maintaining air pressure.
“A continuation of 2018 and 2019 relative to price increases being passed down to the consumer. To combat, fleets will look to save money through retread programs and an emphasis on driver training relative to proper air pressure and other tire-wear and maintenance strategies. The cost of tires being passed down to consumers will continue to mirror the overall cost of oil and other raw materials. Additionally, more tire manufacturers have leveraged support teams designed to help fleet customers and FMCs with making targeted tire selections,” said Albright of Merchants Fleet.
Since oil represents a large percentage of the raw materials used to manufacture tires, the forecast for future oil prices is a positive sign.
“Oil makes up a significant percentage of a tire’s cost and oil is forecast to remain relatively flat in 2020. With no anticipated labor disruptions, tire costs should remain relatively flat or slightly increase,” said Mark Lange, CAFM, technical services consultant for Element Fleet Management.
Tire prices are driven by the costs of labor, carbon black, crude oil, rubber, and steel. While the price of natural rubber continued its sharp downward trend, carbon black, crude oil, and steel prices increased in 2019.
Barring unforeseen events, the industry consensus is that commodity prices will be higher in 2020, led by higher natural rubber prices, which will translate into higher tire prices.
Originally posted on Automotive Fleet
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