Tire Prices Keep Rising

The tire industry is experiencing price increases from tire manufacturers at a record pace. Virtually all are in the midst of a second round of increases in the last six months.  This comes at a time of one of the worst recessions in the last 70 years, where unemployment is said to be just below 10% range.

One of the reasons for the increases in tire prices is escalating material costs.  The main culprit seems to be natural rubber. Supplies have been reduced due to droughts in Thailand and southern regions of China.  Some sources have estimated the cost of natural rubber has increased more than 65% in 2010 over 2009. 

Another reason for tire price increases is increased demand for tires in China and India.  Their economies have rebounded faster than the US’s, and the demand for automobiles is increasing as their living standards rise.

The rising price of oil is another factor. With the current political unrest in Egypt and Algeria, the world price of crude oil is going up. This issue of supply, then, is hotly political, making simple solutions appear far off at best.

Put all of these factors together and it portends higher tire prices for 2011.

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