Some tire makers have lately raised tire prices again. Mr. L, head of a small tire maker, told tireworld.com.cn that his company has no choice but to lift price.
Impact from rubber price surge
Tireworld.com.cn: Why do you raise price so much this time?
Mr. L: This is the first time that our company joined in this round of price increase.
The impact of the rubber price surge on those large-sized manufacturers is much smaller than on smaller makers such as our company.
The large makers have plenty of rubber inventories. Thus, they can afford to lift tire price by 5-10 percent at a time. In contrast, small makers usually purchase rubber for immediate use.
Besides, our company mainly produces tires for agricultural vehicles that consume much more rubber than those for passenger cars. Therefore, we feel quite an impact from the raw material price surge.
The current rubber price has nearly doubled compared to that of a year earlier.
Hope for price correction
Tireworld.com.cn: How do you see the future market?
Mr. L: To tell the truth, I hope the tire price to go down or at least to keep steady instead of rising like this.
Under my estimation, our company has to raise tire price at least by 50 percent in order to offset the increase of rubber costs.
Further price hike possible
Tireworld.com.cn: You mean your company will later raise tire price by 50 percent?
Mr. L: Actually, we do not have the guts to do so.
In fact, we had supplied a batch of tires for the former price to our dealers before we raised the price.
Particularly, our price policy is still open for negotiation for the regular and major clients.
Crucial time for small makers
Tireworld.com.cn: Will this be a chance to reshuffle the tire industry?
Mr. L: It’s definitely no good to the small makers in such a circumstance. Yet I still don’t think this will kill many makers.
Small makers are flexible. The biggest impact for them is a thinner profit.
Also, there is no need to suspend production.
If your clients place orders to you, and you cannot supply them with the goods, the clients may stop purchasing from you next time. Then you lose the client.
Anyway, it’s reasonable that the weakest goes to the wall.
