Chinese Tire Tariffs – This Time Could Be DifferentPosted on January 19, 2015
It appears that another round of increased tariffs on Chinese made tires is upon us. While this does not directly effect Atturo, since our tires are not made in China, it will have consequences to the overall tire market. The primary impact will of course be on the price levels of various tires. This may hit consumers especially hard. It doesn’t have to be that way!
According to a recent article by Bob Ulrich in Modern Tire Dealer, prices on passenger and light truck tires have increased by 25-29% between 2008 and 2012. This period coincides with the last round of increased duty. But don’t forget, this same period saw the price of natural rubber nearly triple. If we are honest, then we must admit that there was also a good amount of profiteering by the premium brands. They sought to maintain their price points above the entry level tires, which suddenly become more expensive.
This was a lost opportunity for domestic tire producers, and all brands, to sell quality. Most of the industry begrudgingly accepts Chinese produced tires as a necessary entry level product. While the overall quality of these tires has continued to improve, there is still a reasonable gap between the next levels up the scale. The prior duty regime should have created an opportunity to set the price difference aside and educate the consumer about why they should prefer the better quality tire.
Between the higher duty, accelerating rubber prices and the arbitrary profiteering, the consumer really did get harmed over the 2008-2012 period. Two of these three factors were outside the control of the tire industry. I believe some type of increased tariff will come again. Rubber prices have come back down and seem stable at the moment. The third pillar is the pricing to be set by the non-Chinese producers. What will they do?
For Atturo’s part, we know the challenges of a new brand trying to earn a reputation for quality and value. Many others from Japan, Korea and other emerging manufacturing hubs have covered this same ground in the past. I look at this next round of higher tariffs as our opportunity to educate customers about the better quality tire which they can get for a very small price difference. This represents true value to the vehicle owner. Drivers will benefit from superior handling, braking, wet traction, proper load and speed index and improved longevity. Dealers will have the confidence of a satisfied customer, solid margins and the support of a US based operation.
Atturo’s pledge is that we will not seek to profiteer under any new tariff regime. While prices may fluctuate for a variety of reasons, Atturo is not going to seek to raise our prices solely to profiteer from an increase to the entry level products we seek to distinguish ourselves from. We started this company because we believe that great tires do not have to cost a lot of money. We also believe that it is better long term business to sell more tires at a fair price, than to try to capitalize on a short term government induced condition. Atturo will continue to keep performance within reach for our customers. Are you with us?