Tiremakers Pump Up Their Prices
The theory that fewer rivals means less competition and therefore higher prices may be borne out in the tire industry. Despite much industry consolidation, tiremakers have spent the past five years scraping for market share--and paying for it with miserable earnings. Now, they're finally letting up on their price war--at least in the replacement market. World leader Michelin on Aug. 1 boosted prices on replacement tires in Europe by 10%, and others followed. By the end of August, Continental's General Tire raised prices for the U. S. replacement-tire market by 7.5%. The three biggest U. S. producers--Goodyear, Michelin, and Bridgestone/Firestone--followed with similar moves. All this has tire stocks soaring. But there's still no sign of increases in the prices of tires bought by carmakers.
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