At press time, we noticed an unusual trend: Tire prices in all sizes decreased by an average of $30–$40 since early in this decade. We’re accustomed to seeing tire prices increase every year.
However, 2014 wasn’t a typical year for rubber prices or oil prices. In September 2014, the price of rubber was at its lowest in 5 years, according to International Rubber Study Group (IRSG). IRSG expects rubber prices to climb in 2015 as rubber producers in Asia cut back on their output. Rubber accounts for about 42 percent of the raw-material costs in tires, according to Tire Review, which covers the tire industry.
Another variable that will affect the price of tires in 2015: tariffs. At press time, United Steelworkers (USW) union wanted U.S. International Trade Commission (USITC) to impose a new tariff on consumer tires that are imported from China. USW argues that Chinese tire imports are sold in the United States at less than fair value and are subsidized unfairly by the Chinese government. At press time, USITC moved to impose tariffs and said a final ruling would be made in mid-2015.
All of the experts with whom we spoke predict that USITC will pass tariffs. Tire Review Editor Jim Smith and Modern Tire Dealer Editor Bob Ulrich expect that the tariffs will be as high as 60 percent. The U.S. tire industry adheres to a three-tier pricing structure, so when the prices of imported tires (lowest tier) increase, the prices of the top two tiers also increase, Ulrich tells us. When the United States imposed tire tariffs on China between 2009 and 2012, the average price of all car and SUV/truck tires increased 29.3 percent and 25.7, respectively, according to Modern Tire Dealer. Gary Hufbauer, who analyzes the effect of tariffs on tire prices at Peterson Institute for International Economics, expects the price on all tires to increase by at least 10 percent to 20 percent in 2015.
“Consumers will lose,” Ulrich says.
In other words, if you’re thinking about buying tires, you should buy them soon, before prices go up.
Characters and Codes
SLOW ROLLING. Previously, we reported that Cooper Tire & Rubber received a $1.5 million grant from Department of Energy to develop an ultralightweight tire that promised a 3 percent improvement in fuel economy through low rolling resistance. Chuck Yurkovich of Cooper tells us that Cooper hopes to begin production in the next year and sell the tire by 2016.
Meanwhile, 10 other manufacturers tell us that they’re working on improving the rolling resistance of their tires. We’re glad to hear that, because low-rolling-resistance tires lighten the effect of the road on a vehicle’s powertrain and allow a vehicle to run farther on a tank of fuel.
Unfortunately, little progress has occurred on a standardized grading system that compares low-rolling-resistance tires. The Energy Independence and Security Act of 2007 (the Energy Bill) instructed National Highway Traffic Safety Administration to establish such a system. However, no way exists for a consumer to compare the fuel efficiency of tires, other than taking the word of manufacturers. Industry representatives, manufacturers and NHTSA officials all tell us that they’re working on a grading system, but nobody will tell us what the new standard will look like or how the testing process will work.
“I have no idea when this is going to happen,” Smith says. “In 2007, the Energy Bill was done for the right reasons. NHTSA has accomplished nothing since then.”
Dandelions, Oranges and Sunflowers: New Directions in Oil and Rubber
What’s the problem? NHTSA refuses to tell us. Experts tell us that officials can’t agree on what type of road-surface texture to use when they test rolling resistance. Officials also can’t agree on how to test the amount of a tire’s heat buildup, which affects rolling resistance.
What’s worst of all is that all experts agree that when we finally have a grading system, it won’t provide consumers with a concrete amount of gasoline that they can expect to save by using a low-rolling-resistance tire. Experts tell us that the system will assign a letter, number or alphanumeric designation to each tire. In other words, the new system will be as incomprehensible to consumers as NHTSA’s Uniform Tire Quality Grading (UTQG) standards, which measures the tread wear, traction and heat resistance of tires.
Industry experts said UTQG is difficult for consumers to understand, because the nomenclature is complex. Since 2010, NHTSA has explored methods for making UTQG easier to understand. However, NHTSA wouldn’t tell us whether it made any progress. All that it tells us is that a low-rolling-resistance grade will be added to the existing alphanumeric soup of UTQG and that the agency expects to publish the supplemental proposal in 2015. Everyone whom we interviewed believes that a system won’t be in place until 2016 at the earliest, and we aren’t optimistic that it will be worth the wait.
Ron Moorhead has written about the tire industry for 30 years. He has written for Motor Trend, New York Times and Popular Mechanics.