A Notification for Price Lifting Excited Tire Industry

The news that a renowned Chinese tire manufacturer is to lift its product prices has excited the entire tire industry.

Someone posted a price lifting notification on the Internet saying the all-steel tire prices will increase by 2% starting from April 1.

A number of distributors confirmed that the notification was true and the distributors had been notified.

A Good News

For Chinese tire manufacturers, “price lifting” is an excited news.

All manufacturers expect to lift tire prices and when they heard that someone had taken the lead in doing so, they were very excited.

“It is definitely a good news, the tire industry has been cutting prices for too long, the morale needs to be boosted,” an industry insider said so.

Due to sluggish marcoeconomy, gloomy tire industry outlook, diving prices of raw materials such as rubber, tire prices have dropped always the way down over the past few years. The tire industry was doom and gloom, particularly in the last year.

The notification says since the beginning of 2016, prices of natural rubber rose nearly 20%, the costs of manufacturing increased significantly.

A senior figure of the tire industry said domestic tire producers are confronting heavy pressures, costs on raw materials and labors have increased, while the companies had little profit in spite of large sales income.

Dilemma of Distributors

Although the industry expects price lifting and it is true that the costs have risen, sluggish market demand worried the distributors.

Some distributors said the price war is still fierce, the overall circumstance is not so good, price lifting may affect tire sales and they could even lose a part of market share.

An industry insider said price lifting is against the market trend, both the manufacturers and distributors should keep the prices within a rational range.

What the distributors fear is consumers refusing paying for higher prices.

Actually, whether the price lifting could be carrying out and how it is carrying out are crucial issues. Market is final decision-maker.

One Cannot Clap with One Hand

Usually, Chinese tire companies summoned policy conferences in March to decide and announce the pricing policy.

With the costs growing higher, tire companies expect to deliver their products as soon as possible.

“It is a sales strategy for quick delivery,” said an industry insider. Tire sales werelackluster in 2015 due to a number of factors. If no new policy is coming out, the market will remain sluggish this year.

Whether the price lifting is an exception or a beginning needs to be proven in a week or a longer period of time, other producers may follow suit.

The insider said the price lifting could be true, but it may also be a signal released by the producer to test the reaction of the market. After all, the market is still sluggish and the producer should be aware of it.