Price fixing among tire manufacturers

Well perhaps, if you exclude the largest source of recycled water, RAIN...

 

Since everyone making tires has similar raw material costs, China has
several advantages for lower cost:

1. Lower wages
2. Virtually no enforced pollution controls
3. Virtually no enforced hazardous waste disposal procedures
4. Virtually no enforced occupational health/safety regulation

Since it is a developing economy, wages will remain lower than the West,
as having an industrial sector job like making tires still pays more
than farming.

Were China to meet USA or Canadian regulations for items 2-4, their cost
advantage would be significantly smaller.

--Gene

 

Much rainwater that falls in the USA is unfit for consumption without
some sort of treatment process, due to atmospheric pollution. Often,
that treatment is performed by another shrinking natural resource,
wetlands. Otherwise, it is performed by treating the municipal water
supply.

20% of irrigated land in the USA is supplied by the Ogallala Aquifer,
which consists of water trapped in sediment during the last ice age. It
is being consumed at four times the rate it is being replaced. Should
the aquifer go dry, that 20% of (highly productive) land will fall out
of production, as it doesn't receive enough rain to be productive on
rainfall alone.

Aquifers, not rainfall, supply 60% of the fresh water in the USA, and
virtually all of them are being consumed faster than their recharge
rate.

--Gene

 

and traffic tickets

As long as they know what they are doing I don't care if they go
flying by me at 90Mph on the interstate on their Z rated tires that
melt away in a year. If those folks want to give the bored municipal
cops something to chase, more power to them.

Unfortunately, however, the fact majority of these "buyers of high
performance tires" do NOT know WTF they are doing, and drive
recklessly and endanger others around them on the road.

High Performance tires give you nothing on a minivan. Unless of
course your driving something like this:

http://www.turbominivan.com

Ted

 

Yes, I also happen to own 3 Honda CB750's. (one of them which I
keep insurance and licensed year round, and I'd be riding it now if I hadn't
come down with a bad cold about a month ago which I'm just recovering from)

However, the one thing about M/C tires is you can order them online,
and you can install them yourself. Thus, relieving you of the dependency on
a bunch of local dealers in your area who all decide to set their prices the
same.

Ted

 

The problem with buying from an online shop like tirerack is you can't
install it yourself - you have to involve a tire dealer to install it. If
all 4
tires are shipped out, arrive at the dealer OK, and the dealer installs them
OK and they all wear to their rated life, then your fine. And, probably the
majority of the people that buy them online have that experience. But,
your taking an added risk. For example, a tire arrives shipping damaged,
but you don't know until it's mounted and put under load. Now, you
have no recourse with the shipper because it will be too long since filing
a claim, the shipper will also claim the tire place damaged it on
installation,
the tire seller will say to go to the shipper for recompense, etc. etc. Or
if the tire fails prematurely the dealer charges money to dismount and
remount it even if tire rack gives you a free tire. Or if tire rack decides
for whatever reason to deny warranty claim, the tire dealer that installed
it since they are making minimal on the tire, isn't going to help you
fight against tire rack. I could go on and on but clearly if you buy online
instead of from the local dealer, your ability to get warranty satisfaction
should you ever need it is much less.

It might be worth assuming the risk if the tires cost $300 a pop from
the local dealer and you could get them for $100 a pop online. But for
$90 tires it's not worth it.

Yes, which is within a few dollars of what the local dealers around here
sell
it for. No real gain from buying the hydroedge from tirerack.

None of the local dealers I contacted sell Pirelli's. But I will ask at a
few
others Wednesday about that tire.

The quote I have here on my desk from Sears that I got 2 days ago lists
$94.99
for that exact model tire.

Yes, but check again - most of the cheaper tires in the same treadwear
rating
of that size are unknown Asian/Chinese/Korean/Japanese brands. Your going
to be hard pressed to find any reviews of them online since they just don't
have
that large a footprint in the US market.

Here in Oregon the largest vendor of Asian tires is Les Schwab. But -every
one-
of their tires (coming mainly from Toyo and Hankook) is a specialty model
that's custom built for Les Schwab and isn't available anywhere else from
anyone
else.

Now, I've dealt with LS over the years a number of times. I even bought a
set of their passenger car retread tires 20 years ago one time when they
were
still selling them. And, I even got a quote from them when I started
looking,
despite the fact the current tires on the van (which are very noisy) came
from
there. But, the very first question I asked them when the guy handed me the
quote was what was the noise level like and the guy immediately stated that
ALL the tires the sold, no matter how expensive, would be noisy, and there
was just nothing that could be done about it. Which, I knew from my
research
was baloney because people HAVE reported dramatic noise improvements
in minivans with the right tires.

In other words, the largest vendor of Asian no-name tires in my market isn't
interested in my business if getting a quiet tire is a requirement. Well,
I'll take
them at face value - Asian no-name tires are noisy, period.

In other words, the treadwear isn't really the whole story and you get
what you pay for. So, back to the grindstone of comparing apples to
apples, instead of apples to oranges.

Well, that explanation really seems to make the most sense so far.
In short, my impression that $100 a tire and $400 for a tire changeout
for a car being really expensive is a complete and utter naieve
impression. In reality, a $100 tire is a cheap tire! Ouch!!!

Ted

 

You can't do that with tires since you would void the warranties. The
warranty clauses contain exclusions enough to drive a truck through.
But other than that, yes I see what you mean. The only problem with
your observation is that most of the cheaper tires - the ones where there is
wider price variation among similar UTQG ratings - are far lower treadwear
than the 700-740 UTQG tires.

My observation on similar pricing holds for the 700+ UTQG tires. Not
for the lower treadwear rated tires. But, I think I already outlined how
the lower treadwear rated tires are a bad deal - much less bang for the
buck - and are only worth dealing with if your primary interest is in
saving cash (such as for example your planning on selling the car within
a year or so)

If I were to do that and name off a price that was rediculously low then I
wouldn't get a computer. But, if I were to name off a price that was
rediculously high - such as for example what Apple charges for their stuff -
then every dealer would say they had the same price and I could get what
I want from anyone. So I'm not sure how far you can carry this analogy
before it gets too silly to be usable.

Getting back to tires, now...

So your assertion here is that the tire market really isn't a commodity
market as much as I think it is. That could be an explanation for what
I'm seeing.

You see, I think this is actually one of the reasons that there ARE so many
different tire models, and that the tire manufacturers are constantly
changing
them. They know that nowadays with the Internet and such that if they
put out a crappy tire, within 6 months the name and model will be splashed
all over the place and people will stop buying them. So they are constantly
changing the names of the models and make very little attempt to build up
model and brand loyalty.

Your cereal manufacturers (General Mills, etc.) spend huge amounts of time
using the same names over and over and protecting them, since they know
they have consumer loyalty. Coca-cola found this out with New Coke -
they changed the flavor a bit and POed their customer base. So they quickly
changed back.

It seems to me that if a tire manufacturer created a model - for example the
Michelin Hydroedge - and spent the next 20 years pushing that model and
making damn sure that every purchaser of it was happy as a clam, that the
consumer loyalty built up over the Hydroedge name would be enormously
valuable. I don't understand why the tire manufacturers don't operate this
way.

Right. But they don't seem to do this. Instead the second they build up
the slightest amount of consumer loyalty to a tire brand, they discontinue
it and substitute a new model with a new name.

Well that is what my goal is. But it's like playing wack-a-mole. To
me the only real worthwhile guide to the better product is testimonials
from people who have actually bought them and put them on their vans.
But most testimonials out there on the Internet, even ones that are no
more than 2 years old, seem to be for tire models that are no longer for
sale.

It's like the entire name of the game here is to keep the tire consumers
from knowing what the hell is really going on.

Ted

 

Mostly taxes. And don't forget theprofit demanded by the shareholders.
The price of Gasoline has VERY little to do with the cost of crude.

Don't forget the HUGE advertizing budget of companies like DEL, HP,
APPLE and others.
Today you are pretty close with your assessment, but 10 - 20 years ago
you would have been SO off-base!! The price you paid for a computer
had everything to do with what the public was WILLING to pay, and
nothing at all to do with the cost. I was in the business then. I SAW
the OBSCENE profits made by some companies - particularly in the
higher end mini computers (bigger than PCs).

 

I grew up with few toys, and made quite a few for my younger brothers
and sisters. They have WAY too many today, and too few that exercise
their magination, their mind, or their body.

Not to mention local is picked at the peak of freshness, where
imported is picked green, and never does get the same flavour.

 

True, BUT, the water, when used, reduces the amount of FRESH water
available. This is particularly true in areas like where I live
(Waterloo Region, Ontario Canada) where we depend heavily on
groundwater.

Any water used and returned to the rivers etc lowers the watrer table
and reduces the amount of water available from wells.

It IS a big consideration, and a problem - particularly when we have a
dry summer like we just had - more than a 30% drop in rain from normal
- which is generally JUST enough.

 

Really? I see what you mean. I mean it's not like when oil was $40 a
barrel, the price of gasoline was cheaper. Oops, it was.

In the fall, Dell had net revenue of about $15.6B and selling costs of
about $2B or around 6% of sales (3 months ending 2 Nov 2007). The cost
of this revenue was about $12.8B. The cost of the revenue included the
cost of the parts, the cost of assembling the computers, the cost of
shipping the assembled computers across the oceans, the cost of the
workforce and the cost of the plants.

You're so full of crap! The price had nothing to do with the cost? I
hate to tell you this, but very few companies sell their goods for less
than it costs them. Those that do, don't do so for long.

The same thing is true today. If Dell could charge $4000 for a computer,
it would. But, the problem is that HP, Levono, Acer and others will sell
the same computer for about $2000. Guess where the costumers go.

IBM and other companies are making a nice profit they way they made
profits years ago: in services (like web services) in addition to the
cost of the computers they sell.

One of my New Year resolutions is not to keep responding to people who
say nonsense. When you are able to say something that makes sense, I
will respond. Until then, bye bye.

Happy New Everyone!

Jeff

 

clare at snyder.on.ca wrote:

I remember when I was a kid, I spent a lot of time playing with trucks
and Legos. I still like to play with them (although now I can include
full-size trucks if I want).

I can't agree with your statement more.

I do think there is a place for kids playing video games, perhaps up to
two hours a day, including time spent playing on the computer. When
they're playing video games, they are learning some important skills.
But not skills that are that important that they need to play video game
or watch TV for hours a day.

Most of the play time should be with toys that exercise the imagination,
mind and body.

Great Point!

Jeff

 

I tend to think that 2 & 3 (and sometimes 4, below) are costs that we
bear in the end, through environmental degradation. In fact, one can
argue that we are just moving the nasty costs of manufacturing (CO2,
pollution, environmental damage) to other countries for stuff like this.

5) Add: Cost of transporting the tires 1/2 way around the world.

I am not so sure about. In the end, the costs would probably be about
the same or even less, because they don't have to take care of as many
sick people and our environment is not as badly degraded.

Jeff

 

What goes around, comes around. CO2 doesn't stay local, and neither
does mercury emitted from burning coal.

Actually, container ship transport is, pound per mile, incredibly
efficient. The larger cost is incurred shipping from the port of
arrival to final destination in some landlocked midwest city.

Heh? I'm not following this. China WILL face a an aging population and
accompanying health crisis (the demographics guarantee it), and are
rapidly dismantling the multi-generational family that was THE system
for caring for the sick and aged.

--Gene

 

China will have additional costs because of the higher costs of caring
for chronic illnesses, environment remediation and lost productivity.

Jeff

 

You are making no sense whatsoever. Look up "conservation of mass".
You continue to give the impression that the amount of water on the
earth is decreasing all the time. That is absurd.

And your point is...? How long have they been without water? And they
are still living there? People in Ethiopia needing water does not equal
available water decreasing in general which is what you've been saying
(i.e., "Once it is used, it is gone forever"). There is a constant
finite quantity of water on the earth - period. Though I'm sure Al Gore
would refute that.

Hmm - interesting. The article says that over 2/3 of the fresh water is
frozen in glaciers and ice caps. If the Amazing Algore's global
warming claims are correct (and they aren't), then we will have all that
additional fresh water to tap into. You guys can't have it both ways.
Unfortunately the world listened to this kind of alarmist
invented-crisis pseudo-science crap about DDT, and as a result millions
of unnecessary deaths occurred from malaria that never would have
happened. How come no one ever talks about that? Instead you want to
move on to the next invented pseudo-science crisis.

Seriously - I'm sure water management is a critical thing - in the
future as in the past. But when you say that when water is used it is
gone forever, you lose all credibility and that weakens any potentially
valid points that you may otherwise want or need to make.

Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

 

Yeah - I know. I was going to suggest that you check into a good
touring tire - maybe you already are looking at those. But they are
very good on low noise.

At the suggestion of someone here (rec.autos.makers.chrysler) 3 or 4
years ago, I tried Cooper Lifeliner Touring SLE - supposedly super
quiet, 620 treadwear rating, and advertised as something like 70k mile.
I tried them and they proved everything they were claimed to be. All
three of my present cars have them - my daily driver is on its second
set. They cost around $80-85 out the door, and included lifetime
rotation and balancing.

But guess what. Cooper has discontinued it. Replaced it with touring
model CS4. I will give them a try the next time I need tires - they
appear to be the same tire (ratings, quietness, etc.) with just enough
changes that they could give it a different name. Oh - and it costs
$110 instead of $80-85.

See above re: Cooper SLE/CS4.

Anyway - if you don't need to pull the absolute max. G's on cornering,
consider the Cooper CS4 or another good touring tire you may hear good
things about.

Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

 

Actually there isn't. Every time you burn Natural Gas you introduce water
to the earth as your creating it from the burning of the hydrocarbon, as
well as burning many other kinds of hydrocarbons. Introduction of water
through space material (comets and such) hitting the earth adds some more
and doubtless the decomposition of water as a result of lightning removes
some,
although those are minor in comparison.

I think the amount of water on earth varies quite a bit, I'm sure there's
other
chemical actions that tie up the various atoms that make up a water molecule
into other molecules.

I think it was Heinlein who wrote a Sci-Fi story about a future where
spaceships used water as a reaction mass to get out of the Earth's gravity
well - as a result of it, an entire political party on Earth was created
over
the outrage of the idea that Earth's water was being lost to spaceships,
resulting in crushing and punitive restrictions on space travel. The party
collapsed when the opposition brought a giant chunk of frozen ice from
the Asteroid belt, landing it on Mars as a publicity stunt and offering to
freely export water from Mars back to Earth... An amusing
story, kind of like this argument...

Ted

 

On a minivan? You kidding?

Firestone has apparently started another sale - a $50 off coupon on a set of
4
Bridgestone tires just came in the newspaper today, good til Jan 6th....plus
another 5% off if you use a Firestone credit card to buy them..

Ted

 

Pricing is an important part of marketing. You want to be low enough to
compete
in your desirability range, but you dont want to leave money on the table.

For example, people will pay more for a BMW than they will for a Chevy, but
the
car may not be any better at the end of the day. So you establish a price
range
for your desirability range. And, you dont give them away even if you
could..