AKRON-Recent aftermarket tire pricing activity has reaffirmed some dealers' conviction that they are in a rather crazy business. Last year there was an unusual number of tire price increases announced by tire manufacturers who complained of rising raw materials costs. They were also having a hard time keeping up with truck tire demand. A year later, there appears to be an oversupply of tires, raw materials costs have declined-and tire prices are tumbling.
``I haven't seen such pricing in more than 20 years. It's the lowest I've ever seen,'' said Artie Shields, vice president of sales for Lincolnton, N.C.-based Regul Tire & Rubber Co. ``There are dealers who are afraid to buy because once they do, the price will drop again.''
Prices have fallen 45 times in the last 60 days on selected items, Mr. Shields said in a June 24 interview.
Steve Ganin, vice president of Reynolds Tire & Rubber Co., Brooklyn, N.Y., also noted that dealers are wary about placing large orders. ``Nobody knows what a good deal is anymore.''
``It's about as bad as I can remember in some time,'' added Art Lutz of Lutz Tire Co. Inc., a wholesaler in Portland, Ore.
In the past four to five weeks, Mr. Lutz said, he has seen a number of manufacturers offering ``special discounts''-including a 10-percent price reduction on truck tires. One major supplier discounted prices 4 percent one week and then added another 7.5 percent discount on top of that, he added.
Some brands have been discounted three times so far this year, according to Craig Palmer of Volume Tire Co. Inc. in Macon, Ga. ``I've been in the business since 1968, and it's been a long time since I've seen this much (discounting).''
``There's just a glut of tires right now,'' said Don Helker, vice president of sales for Del-Nat Tire Corp. ``Warehouses are full and they (manufacturers) still have to produce and keep the factories warm. . . . Obviously, the bottom lines of manufacturers aren't going to look too good after this quarter. If it continues, it won't look good for 1996, and that's not good for the industry.''
A Goodyear spokesman said consumer tire sales industrywide have increased over last year, but some lines are in short supply, while others are in oversupply.
``And this year, as every year, manufacturers put together special packages of tires for dealers in an effort to move some of the long-supply items,'' he said. ``Industry activity in this area is not significantly different than it has been in prior years.''
The truck tire market is a different story, however. Medium truck tire sales in both original and replacement markets ``are down much more than the industry expected,'' the Goodyear spokesman said. ``Accordingly, this is a very competitive arena, with some manufacturers extremely aggressive on pricing. Everyone wants to maintain market share.''
Some dealers, such as Mr. Palmer, who runs four retail outlets, welcome the lower prices. ``They say the market is soft,'' he noted, ``but our business has increased over last year. (The discounting) helps our profits.''
But the same can't be said for large wholesalers who maintain high inventories of tires-for with every discount, their inventories depreciate in value.
``We carry $3 million to $3.5 million in inventory, and half our suppliers have cut prices,'' lamented Mr. Lutz. He carries about a $400,000 inventory of snow tires, which have been discounted 10 percent since last year.
Mr. Shields said the market this year has been fairly soft, offsetting sales increases in some areas.
Manufacturers' inventories are very high, and they are reacting by cutting prices. Their price hikes of last year are essentially gone, according to Mr. Shields and others.
``(Tire makers) have been running full bore to keep costs per unit down,'' Mr. Lutz said. They get bit on each end, he explained: If they don't run at full capacity, they lose efficiency; but if they do run full steam, oversupply results.
Roland Lesieur of Maynard & Lesieur Inc. in Nashua, N.H., said the discounting frenzy is compounded by manufacturers' fears of losing market share to a lower-priced competitor. ``There can only be so many tires sold in this country-whether they are sold for $1 or $1.10,'' Mr. Lesieur said.
``Tires are cheaper than 15 years ago,'' Mr. Shields added. ``Expenses continue to increase, but the prices keep going down.''
He attributed the soft market today to the longevity of the product itself. Longer-wearing, longer-warranted tires diminish demand, he said, adding that this technology is ``coming back to haunt us.''
Echoed Mr. Lutz: ``There are so many tires sold today with high mileage. . . I wonder, if not for that, if there would be a glut.''