AKRON—The good news for dealers in the last quarter of 1999 was that retail sales of both tires and automotive service grew at a healthy rate. Commercial sales also improved, compared with the final three months of 1998, but not by as substantial percentages, according to respondents in Tire Business' reconstituted Rapid Response Fax/E-Poll.
The bad news was that, while the costs of doing business increased about 4 percent on average, most dealers were unable to adjust their prices upward to compensate.
In short, improvements to dealers' bottom lines were the result of higher sales volumes, not better margins.
"We need to increase our prices, but the market won't let us," one dealer in Oregon responded.
Dealers throughout the northern states reported that mild weather through the quarter depressed sales of winter tires and brought fewer cold-weather-related service opportunities.
Looking ahead to the first quarter of 2000, most dealers saw little prospect to raising prices in response to rising costs.
While more than half expected their costs to rise, nearly three-quarters predicted their selling prices would remain unchanged.
The good news—and perhaps the saving grace—is that majorities of the respondents also forecast that tire and auto service sales would continue to rise, with service eliciting the greatest optimism.