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Published on April 10, 2000

Tire price hikes needed

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The latest round of tire price increases is needed by makers and dealers alike, particularly in light of the recent spike in oil costs. It's been a long time since the tire industry participated en masse in a round of price hikes.

The Federal Trade Commission's recently concluded investigation of the industry's pricing practices might have contributed to this.

As expected, the FTC found no evidence of price fixing. The truth is, tire prices have declined in recent years, the government's Producer Price Index shows.

However, the more likely reason for not raising prices is that competition makes it difficult for any individual firm to do so without risking market share.

This latest round of hikes gives tire dealers an opportunity to boost profit margins by passing the increases along to customers.

But history has shown that's not usually done. There's always one company willing to trade market share for profits. If others follow, the price increases fail to stick.

Maybe this time will be different.

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