Recent correspondence with a national tyre distributor reported a positive first quarter for sales and the tyre industry has reported growth year on year, which is positive news given the market turbulation over the last two years.
The main issues facing the tyre industry have not been demand but supply, due to Covid disruption, Brexit uncertainty and new regulations, and the blockage of the Suez Canal. These issues subsequently caused supply issues. This significantly affected the supply of budget tyres and as a result, the cost of these soared close to that of mid-range.
As we move into Q2, tyre stock is starting to return to normal as the impact of Covid lessens. However, China are continuing to struggle with Covid restrictions which may have an impact down the line.
This all largely sounds like positive news, however there’s a ‘BUT’… Our national tyre distributor is predicting a significant price increase as the supply of raw materials and tyre production has been significantly affected by the Russian invasion of Ukraine. We are yet to see the ramifications of this but we are predicting tyre prices will start to rise towards the end of Q2.
Thankfully the supply issues of recent years seem to be behind us as stock returns to normal levels, however the increase in tyre materials and production will see consumers having to pay significantly more for their tyres in the not-too-distant future. Add this tyre price increase to the already inflated cost of fuel, motor oil, and replacement parts and we could see a wider impact on the automotive industry, as people abandon their cars for alternative methods of transport.
Ben Grave, Mark Lawson