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Michelin Advantage Prices Go Up 12/1/2014

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A heads-up, for tire buyers ...

FMCA has just learned that, effective Dec. 1, 2014, Michelin will increase the price of new truck tires available through the FMCA-Michelin Advantage program. Prices will increase by an average of five (5) percent, according to the pricing manager for Michelin Americas Truck Tires.

A link to the Updated price list for Michelin Truck Tires will be posted on the Michelin Advantage instructions page (requires FMCA member login) by Nov. 3, 2014.

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I found nothing about price increase, not that it matters, glad I got 8 new ones in Oregon after rally!!! Saved big on no sales tax... :)

Carl C.

10' AMC Tradition 45'

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i got tires (p245/70-16 ATS2) for my toad for $150 each minus $70 since I brought 4 at Costco. They are Michelin and Costco never heard of the program but I saved anyway.

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Believing there was going to be an increase I purchased 6 Michelin 275/80R22.5 XZA 3+ the end of Nov 2014. Same tires now are less than what I paid.

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I wondered if the cost of tires would go up with the lower oil cost.

Timing is everything and had no idea that crude prices would drop to the current level.

I'm not a tire engineer, but most of the material is oil based unless I'm missing something used in the manufacture of tires.

So Roger: How do you think the current oil prices will affect the supply chain in the manufacturing of tires and any clue of the time line ?

Rich.

PS. Welcome to the FMCA Forum - FD5

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I always amazes me that when the price of oil goes up the cost of oil based products goes up immediately. But let the price go down and it take some time for the products to go down and some never go down.

Thanks Todd for keeping the Family Members up to date.

Herman

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Rich & Lois and others,

Yes it is true that a good portion of the "rubber" in tires is really synthetic which means the raw material is petroleum based. Today's passenger tires have very little if any natural rubber but as you move up in size there is an increasing % of natural rubber. Some 22.5 size tires have Natural rubber as a component but without access to the secret formulas I can't address the % which could range from 0% to maybe as much as 25% or more

.

There is also the special high strength brass plates steel to consider along with numerous other materials such as titanium oxide,

From Whikipedia we see

  • Natural rubber, or polyisoprene is the basic elastomer used in tire making
  • Styrene-butadiene co-polymer (SBR) is a synthetic rubber which is often substituted in part for natural rubber based on the comparative raw materials cost
  • Polybutadiene is used in combination with other rubbers because of its low heat-buildup properties
  • Halobutyl rubber is used for the tubeless inner liner compounds, because of its low air permeability. The halogen atoms provide a bond with the carcass compounds which are mainly natural rubber. Bromobutyl is superior to chlorobutyl, but is more expensive
  • Carbon Black, forms a high percentage of the rubber compound. This gives reinforcement and abrasion resistance
  • Silica, used together with carbon black in high performance tires, as a low heat build up reinforcement
  • Sulphur crosslinks the rubber molecules in the vulcanization process
  • Vulcanizing Accelerators are complex organic compounds that speed up the vulcanization
  • Activators assist the vulcanization. The main one is zinc oxide
  • Antioxidants and antiozonants prevent sidewall cracking due to the action of sunlight and ozone
  • Textile fabric reinforces the carcass of the tire

Here is a good article on the topic.

What hasn't been addressed is the research, manufacturing and transportation costs. With the ever increasing pressure for improved fuel economy, smooth and quite ride as well as, long wear and all season performance the R&D efforts are continually increasing.

I think it is important to remember that oil price at the pump is a poor reflection of the real cost of the commodity especially when most of the materials are bought based of future delivery so current day to day variations have little affect of the price of oil someone is willing to commit to 5 months or a year in the future.

One thing to look as is the profit margin of the tire companies over a multi-year basis. For example I believe Goodyear profit in 2013 was about 3% of sales income.

If you want the nitti gritty check this web site and you will see the Return on Assets ranges from negative 6% tp plus 5%

Now please remember I may be a tire engineer and I even play one at FMCA Conventions but I am not a financial advisor and as we all know past performance is no guarantee of future performance.

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