Malaysia tire price increase: Tire prices are something that nobody cares too much about until they need to purchase a set of tires. This is the moment they start to freak out and say “why is it so expensive?” We have shown in the past that tire prices relatively increase as your tire inches go up. If you would like to find out how Michelin priced their different segments you can also check it out here.
The world has been grappling on post covid inflation since economies return to the normal status quo. With a lot of cheap cash floating around and the supply/demand imbalance, prices start to increase in the early 2022. However as tires are not an essential good and will never be in the consumer price index, the increase usually is not well documented. With the information I have stored via my tire price table , I would like to share how much the retail tire prices have risen over the last years.
Table of Contents
Data collection
The price data collected was taken from our own internal price table which sources most of the data from Lazada’s biggest tire dealers. It is important to ensure that the prices we compare are coming from the same store. We also took extra care to exclude any outliers which have huge price decreases due to old age or stock clearance. In total we managed to collect 412 tire prices involving 11 different products. We have segmented the tire prices in 2 phases. The first phase involves the later stages of the pandemic from March 2021 till February 2022 while the second phase is the start of the endemic part.
Phase 1: 03/2021 – 02/2022
The first phase involves the later stages of the pandemic where the vaccine roll out starts to kick in as the world pace itself to get everyone vaccinated. The table below shows the average price increase for each product segment over a 12 month period.
For a 12 month period (03/2021-02/2022)
- Total Average Increase : 10.4%
- Total count: 216 sizes.
- Highest increase: Continental Comfort 6 +25.6%
- Lowest increase: BF Goodrich All Terrain AT KO2 +0.36%
Phase 2: 03/2022 – 06/2022
The second phase involves the endemic phase and a huge spike in inflation for common goods. This is also the period where the conflict in eastern Europe started. The table below shows the average price increase for each product segment over the 4 month period.
For a 4 month period (03/2022-06/2022)
- Total Average Increase : 11.09%
- Total count: 216 sizes.
- Highest increase: Michelin Energy XM2+ +25.6%
- Lowest increase: Continental UC6 SUV +0.36%
Why is there a price increase?
The increase in prices are due to a multitude of different factors and here are some of the contributing factors.
Increase in raw material prices
Most of the new generation tires are heavily reliant on synthetic rubber such as Solution Styrene Butadiene Rubber (SSBR) due to their better abrasion resistance. This indirectly resulted in a reliance on crude oil as these products are derived from petroleum related products. Natural rubber also do play a role when it comes to tire production but at a smaller scale compared to synthetic rubber.
Taking a page out of Michelin’s annual report, you can get a feeling on the relative pricing and how much different raw materials constitute towards the overall cost. Both natural rubber and synthetic rubber makes up 53% of the tire raw material cost. The reliance on these 2 key products is clear and any disruption towards it will have a significant impact on the cost of producing tires.
So how did prices of natural rubber and synthetic rubber performed in 2021? The graph below taken from Continental’s 2021 annual report shows the price increase of key raw materials from 2020 till 2021. The natural rubber (TSR20) was up 27% year on year while Brent crude oil was also up 66% year on year.
Overall the raw material prices went up considerably and tire manufacturers have to “react” and pass on these costs to the consumers. This ultimately resulted in multiple price hikes over the year to ensure a same profit margin can be maintained.
Supplier chain and other inflation related cost
As most of the people might already feel, the prices of everything is increasing and slowly taking its toll. Due to the conflict in eastern Europe, many companies faced supply chain issues as sourcing from Russia & Ukraine was not possible. China’s supply chain was also temporarily halted during the lockdown in the early 2022. This “extra burden” caused production of tires to be more expensive which ultimately needed to be offset through a price increase.
What can you do about it?
So one might ask what can you do about the price hikes? We came up with some countermeasures which might be useful in this situation.
- Take care of your tires. Check out our article on “How to increase your tire life”
- Before buying your next set of tires, use our tire price table to compare the latest prices.
Summary & Outlook 2022
Overall, tire prices were found to increase on average 10% from Mar-2021 to Feb-2022. However due to unfavorable raw material prices & supplier chain difficulties, we saw a further 11% price increase just in the space of 4 months ! (Mar-2022 to April-2022). Based on the current situation, the outlook for 2022 looks to continue with tire price hikes becoming more and more common. While there is nothing you can do about the prices, there are a whole lot of things you can do to take care of your tires. You can also do proper research on your next tire purchase in order to extract the most value out of it !