No Price Increases for 2008 – ATC

A company enjoying considerable media attention within the tyre industry this year is American Tire Corporation; since the start of February the previously low profile company has reported plans to build a half billion dollar OTR tyre facility and shared news of a “big” acquisition offer, which it declined on the grounds of conflicts between an outright acquisition and the firm’s current development strategy.

Making the news for a third time in little over a week, on Sunday 10 February American Tire Corporation announced a sweeping host of across the board price non-increases. According to the company’s press release “American Tire Corporation has decided to maintain its OTR tyre prices at current levels while other US tyre manufacturers have increased or are planning to increase their prices from the beginning of 2008.” The company further promises “no price increase will take place this year.”

The promise of no price increases over the course of a year in an uncertain market is a gesture rarely seen in a business where profit margins have been whittled away by increased raw material and transportation costs; the decision appears all the more extraordinary in light of the company’s recently announced plans to build what will be one of the most expensive tyre manufacturing facilities ever constructed in the US. A North American based industry observer has expressed scepticism over the recently reported acquisition offer, and commented to T&A that he remains unconvinced on American Tire Corporation’s ability to deliver on its greenfield facility plans. Whether or not it can deliver a supply of quality OTR tyres at current prices throughout the remainder of 2008 is another issue entirely.