Online tyre pricing trends to June 2023

During the last few years, tyremakers have repeatedly increased prices. The combination of pandemic-related complications, lower car production rates, higher shipping costs as well as higher raw material costs meant that was inevitable. More recently, the situation was compounded by unusually high rates of general inflation driven by increased energy costs that came as the result of war in Ukraine. However, shipping costs are now lower than they were and industry sources report that tyre manufacturers are beginning to change their previously one-way price movement policy. But is that reflected in sell-out pricing? Specifically, what about the stereotypically more price-drive online etail tyre business? Tyres & Accessories got in touch with Encircle Marketing, which specialises in the kind of market research that can answer those questions, in order to find out.

The particular piece of Encircle research we looked at focused on sell-out tyre pricing in the UK, especially online. But we also looked at comparative German tyre market data.

The headline news is that online tyre retailers have generally continued increasing prices since September 2022 in a trend that has continued into 2023. Since the start of 2023, more significant increases have been recorded. In the interim, prices have dipped and plateau before rising again in recently months. The latest data seems to suggest something of an easing off, but it is too early to say if that is the case or if that is a stable downward trajectory.

Looking closer at the data, the historically erratic online tyre pricing environment appears to have settled into a more uniform leader and follower type pattern. That means that the price leadership of one or two of the largest retailers is generally setting the pace for the others. However, there are exceptions to both rules, with one or two retailers neither fitting in with the leader-follower context nor following the overall market trajectories – making them, by definition, outliers.

Is traditional retail pricing following etail?

Chart 1

Overall, the market is reportedly showing significant pricing growth overtime. This was initially driven by a price lift in August 2022, but was then followed by a three-month price increase hiatus. Since August 2022, there has been price acceleration across key platforms. At the same time, while the gamp between top and bottom was largest in October 2022, there has been a considerable narrowing of market pricing since then. Throughout, the same outlier has stood apart. However, having said that, data for the latest month on record – June 2023 – indicates that even that outlier is as close to the pack as it has been since August 2022. Looking at the online tyre market more broader, as the data enters January 2023, price increases accelerates again before a marginal decline in March (see Chart 1 for further details).

Compare the online tyre retail data with the conventional channels, however, and you can start to see that the traditional tropes suggesting that the online tyre business is simply a race to the bottom don’t really hold water. Rather, the data suggests that bricks and mortar tyre businesses follow the same path as online. The difference is that that they are reacting later in the year – which supports the suggestion that they are to some extent following online tyre pricing trends. Another difference is that when conventional tyre retailers have been increasing prices in 2023 they have been more reluctant about it.

How do pricing vary by segment?

Break the data down by rim diameter and you have a means of looking at the market in terms of high-performance tyre sales. Here, the short story is pretty-much what you would expect: greater than 16-inch pricing is tight, while greater than 17-inch pricing is considerably more diverse. And, therefore, another perspective is required to find out more.

Chart 2

For this we looked at Encirle’s premium pricing breakdown, which compares the prices of the leading retailer when they sell “premium” tyres. For the purposes of this research, Encircle filters off Michelin, Goodyear, Bridgestone, Continental, Pirelli and Dunlop tyre sales in order to fulfil that remit.

Here, trends similar to those found in the general market data can be seen. However, the difference when it comes to the premium market breakdown is that it is noticeable how compact the market is outside of the single outlier. In other words, when it comes to selling premium tyres online, there is very little price differentiation between platforms (see chart 2).

When Encircle’s premium basket is spun off into its constituent brands, clear differentiation between the top and the bottom of this premium segment can be seen. Analysing the 12-month data between June 2022 and June 2023 by brand also shows more about what is being the overall price growth acceleration trend. Specifically, Michelin stands our as consistently the highest price point. Pirelli’s price point is similarly consistently, albeit between £8 and £13 per tyre lower than Michelin. Bridgestone is next, closely correlated to Continental, leaving Goodyear lowest amongst those top brands, with just Dunlop another step under. That last point reinforces the finds may by previous reports we have seen, showing that Goodyear is the lowest priced premium brand, followed by Dunlop.