Tyres - Is there a general rule for pricing
Discussion
At the moment I am fannying about trying to get a deal on tyres.
I have often thought what it costs to actually make a tyre and what sort of mark up the tyre dealer puts on them.
I am not looking to use this as ammunition when buying, but I have long since been curious about how it works....anyone know so as I can sleep at night.....
I have often thought what it costs to actually make a tyre and what sort of mark up the tyre dealer puts on them.
I am not looking to use this as ammunition when buying, but I have long since been curious about how it works....anyone know so as I can sleep at night.....
C.A.R. said:
Buy online, get them delivered to work / house and then get a friendly garage to fit and balance them.
Camskill
Blackcircles
Two good'uns.
Apart from the fact most friendly garages - certainly round here anyway - have got wise to this and now charge so much for fitting and balancing tyres they have not supplied themselves that's it's not worth going the mail order route anymore.Camskill
Blackcircles
Two good'uns.
Jaguar steve said:
Apart from the fact most friendly garages - certainly round here anyway - have got wise to this and now charge so much for fitting and balancing tyres they have not supplied themselves that's it's not worth going the mail order route anymore.
Black circles allow you to use their approved fitters so no extra cost. Funnily enough the garage they suggested was the garage I was going to take it to anyway when I got mine off them. Zippyworld said:
At the moment I am fannying about trying to get a deal on tyres.
I have often thought what it costs to actually make a tyre and what sort of mark up the tyre dealer puts on them.
I am not looking to use this as ammunition when buying, but I have long since been curious about how it works....anyone know so as I can sleep at night.....
Margin in online sales can be as low as £5/tyre in popular sizes. It's a high competitive market, based on volume.I have often thought what it costs to actually make a tyre and what sort of mark up the tyre dealer puts on them.
I am not looking to use this as ammunition when buying, but I have long since been curious about how it works....anyone know so as I can sleep at night.....
People like cam / lovetyres / tyretraders are effectively wholesaling to the public.
Most garages should charge you £10/tyre to fit. Blackcircles add £12-20 per tyre for fitting depending on size.
It's just finding the right friendly garage to do it for you. I called around a few places till I found somewhere. Fit and balance £5 a wheel, if I'd of just gone with the first place it would have been £15 exc. VAT a corner.
Local knowledge really helps and it tends to be the smaller, 'lesser known' garages that are the places you want to go. They would have also price matched -£1 camskill for the tyres I wanted (T1-R's 205/40/17), so it might be worth seeing if anywhere can compete. I'd of saved the £12 odd delivery, £1 a corner and hassle of getting them delivered and then down to the garage if I'd of asked this..
Local knowledge really helps and it tends to be the smaller, 'lesser known' garages that are the places you want to go. They would have also price matched -£1 camskill for the tyres I wanted (T1-R's 205/40/17), so it might be worth seeing if anywhere can compete. I'd of saved the £12 odd delivery, £1 a corner and hassle of getting them delivered and then down to the garage if I'd of asked this..
Delticom are tyre distributors who run mytyres.co.uk and a bunch of other online tyre sites in different countries.
They make a c.9-10% operating profit margin with a 28% gross margin.
Last year Pirelli (who are the most premium of all the tyre makers excluding Nokian) made 11% op profit margin with a 43% gross margin.
I don't know about the tyre installers but their INCREMENTAL profit on a tyre fitting is very high because all their costs are fixed.
However, if we assume Halfords Autocentres (used to be Nationwide) is typical for all types of minor car servicing including tyres - they make a 6-7% operating margin.
So to break it down for a say £120 retail tyre fitted:
VAT £20
Fitting £15 (Of which £14 is the cost of running the tyre fitting place, £1 profit).
Tyre £85:
- Tyre cost to distributor £60 (this is Pirelli's revenue)
- Distributor operating costs ££17
- Distributor profit £8
For a £60 tyre to Pirelli:
- Cost to manufacture £34
- Pirelli operating costs £20
- Pirelli profit £6
Roughly 50% of the cost of manufacture is raw materials of which IIRC at least 50% is rubber.
So the rubber in your tyre costs c.£10.
That enough detail?
Pricing usually filters up from the bottom.
Since rubber is a commodity, there is very little pricing power - Pirelli just have to suck it up.
They put up the price if rubber climbs in price. As long as the others (Michelin, Conti, Goodyear, Nokian etc...) are playing ball.
The distributors pretty much pass the price straight along.
As do the installers.
They make a c.9-10% operating profit margin with a 28% gross margin.
Last year Pirelli (who are the most premium of all the tyre makers excluding Nokian) made 11% op profit margin with a 43% gross margin.
I don't know about the tyre installers but their INCREMENTAL profit on a tyre fitting is very high because all their costs are fixed.
However, if we assume Halfords Autocentres (used to be Nationwide) is typical for all types of minor car servicing including tyres - they make a 6-7% operating margin.
So to break it down for a say £120 retail tyre fitted:
VAT £20
Fitting £15 (Of which £14 is the cost of running the tyre fitting place, £1 profit).
Tyre £85:
- Tyre cost to distributor £60 (this is Pirelli's revenue)
- Distributor operating costs ££17
- Distributor profit £8
For a £60 tyre to Pirelli:
- Cost to manufacture £34
- Pirelli operating costs £20
- Pirelli profit £6
Roughly 50% of the cost of manufacture is raw materials of which IIRC at least 50% is rubber.
So the rubber in your tyre costs c.£10.
That enough detail?
Pricing usually filters up from the bottom.
Since rubber is a commodity, there is very little pricing power - Pirelli just have to suck it up.
They put up the price if rubber climbs in price. As long as the others (Michelin, Conti, Goodyear, Nokian etc...) are playing ball.
The distributors pretty much pass the price straight along.
As do the installers.
I got my continentals from Kwik Fit.
I was picking up a part from the dealer, and dropped in to what was Hi-Q tyres (seems they had switched over very recently to Kwik Fit) and they had the tyres in stock and whilst more than I had planned to pay originally, they worked out cheaper than ordering them online, having them delivered, then finding somewhere to fit them.
They had 2-4 people working on them and were quickly fitted, well balanced and handed me back the alloy wheel key so it didn't get lost.
I was picking up a part from the dealer, and dropped in to what was Hi-Q tyres (seems they had switched over very recently to Kwik Fit) and they had the tyres in stock and whilst more than I had planned to pay originally, they worked out cheaper than ordering them online, having them delivered, then finding somewhere to fit them.
They had 2-4 people working on them and were quickly fitted, well balanced and handed me back the alloy wheel key so it didn't get lost.
Pugster said:
Don't assume the likes of Blackcircles are the cheapest either.
I recently needed 2 Bridgestone 18's and my local independant place was cheaper than Blackcircles delived only price.
As above, I always get my tyres fitted from a couple of local independents in Bristol that have always proved to be less than buying direct from cam/blackcircles before you even factor in the fitting costs.I recently needed 2 Bridgestone 18's and my local independant place was cheaper than Blackcircles delived only price.
Pugster said:
Don't assume the likes of Blackcircles are the cheapest either.
I recently needed 2 Bridgestone 18's and my local independant place was cheaper than Blackcircles delived only price.
These seem to be getting expensive recently. Camskill is a lot cheaper, even for the delivered option.I recently needed 2 Bridgestone 18's and my local independant place was cheaper than Blackcircles delived only price.
Gassing Station | General Gassing | Top of Page | What's New | My Stuff