My Name Is Nobody wrote:
> "Ted Mittelstaedt" > wrote in message
> ...
>> "Ray O" <rokigawaATtristarassociatesDOTcom> wrote in message
>> ...
>>>> What happened to competition? Seems to me there ought to be a big
>>>> case here for an anti-trust price fixing lawsuit against the tire
>>>> manufacturers.
>>>> Anyone have any ideas?
>>>>
>>>> Ted
>>>>
>>> It is possible that all of the tires you shopped were made in the U.S.,
>>> which would reduce the disparity in manufacturing cost.
>>>
>> That might be true, and it is true that there are not a lot of other tire
>> manufacturers
>> that make that size AND that mileage and UTQGS rating I looked at.
>>
>> But, if I went to a treadwear and UTQGS rating of about 1/2 of what I
>> surveyed,
>> then there's an order of magnitude larger number of tire manufacturers
>> making that
>
>
> There arn't that many tire manufactures...
>
>
>> size. But, they are ALL the same tire price ALSO (or within very small
>> amounts
>> of each other) for that treadwear and UTQGS rating. I'd find it hard to
>> believe
>> they all make tires in the US.
>>
>> After surveying I found NOT a lot of price coorelation between tire
>> mileage
>> warranty and price, but I found a LOT of price coorelation between
>> different
>> tires of the same UTQGS rating. I found a LOT of tires with DIFFERENT
>> mileage rating but the same UTQGS specs. So I tend to discount the stated
>> mileage as marketing fiction. What matters is UTQGS. And another telling
>> indicator of the importance of UTQGS is that some manufacturers hide it.
>> Goodyear, for example, doesen't post that on their website - they tell you
>> you have to get it from the tire brochure at the tire dealership.
>>
>
> In my business, I have found that if I want to (and I don't generally) have
> the cheapest price (cheaper than any or all of my competitors) every dollar
> beyond one dollar cheaper than the competition is a dollar flushed down the
> toilet. Why do it? I am not involved in "price fixing", but I do monitor
> the market, and if my prices are substantially lower than the competition I
> will generally raise mine. not unlike the airline industry, or your local
> gas stations. There is absolutely no benefit to being half the price of
> your nearest competitor.
>
>> However, it's pointless. The cheapest tire I could find in that size is a
>> 40K tire and it's only 1/3 cheaper for 1/2 the treadlife. For
>> only 1/3 again more of the price you get double the tire life. Plus the
>> mounting
>> costs are all the same cost as well as the road hazard warranty. In other
>> words
>> I can buy a road hazard warranty for 40K miles or a road hazard warranty
>> for
>> 80K miles - but they both cost the same. If the road hazard warranty was
>> 1/2 the cost for the lower-mileage tire it might be worth it - but the way
>> it's
>> priced at the tire dealerships, it's cheaper-per-mile for the more
>> expensive
>> higher mileage tire. Not to mention with a 40K mile warranty you have to
>> replace the
>> tires twice as often so your doubling your installation costs.
>
> Unless you do not keep the car for more than 40,000 miles...
>
>>> Tires are a competitive business and a company whose products are priced
>>> higher will have a tough time competing without a product attribute that
>>> a
>>> consumer is willing to pay for, especially in the most common sizes like
>>> 205/70-15.
>> That I understand well. But that isn't how competition is carried out
>> these
>> days. In most commodity markets there are maybe a maximum of 2-4
>> manufacturers who are
>> dominant players plus dozens of small fry. For example, in computer
>> software
>> it's Microsoft
>> and Linux distributions. In computer hardware it's Dell, HP & IBM. In
>> hard
>> disk
>> drives it's Seagate and Western Digital. In soft drinks
>> it's Coke and Pepsi. In cars it's GM, Ford, Toyota, Honda & maybe
>> Chrysler.
>> In US crude oil it's Exxon, Texaco and a few others. And so on and so on
>> and so on.
>>
>> All these commodity markets got this way because these dominant players
>> gobbled
>> up competitors until they ran up against the anti-trust regulators of the
>> world's
>> governments who prohibited further market acquisitions. Manufacturing
>> economies of scale in today's markets dictate that the larger you are the
>> cheaper you can make things. In most markets, consolidation sets in
>> and continues until the governmental regulators put a stop to it, or
>> declare
>> a monopoly market and start regulating the dominant monopoly.
>
> You can't earn 11,000,000,000 in quarterly profits, if you limit yourself to
> some predetermined small profit margin now can your? These corporations
> legal obligation is to earn a PROFIT, as high as the "market will bear, not
> supply their goods at the cheapest possible price.

The so called magic of the market is supposed to see to the best prices
for the buyers (ref. Adam Smith & the like), but that has little to do
with real world prices in the 21st century IMHO.