Tyre prices could be set to rise in the UK as manufacturers struggle with various financial pressures.
It’s not the news that anyone wants to hear, but it’s possible that tyres – never the cheapest product – may face some price hikes in the near future.
Let’s take a look at why that may be.
What determines the cost of your tyres?
You don’t need to have a PhD in Economics (and we certainly don’t) to understand some of the main factors that make tyre prices go up and down. They include:
- Labour costs. Obviously, the more that workers are paid, the more tyres cost to produce.
- Supply chain costs. Tyres contain many different materials, shipped from many different areas. When supply chains are disrupted (as they were by the Russian invasion of Ukraine), end product prices rise accordingly.
- Research and development costs. When new vehicle trends emerge (e.g. electric cars) or government regulations change (e.g. EU laws on tyre toxicity), manufacturers must research and develop new products – an immensely costly process that is assed onto the consumer.
- Raw material costs. Tyres are made up of dozens of different compounds., but 80% of the raw material cost of manufacture comes from four materials: natural rubber, butadiene, oil, and carbon black (15%). A rise in the cost of any of these will send tyre costs (and hence end prices) skyward.
- Supply and demand. As with any other product, prices fluctuate according to the balance between the two. During shortages, consumers are obliged to pay more, when there’s a glut, prices fall.
So, what’s the problem for 2025?
Tyre manufacturers would no doubt tell you that there’s continuing pressure from all of the above. After all, we’ve been through a period of global inflation which has pushed wages higher, there’s still a war in Ukraine (though supply chains have adjusted somewhat to cope with that), and the there’s twin development challenges from EU regs and electric cars (we’ll cover these in an upcoming article).
However, the most pressing problems right now are the bottom two: raw material costs and supply vs demand.
In particular, in recent years, the global supply of rubber has not kept pace with increased world demand. Between 2011 and 2023, supply rose by 35% – but demand increased by 40%. Rubber plantations in some area have been hit by white root rot disease, further impacting supply. And trying to squeeze more rubber out of a plantation only worsens the problem, as over-tapped trees are vulnerable to disease.
On the demand side, after Covid slowed car sales in 2020 and 2021, they rebounded in 2022 and last year. According to Statista, global sales “grew to around 75.3 million automobiles in 2023, up from around 67.3 million units in 2022”. And every single one of those 75 million cars needed rubber for their tyres.
This perfect storm of events has led to huge increases in the price of natural rubber. Between April and September of 2024, the cost of natural rubber rocketed by 33%. And though competition between manufacturers helps to mitigate price increases, eventually those costs are passed onto the consumer.
But then there’s China
So it’s inevitable that tyre prices will fly upwards next year? Not quite. For one thing, the current state of China’s economy is a great big unknown. There are warning signs that all is not well in the economy of the world’s most populous country, with domestic demand falling. And what happens in China doesn’t stay in China: as noted above, it’s the biggest auto market in the world. So if the Chinese economy turns down and demand for rubber falls, that might offset the recent imbalance, helping to keep prices stable.
Whatever happens, we’ll keep supplying tyres at competitive prices
Who’d be an economist, eh? Trying to predict what will happen next feels like black magic.
One thing we do know, though. Whether there’s a price surge next year or not, BK Tyres is here to offer the absolute best deals we can – while providing a highly rated service to all of our customers in South Oxfordshire.
The BK Tyres blog carries news, views and information on tyres and related subjects. BK Tyres supplies and fits tyres throughout South Oxfordshire, including the communities of Abingdon, Didcot and Henley on Thames. As an independent, family run mobile provider, we provide exceptional levels of service and affordable prices. Contact us today.