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Old 21st January 2014, 17:51   #1
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Default Tyre dealers accuse MRF, JK & others of Price-fixing

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Tyre dealers have dragged MRF, JK and Birla Tyres among other tyre manufacturers to the competition watchdog alleging cartelisation and that pricing of tyres was "disproportionate and arbitrarily".

The federation has charged that despite a sharp drop in rubber prices by 15-17% from a year ago, domestic firms continue to charge high prices for tyres. The first quarter results in 2013 saw most domestic tyre manufacturers posting good results. In fact, top five tyre manufacturers captured 90% of the market.
Source & Full Economic Times Article
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Old 21st January 2014, 18:12   #2
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Default Re: Tyre dealers accuse MRF, JK & others of Price-fixing

Why do the tyre dealers care about this? I'm sure they aren't such saints that they care about consumers enough to risk relations with manufacturers for it.

Also, wouldn't higher prices mean higher margins?

I am happy and impressed that the dealers are doing this; but cynicism makes me wonder what their play in this is.
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Old 21st January 2014, 18:59   #3
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Default Re: Tyre dealers accuse MRF, JK & others of Price-fixing

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Originally Posted by libranof1987 View Post
Why do the tyre dealers care about this? I'm sure they aren't such saints that they care about consumers enough to risk relations with manufacturers for it.

Also, wouldn't higher prices mean higher margins?

I am happy and impressed that the dealers are doing this; but cynicism makes me wonder what their play in this is.
+1 to this. I too am not sure why they would be bothered, unless their commission has been cut or hasn't been increased in proportion to the increase in the rates.
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Old 21st January 2014, 22:46   #4
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Default Re: Tyre dealers accuse MRF, JK & others of Price-fixing

It's not only the manufacturers who are to blame. It's the retailer as well. With no clear dealer Invoice price published for a given tyre, only MRP, the retailer can and does have a free reign of anywhere from Rs 300/- to Rs 1000/- per tyre (sometimes even more than that).
The ill-informed consumer pays through his nose. One may say Caveat Emptor but, how many people really have the time, inclination or interest to check pricing from two or more well-separated locations?
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Old 22nd January 2014, 06:55   #5
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Default Re: Tyre dealers accuse MRF, JK & others of Price-fixing

The dealers are only interested in their margins. Manufacturer or brand might not hold any importance or value to them.

There may have been a situation when all the companies would have decided to give them uniform margins so that they allow the customer to make an informed choice when buying a tyre for his/her vehicle.Companies may have come across instances where the dealer forces his way to sell a particular brand that offers him the maximum margin.They must understand that companies tend to run their businesses in a very holistic ways.The overall cost of production must have been on a higher side. The rising cost of fuel and electricity results in rising production cost. Freight is something that is increasing month after month with the increase in price of diesel. The reduction in rubber price is just a cushion to the companies in an overall dull economy.

The excess money that they charge goes into their profitability. They use some of it for R&D related activities. They are in a better position to give good increments and bonus to their employees. It increases their profitability and thus benefit the share holders and spend more on CSR (Corporate Social Responsibilities)activities.

Last edited by mints21 : 22nd January 2014 at 07:22. Reason: Adding info
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Old 22nd January 2014, 08:56   #6
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Default Re: Tyre dealers accuse MRF, JK & others of Price-fixing

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Originally Posted by libranof1987 View Post
I am happy and impressed that the dealers are doing this; but cynicism makes me wonder what their play in this is.
It could be a way to negotiate or bargain harder on some topics. I have my doubts over how biting the hand that feeds them (ok, not really but I hope the gist is taken!) will help in the long run

Do the tyre companies have online stores? I am sure there would be some folks who know what they want to buy and these can be delivered directly to the customer, eliminating dealer margins.

Maybe someone can start selling tyres online if this is not already done here. No reason why we should contribute towards the shop rentals for a tyre dealer. In any case it is not as if we cannot change a tyre!

If one wants to check out options, the dealer is always there
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Old 22nd January 2014, 09:12   #7
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Arrow Re: Tyre dealers accuse MRF, JK & others of Price-fixing

Online tyre stores for India:

http://www.changemytyre.com

and

http://www.clicktyre.com


Recently my brother changed his Swift tyres to Michelin XM2. A few days later, landed up on the above sites and discovered we could have got the tyres at around 500 rupees cheaper a piece.

You can get the tyres installed at some of the tyre shops they have tied up with across the country or I guess you can just get them home delivered and they take them to your FNG.

I am sure more shops will come up as we go along. Maybe even flipkart, which sells bicycle tyres will start selling car tyres once they get wind of the opportunity! Btw, I did not find anyone is selling car tyres on ebay.in Anyone going to start?
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Old 22nd January 2014, 09:12   #8
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Default Re: Tyre dealers accuse MRF, JK & others of Price-fixing

Or they being propped up by the importers/ foreign manufacturers ?
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Old 22nd January 2014, 10:57   #9
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Default Re: Tyre dealers accuse MRF, JK & others of Price-fixing

I think the dealers are cross because the tyre manufacturers are keeping all the profits accrued because of fall in raw material prices, rather than sharing it with the dealers. The dealers want the tyre manufacturers to either -

Increase the dealer margin per tyre sold (so that the tyre dealers income increases)

OR

Reduce the tyre prices (so that demand picks up)
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Old 22nd January 2014, 11:14   #10
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Default Re: Tyre dealers accuse MRF, JK & others of Price-fixing

I am confused as hell. Guess the dealer margins were NOT revised based on the increased prices. And would it NOT be percentage wise commission which also means better margins?

I think we need to invite @NikhilB for some clarification.

Quote:
Originally Posted by selfdrive View Post
...Do the tyre companies have online stores? ...
Quote:
Originally Posted by Musa View Post
Online tyre stores for India:

http://www.changemytyre.com

and

http://www.clicktyre.com
...
Snapdeal.com also sells tyres online.
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Old 22nd January 2014, 11:45   #11
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Default Re: Tyre dealers accuse MRF, JK & others of Price-fixing

I don't think it is the tyre dealer's at all. Firstly there is no 'national'' tyre dealers association as such, it's mostly local market associations - whose only activities are restricted to independence day flag hoisting and sundry other festivals that are celebrated.

This is clearly the handiwork of tyre importers / imported tyre distributors who have been slapped with anti-dumping duties on chinese tyres and have been forced to have BIS certification mandatory for all tyres sold in India. IIRC for each size the cost of BIS certification worked out to upwards of 35K. Now that is big money considering most models of cars have 2-3 tyre size variants.

But price cartel issue apart, this BIS thing has been good for the consumers. I have personally seen a chinese tyre with 205/65/R15 marked on the sidewall while the tyre had exactly the same dimensions of a 195/65/R15 tyre !!

Another bit of related news - Alloys are set to get pricier by upto 4K a set with anti-dumping duty having been slapped on them.
This is the exact circular :
Anti-Dumping duty on cast aluminum alloy wheels (16 January 2014) Anti dumping investigations concerning imports of cast aluminum alloy wheels or alloy road wheels used in motor vehicles, whether or not attached with their accessories, of a size in diameters ranging from 12 inches to 24 inches, originating in or exported from China PR, Korean PR and Thailand.
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Old 22nd January 2014, 11:49   #12
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Red face Re: Tyre dealers accuse MRF, JK & others of Price-fixing

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Originally Posted by smartcat View Post
Increase the dealer margin per tyre sold (so that the tyre dealers income increases)

OR

Reduce the tyre prices (so that demand picks up)
In the former the dealer wins, in the latter the customer.

BTW is the fight against Indian tyre manufacturers only or is it against the MNC ones too? Dont the dealers profit in on the used tyres too by selling it back to the tyre manufacturers?
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Old 22nd January 2014, 11:58   #13
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Default Re: Tyre dealers accuse MRF, JK & others of Price-fixing

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Originally Posted by smartcat View Post
I think the dealers are cross because the tyre manufacturers are keeping all the profits accrued because of fall in raw material prices, rather than sharing it with the dealers. The dealers want the tyre manufacturers to either -

Increase the dealer margin per tyre sold (so that the tyre dealers income increases)

OR

Reduce the tyre prices (so that demand picks up)
This is the only valid reason that I can think of. Interesting none the less.

I am wondering what Michelin and Bridgestone are doing ? Shouldn't their prices also decrease ?
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Old 22nd January 2014, 12:00   #14
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Default Re: Tyre dealers accuse MRF, JK & others of Price-fixing

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Originally Posted by libranof1987 View Post
Why do the tyre dealers care about this? I'm sure they aren't such saints that they care about consumers enough to risk relations with manufacturers for it.

Also, wouldn't higher prices mean higher margins?

I am happy and impressed that the dealers are doing this; but cynicism makes me wonder what their play in this is.
I'm not so sure. Higher prices won't necessarily mean higher margins for the dealers. Perhaps they are given X amount of margin that is fixed rather than a scaling %, Although that seems highly improbable.

Another reason for complain would be the lack of/drop in demand with Increase in supply cost hence retail price. I assume the dealers feel, rightly so, that they'd be selling a whole lot more tyres if the prices were lower.

Yet another possibility could be they simply want the manufactures to allow them to make more money plain and simple.

The above are just some things that come to mind, I could be completely wrong & There may be other reasons behind this.
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Old 22nd January 2014, 12:34   #15
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Default Re: Tyre dealers accuse MRF, JK & others of Price-fixing

Notice that Apollo, Michelin and Bridgestone are not there in lawsuit. Perhaps they provide bigger margins than home grown ones mentioned in complaint. Also, because dealers of these tyres are locked to sell only one brand by having exclusive showrooms against others who can sell multi-branded?
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