Bridgestone Corp. and Sumitomo Rubber Industries Ltd. are among the leading Japanese tire manufacturers in negotiations with auto makers to tie pricing for original equipment tires to prices for raw materials, the Nikkei reported Friday.
Such a mechanism would relieve both tiremakers and auto manufacturers of the need for price negotiations. The tire producers are now discussing their plans with such major auto makers as Toyota Motor Corp.
The tire companies envision a new index based on the prices of five materials, including synthetic and natural rubber as well as synthetic fiber. Tire prices would be set every six or 12 months under the proposed mechanism. Each tire manufacturer is expected to come up with its own framework.
At global leader Bridgestone, original equipment tires -- which automakers install on their new vehicles -- account for some 20% of total domestic tire sales. The figure is almost 50% forSumitomo Rubber , Japan
In contrast to the pricing of aftermarket tires, the tire companies have been unable to fully pass on higher costs for oil products and other materials to automakers, and this has weighed on their earnings. The tire producers hope to introduce the new price-setting mechanism next fiscal year.
If the auto makers agree to the proposals, it would mark the first use of such a setup for passenger cars. A similar framework has been used on a limited basis for truck and bus tires.
(Source: irco.biz)
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