How Does a Tire Manufacturer Make a Profit of Less Than 100 Yuan Per Tire?

How Does a Tire Manufacturer Make a Profit of Less Than 100 Yuan Per Tire?

As early as 2017, some people have been emphasizing the fierce competition in the industry and the transparency of profits. But at that time, the highest-selling 12R22.5 big truck tires on the market could still earn 200. A few days ago, tire merchants complained about the post-bar that a certain explosive tire from a well-known company could not earn 100 yuan per tire.

1. The higher the sales volume, the lower the profits

The profit of 100 per tire mentioned here is gross profit. A tire store needs to stock at least a few hundred tires, plus the rented store and employee wages, which means at least two or three million in normal operation. But after selling a big truck tire, how much money can you make in net profit, excluding shipping costs, installation costs, and storage fees? Moreover, the higher the sales volume of the product in the tire store, the lower the profit, and the product with high profit cannot be sold for a few days. Truck tyre distributors compete for lower prices as truck tire factories expand production. On this basis, truck tire prices are also required to be transparent, how much can the tire shop earn?

2. Why is domestic price competition so intense?

Low-price competition is scorned not only in the tire industry but also in any industry. Everyone has always believed that low-price competition has destroyed the market order and made everyone lose money, but why is everyone still doing it?

A manufacturer who has worked in the tire industry for many years directly pointed out the reason: in this industry, many people scold others for low-price competition, but they are secretly doing it. Many truck tyre distributors and businessmen related to the truck tire factory are hypocrites.

As the tire insider said, many truck tire manufacturers like to advertise that they are not fighting price wars and are taking the high-end brand route. But in private, they cooperated with truck tyre distributors to secretly cut prices to compete with low prices. Some enterprises simply produced low price tires and put them on the market, which caused the low-price competition to the end.

3. Will the price war of big truck tires disappears?

The answer is no, and it will intensify. The existence of any business model has its rationale, and low-price competition has always existed. It's just that some companies have made plausible excuses for low-price competition. For example, the main tyre brands of the company cannot compete at low prices, so they make a sub-brand for low-price competition, and they also use a false banner: specifically targeting the Chinese market. In fact, it is to engage in low-price competition and seize more markets.

Although low prices attract customers, low prices without a lower limit will give customers the illusion of being deceived. Customers attracted by low prices are usually not very loyal. Once there is a lower price or a higher level of demand is needed, they will leave at any time. Therefore, tire companies should not try to win by simply relying on price when pricing, but also establish a certain reputation and tyre brand image. In the current market, high-priced tires may not be treated as high-quality by customers, but low price tires tend to be considered low-quality. Generally speaking, if the price is set too low at the beginning, it will be difficult to raise it later. On the contrary, if the price set at the beginning is too high, although it is easy to think low, it is actually destructive to the tyre brands. A wide range of price ranges often makes consumers feel cheated and no longer trust the brand.

AULICE always focuses on customers' profits, and we advocate that enterprises should not only rely on words to regulate the market, nor should they support the fight against price wars on the surface, and secretly lower their prices for the sake of sales. As a result, truck tyre distributors and retailers can only survive in the market with low prices. Finally, we hope that tire companies can really start from the tire market, for the interests of truck tyre distributors and retailers. Let truck tyre distributors and retail stores be profitable, and they can better develop a broad market for tire companies.

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How Does a Tire Manufacturer Make a Profit of Less Than 100 Yuan Per Tire? East New District, Yangxin Industrial Zone, Huangshi, Hubei, China
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