Tires cheaper in the U.S.? We are being gouged

John Mahler

SPECIAL TO THE STAR

Q: Why are prices for tires higher in Canada than the United States? I check prices at tirerack.com and sometimes they are half the Canadian list price.

A: Do not blame Canadian tire retailers – they make the same margins on tires as their American counterparts and, most of the time, they make less. It is difficult to be a small independent tire dealer. Even the best ones have a tough time making a decent living.

Tire companies are to blame for our high prices. Canadians have gotten used to high prices and the companies take advantage of that. It used to be the tire companies all had warehouses, headquarters and staff in Canada. These warehouses carried huge inventory and dealers could often get same-day delivery on stock. That justified the "higher distribution costs" for our lower-volume market. We got better service.

But that has changed significantly over the past decade. Warehousing has moved to the U.S. and headquarters have been downsized or moved south. Bridgestone no longer has a head office here and Goodyear is a mere shadow of its former self.

With the advent of overnight shipping, retail dealers still get their stock items quickly, but they are as likely to come from Greenville, S.C., Rome, Ga., or Nashville as they are from Napanee or Montreal.

Though shipping is a huge cost, there have been big savings through consolidation efficiencies – but Canadian prices have not dropped.

If shipping costs were the only factor, Goodyear tires made in Napanee should be dirt cheap in Toronto compared to the same tire sold in Los Angeles. And the list price should be cheapest of all in Belleville, just minutes from the factory door. But it is not.

Transportation costs are averaged out on every tire produced, so no one region feels the sting of living too far from the factory. These costs are part of the tire's wholesale cost to the retailer. Special order deliveries involve a second delivery charge which the retailer pays.

So, why the higher list price for Canadian consumers? There is duty to get them across the border – typically 4 to 7 per cent – but our prices are as much as 50 per cent more.

It can't be the extra service from tire company reps visiting retailers to adjust warranty issues. Dealers see their reps maybe a few times a year. It can't be Canadian-specific advertising as we merely get retuned American ads. It can't be the tire company infrastructure that has shrivelled and moved south. It must be the warm fuzzy glow that comes from extra Canadian profits.

Should you buy from tirerack.com or some other place south of the border? If price matters that much, you probably will come up a winner. The local tire shops won't thank you as you drive another nail into their sides. They are caught in the squeeze play between consumers and tire companies – and they take the heat. Consumers should vent at the corporate level.

If you do buy American from a good honest retailer, the experience will be bliss. Savings will vary as the exchange rate moves around, but there will be savings.

My friend Brian chose to have his tires shipped from tirerack.com to a drop shipping place in Niagara Falls, N.Y. This is his story:

"The trip to Niagara Falls went well. I had the tires dropped off at a mailbox depot (independent from tirerack.com) near the Rainbow Bridge. I was charged $14 (U.S.) for a 98-pound package. Tirerack.com charged roughly $50 to ship it.

"At the border, I was charged PST and GST on the total invoice cost (including shipping) converted to Canadian dollars at that day's rate.

"All together, the 16-inch Bridgestone Blizzaks priced at $66 (U.S.) each cost me $400 (Canadian) – not including the fuel to drive to Niagara Falls.

"Had this package been delivered to Toronto directly from tirerack.com, the total price would have been $525.

"If I had purchased these tires in Toronto, my total cost would have been more than $900, including taxes and installation.

"The total cost for buying south of the border, if you add about $50 for installation on top of the tirerack.com delivery, is $575. That's a savings of $375."

Your savings increase as you go up in size. Another friend had a set of Porsche 911 tires delivered to Toronto by tirerack.com.

The set cost $1,161 for a premium brand – including freight, brokerage, duty, GST and PST. The best price he could find in the GTA was $1,988.

Email tire questions to John Mahler at thetireguy_1 @ hotmail.com. Please include vehicle's make, model and year, tire brand and size, as well as your name, address and phone number. Volume of mail prevents us from answering all queries or providing personal replies.

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