Cape Town - The Tyre Importers Association of South Africa (TIASA) says the cost of tyres could increase by up to 41% if the four large domestic tyre producers, Continental, Bridgestone, Goodyear, and Sumitomo - collectively known as the SA Tyre Manufacturers Conference (SATMC) – are successful in their duty application.
TIASA is opposing SATMC’s application to the International Trade Administration Commission (ITAC), which they say is to impose additional duties of between 8 and 69% on passenger, taxi, bus and truck vehicle tyres imported from China.
The association says the imposition of duties are expected to have a material impact on the price of tyres, not only for passenger vehicles, but also for trucks and taxis.
Tyres are the third biggest cost driver in transport, after wages and fuel.
"If the application is successful, the taxi industry will be hit hardest, with the cost of taxi tyres set to increase by 41%. Consumers will also be hit hard, with small passenger vehicle tyres expected to increase by 38-40%, and truck and bus tyres by an average of 17%," TIASA said.
Charl de Villiers, TIASA chairperson, said: “The sad reality is that while this application makes no sense at all, it will, if successful, add a significant cost burden to motorists, taxi and bus operators and trucking and logistics companies. Even more concerning is that vehicle owners, when faced with such dramatic cost increases, may trade down to second hand or illicit tyres, or simply delay replacing their tyres, which places every road user at greater risk of accidents.”
Donald MacKay, founder and CEO of XA International Trade Advisors, agreed, saying: “Continental and Goodyear import 100% of their bus and truck tyres, so they would essentially be asking for duties against themselves. What is even more bizarre is that Goodyear China has opposed Goodyear South Africa’s application. If new duties are imposed against Chinese imports, two things will happen: the first is that those importing tyres will shift imports to other, possibly more expensive markets, increasing the price of tyres, and, secondly, what naturally follows the imposition of additional duties is that domestic producers and retailers will raise the local prices to meet the imported cost. Great for profits, but very bad for consumers.”
Spokesperson for the National Taxi Alliance, Theo Malele, says its message to the government was that they should be looking at every way possible to arrest the surging cost of transport.
“We already estimate that taxi fares need to rise by up to 30% due to rampant petrol price increases. If tyres go up by 41%, it will have a devastating impact on our sector and on commuters who rely on us to transport them to and from work. Government must intervene as a matter of urgency to reject SATMC’s application for these duties immediately,” says Malele.
Gavin Kelly, chief executive of the Road Freight Association (RFA), says: “Based on the projected 17% increase in the landed cost of truck tyres – we estimate that this will translate into a 6% increase to operators. This is after the projected increases being touted for August 2022.
Cape Times