SA motorists, transport operators ‘will be hardest hit by proposed tyre duties’

Industry bodies warn that if duties are implemented the price of tyres could increase by between 17% and 41%.
The taxi industry could be worst-hit by proposed additional tyre duties. Image: Morne De Klerk/Getty Images

The Tyre Importers Association of South Africa (Tiasa) is opposing the SA Tyre Manufacturers Conference’s (SATMC) International Trade Administration Commission (Itac) application for additional duties to be imposed on tyres imported from China, saying that doing so will increase cost pressures on motorists, commuters and the transport sector.

Tiasa says that should the SATMC’s Itac application be successful, the taxi industry will suffer the most, possibly seeing the industry paying as much as 41% more for tyres.

Read: Tyre manufacturer price-fixing case finally starts

SATMC comprises the country’s four largest tyre producers: Continental, Bridgestone, Goodyear and Sumitomo.

Tiasa says motorists with small passenger cars would pay at least 38% more, while the truck and bus sectors face an increase of 17%.

“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,” says Tiasa chairperson Charl de Villiers.

According to SATMC industry insight, South Africa’s domestic tyre manufacturing industry generated sales of around R5.5 billion in 2021.

Impact on taxi industry

Earlier this month the National Taxi Alliance (NTA) announced national taxi fare increases of up to 30%, as a response to rising fuel costs.

At the time of implementing the increases, the alliance said the hikes were a necessary measure to protect the industry’s bottom line.

However, the mini-bus taxi industry now warns that the anticipated increase in the cost of tyres could potentially offset the benefits that fare increases were supposed to have in ensuring the industry’s survival.

“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,” says NTA spokesperson Theo Malele.

Read:
Bridgestone’s Port Elizabeth tyre plant will close on November 15 [2020]
‘Without trucks, South Africa stops’
Attacks on trucks are an attack on the economy [June 2019]

The alliance has called on government to intervene in the matter and find solutions that will protect both the taxi industry and its customers.

“Government must intervene as a matter of urgency to reject SATMC’s application for these duties immediately,” adds Malele.

Impact on road freight sector

The CEO of the Road Freight Association (RFA) Gavin Kelly says if the SATMC’s Itac application is successful it could see truck operators having to stomach a 6% increase in costs.

He warns that a price increase may force the trucking industry to pass on these higher costs, which runs the risk of translating into higher food, medicine and even fuel costs for consumers.

Kelly further cautions that increased costs could see struggling truck operators being squeezed out of the industry.

“Transport companies already cannot afford the ever-rising operating and fuel costs, and so an increase in the cost of tyres could become the final nail in the coffin for many operators, leading to a collapse in the country’s critical road freight logistics sector.”

Road safety risks

Apart from the threat of increased cost pressures on South Africans, Tiasa claims that a successful application to Itac could also see the risk of decreasing safety on the country’s roads, as motorists may delay replacing their tyres to avoid price increases.

“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,” de Villiers says.

Kelly reiterates these concerns, adding that operators may decide to trade down and buy tyres of inferior quality as a way to cut costs, placing all road commuters at risk.

Related podcasts:

Nduduzo Chala of SA Tyre Manufacturers Conference on why it proposed the tariffs on imported tyres

Charl de Villiers, Chair of Tyre Importers Association of South Africa, on the proposed tyre import duties

Listen: FNB economist Koketso Mano on the bank’s petrol price and oil price expectations (or read the transcript)

AUTHOR PROFILE

COMMENTS   3

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in and an Insider Gold subscriber to comment.

SUBSCRIBE NOW SIGN IN

Jip – typical of SA companies –
Need tariff protection to assist with their uncompetitive production and inefficiencies and unscrupulously passing on the costs to the consumer !!!!

Cheap Chinese tyres on a taxi are an indirect subsidy to the funeral industry.

How do prices compare of the same tyre ex China and local factory? Quite a few famous brand tyres are now made in China

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Subscribe to our mailing list

* indicates required
Moneyweb newsletters

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.
INSIDER SUBSCRIPTION APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING

Follow us:

Search Articles:
Click a Company: