Tyre importers and transport industry players want the government to slam the brakes on what they term a bizarre application by local manufacturers for anti-dumping duties on various categories of Chinese tyres, saying the tariffs could drive up the cost of tyres by as much as 41%.
Tyres are the third-biggest cost driver in transport after wages and fuel, and any cost increase could have a devastating effect across the economy at a time when many consumers are under the cosh as fuel prices, inflation and interest rates continue to surge.
The application for anti-dumping duties on car, truck and bus tyres from China was recently lodged by the SA Tyre Manufacturers Conference (SATMC), the industry body and trade association of local tyre manufacturers: Bridgestone, Continental, Goodyear and Sumitomo. These four companies are under scrutiny by the Competition Commission for alleged price-fixing.
On Tuesday, the Tyre Importers Association of SA (TIASA) warned that the cost of tyres could increase by up to 41% if the local manufacturers are successful in their application, which will be bad news for the entire economy and many cash-strapped consumers.
SATMC has approached the International Trade Administration Commission — the organisation tasked with customs tariff investigations, trade remedies, and import and export control — and the companies are collectively requesting duties of between 8% and about 70%.
SATMC argues that tyres used on cars, buses and lorries originating in or imported from China are being dumped into the Southern African Customs Union market, causing material injury.
But critics say the application is without merit, more so because local manufacturers could be unable to meet local demand. Tyres worth R5.7bn were imported into SA between August 2020 and July 2021, with 47% of that (almost R3bn) coming from China.
Charl de Villiers, chair of TIASA, described SATMC’s application for duties as “absurd”, given that of the almost 3,200 tyre products sold in SA, the applicants, according to their own price lists, collectively import 80% of the variety of tyres they sell.
“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 said.
Gavin Kelly, CEO of the Road Freight Association (RFA), which represents road freight service providers, said “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.”
He said 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, threatening the viability of the country’s critical road freight logistics sector.
“This will have a knock-on effect, as over 80% of SA’s food, medicines, fuel and many other goods are transported by road, so rising costs have an impact on every single item transported to, and across SA,” Kelly said.
Theo Malele, spokesperson for the National Taxi Alliance, said any increase in the cost of tyres would be detrimental to the industry and consumers.
“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,” he said.
Donald MacKay, a trade expert and founder of XA International Trade Advisors, also believes the anti-dumping application is one of the more ludicrous in the latest protectionist moves in SA.
“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 SA’s application,” MacKay said.
SATMC could not be reached for comment on Tuesday.
With Michelle Gumede
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