Motorists might be able to breathe a sigh of relief, albeit briefly, with the termination of a temporary “anti-dumping” import duty that hiked Chinese tyre prices in SA more than 20%.
It is estimated that imported Chinese tyres account for more than 70% of the local truck tyre market and more than 50% of the car tyre market, according to the Tyre Importers Association of SA (Tiasa).
A 38.33% ad valorem was imposed on imported tyres from September 9 until March 8, but may be reinstated pending the outcome of the investigation of the International Trade Administration Commission (Itac) into the alleged dumping of passenger, truck and bus tyres from China.
SA’s trade regulation body imposed the temporary tariff on car, passenger, truck and bus tyres on top of existing import duties of between 25% and 30%, after the SA Tyre Manufacturers’ Conference (SATMC) applied to Itac for relief against what it termed unfairly traded tyre imports from China.
The SATMC, which represents local tyre producers Continental, Bridgestone, Goodyear and Sumitomo, had argued that low-priced imported Chinese tyres placed the local tyre industry’s future at risk and threatened jobs. It said fairly traded imports at prevailing prices from countries other than China, such as Korea and Japan, would continue unaffected into SA.
SATMC managing executive Nduduzo Chala said the imposition of the provisional duties had been beneficial for the sector, and the local tyre industry was eagerly awaiting the final outcomes of Itac’s investigation into the matter. He said Itac would submit its recommendations to trade, industry and competition minsiter Ebrahim Patel and a decision was expected in the next 30-60 days.
He said the local industry was not against healthy trade and competition at fair prices, but rather against tyres designed and manufactured in China that were imported unfairly into SA at unsustainable, rock-bottom rates.
Chala said dumping has limited the competitiveness of domestic manufacturers, who employ more than 6,000 people directly and create 19,000 indirect employment opportunities. Tyres worth R5.7bn were imported into SA between August 2020 and July 2021, with 47% of that (almost R3bn) coming from China.
The imposition of the temporary tariff in September was criticised by tyre importers, the trucking and taxi industries, as well as the AA.
The Road Freight Association (RFA), which represents road freight service providers, said the increased duties would affect consumers not only with higher-priced passenger car tyres but they would also pay more for public transport and goods.
Gavin Kelly, CEO of the RFA, said transport companies already could 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.
The taxi industry also said it would be forced to pass on the increased costs to consumers as tyres were the third-biggest cost after wages and fuel.
The AA said that already embattled consumers would balk at paying higher prices for tyres and would, unfortunately, continue using tyres that are in a poor condition because they could not afford the new prices.
Tiasa, which represents local tyre importers, said introducing such a pricing bombshell into the current inflationary environment was devastating for South Africans. Tiasa has welcomed the termination of the provisional 38.33% tariff but said it continued to be concerned that consumers had been most affected by the introduction of the provisional payments since September 9.
“During this period SATMC members have increased their prices more than once after initially saying that they will not increase prices. The net result is that the consumer is now paying on average 20% more for tyres compared to six months ago,” says Charl de Villiers, chair of Tiasa.
SATMC’s Chala said local tyre producers increased only the prices of their imported Chinese tyres, which accounted for a small percentage of their business. About 70% of tyres sold in SA by SATMC were locally produced, he said, while the imported component included tyres from China as well as other countries.
De Villiers said he didn’t expect the termination of the 38.33% duty to significantly reduce the prices of imported Chinese tyres, as the rand had weakened in the last six months. He expected a slight price reduction but said there was huge uncertainty in the future, depending on what Itac decided. He also believed a decision wouldtake much longer than the 30-60 days time frame mentioned.
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