Cheap Chinese tyres flood local markets
KARACHI: Chinese tyres have captured 85 per cent of market share in Pakistan — a substantial 45pc increase from two years ago, importers said on Monday.
Like many Made in China products that have flooded local markets, the takeover of the local market share by a Chinese product is not unusual.
Back in 2018, Chinese car tyres held 40pc of the market share which has since increased to 85pc. In the light truck category tyres, China held a share of 30-40pc two years ago which has now gone up to 65-70pc.
Similarly, China also dominates in truck/bus tyres with over 75pc market share which was 40pc two years back.
Talking to Dawn, former chairman of the Pakistan Tyre Importers and Dealers Association (PTIDA) Azim K. Yousufzai said, “Mushroom growth has been noted in the number of dealers who are regularly flooding the market with Chinese tyres.”
One of the main reasons for the rising market share of Chinese tyres is low prices compared with European, Korean, Thai and American tyres, Mr Yousufzai added.
On the smuggling of tyres, he said illegal arrival of different types tyres has slowed down drastically owing to strict vigil at the Landi Kotal border. However, smuggled truck tyres still find their way into local markets via the Chaman border.
“Strict monitoring at the borders has brought down informal arrival of tyres to 20pc from 50-60pc,” he claimed.
Tightening border security has helped in boosting Pakistan’s legal imports of rubber tyres and tubes by 145pc in quantity to 4.87 million and 253pc in value to $262m during July-Feb 2020-21 from 1.98m costing $74m in the same period last fiscal year, figures of PBS revealed.
However, Mr Yousufzai said the menace of smuggling still haunts legal tyre trade and deprives the government from revenue. “If the passenger car tyre demand is estimated at 4.25m tyres annually, legal imports cover over 1.7m tyres while the local industry provides 1.19m, leaving a shortfall of around 500,000 tyres which is met through smuggling,” he explained.
Light truck tyre (radial and non-radial) demand is estimated at 4.48m in which local industry produces over 360,000 tyres while imports come to around 900,000 tyres, leaving a shortfall of 2.66m tyres which is met by smuggled items.
In truck/bus tyres (radial and non-radial), legal imports stand at around 900,000 tyres against the demand of 4m tyres annually. As a result, the shortfall of 2.5m tyres is met via illegal arrivals, the former PTIDA office bearer said.
The government has reduced the regulatory duty (RD) to 10-20pc for various categories imported tyres imported 35pc some two and half years ago which also encouraged legal imports, he added.
Published in Dawn, April 6th, 2021