Efforts of the Pakistani government to curb smuggling via the Afghan border have helped put the car and truck tyre manufacturers on a positive track.
Second-Hand Tyres Under Scrutiny
The Covid-19 outbreak, higher import duty structures coupled with increase in US dollar rate and better surveillance on the border to check smuggling – have led to an increase in prices for both local and imported tyres – new and second-hand.
“The purchasing power of the common man has dropped to the point that demand for second-hand imported tyres has been on the rise since the lockdown restrictions were eased,” said a Lahore-based tyre importer speaking in the Express Tribune.
He added that currently the country’s only tyre manufacturer, General Tyre, was catering for around 20 per cent of the market, while the rest was met either through import or smuggling via Afghanistan. “All these recent developments have pushed up prices to exorbitant levels.”
Meanwhile, General Tyre CEO Hussain Kuli Khan said that improved profits of the company indicated that strict surveillance on borders during Covid-19 played a positive role in the company’s performance.
“This is the reason why smuggled tyres are not so readily available in the market, which has helped the local industry to increase its share,” he added.
“Curbs on smuggling are a good sign but alternative options should be explored to stop price hikes in the open market,” said another importer Ali bin Nasser.
At present, only one company was manufacturing four-wheeler tyres in Pakistan and there was a need to increase the number of such manufacturing units if the government wanted the end-consumers to truly benefit, he added.
He said that scarcity of imported tyres in the post-lockdown scenario had resulted in 80 per cent hike in prices for imported tyres. “This hike is a direct result of reduced smuggling, higher import duties and increase in the dollar rate.”
People still prefer used imported tyres over locally manufactured new tyres, though the supply of smuggled tyres has gone down by up to 70 per cent. “The lower purchasing power of consumers has forced them to ask for second hand tyres”, he added.
“The local tyre industry is facing problems due to heavy under-invoicing in the import of tyres, that also causes revenue loss to the government,” said Kuli Khan.
“The government should re-evaluate ITPs (Import Trade Prices) at least twice a year, if not every quarter, as raw material prices have been going up since last November.”
He hoped that the authorities would further strengthen measures to control under-invoicing and smuggling in order to provide a level playing field for the domestic manufacturer.
Source: Lahore Express Tribune