The road transport and freight industries, as well as the Tyre Importers Association of South Africa (Tiasa), are opposing an application brought to the International Trade Administration Commission of South Africa (Itac) by domestic tyre manufacturers seeking increases in respect of some import tariffs.

Tiasa says there is concern that tariff increases will lead to higher tyre prices. It also notes that local manufacturers cannot meet local demand for tyres.

During a webinar hosted by international trade consulting practice XA International Trade Advisors on July 26, Tiasa chairperson Charl de Villiers said the four manufacturers making tyres locally have applied for tariff increases on tyres imported from China across eight tariff codes, asking for percentage increases that range from 8.45% to 69.97% on top of the 25% to 30% import duties paid for normal imports.

"The impact of these increases was modelled, with the taxi industry expected to see a 41% increase in the price of tyres, passenger vehicles expected to see a 38% to 40% increase in prices, and truck and bus tyres expected to increase by 17% to 18%," he said.

Further, 80% of the 3 200 models of tyres in South Africa are not made in local factories, and two of the four local tyre manufacturers import 100% of their truck and bus tyres. This means that local tyre manufacturers are significant importers of tyres themselves, said De Villiers.

South Africa's truck tyre manufacturing capacity is about 600 000 units a year and demand is about 1.2-million to 1.4-million units a year, he added.

National Taxi Alliance spokesperson Theo Malele and Road Freight Association (RFA) CEO Gavin Kelly both highlighted that the industries cannot absorb further increases, with Malele highlighting statistics indicating that households use up to 55% of their disposable income for transport.

Kelly added RFA estimates indicate that the proposed tyre tariff increases will result in a 6% to 6.3% increase in road freight costs.

"We urge government not to allow these increases to be effected and we are strongly opposed to this, which we cannot afford as the taxi industry, nor as a country. Owing to the squeeze on margins, many taxi operators find it difficult to meet monthly obligations and may lose their vehicles. The industry cannot afford such price increases," said Malele.

About 80% of goods in South Africa are moved by road, and a key concern for the road freight industry is the lack of information on what is driving this application, especially as South African manufacturers cannot meet demand, highlighted Kelly.

"This anti-dumping action is not creating clarity for the industry, nor understanding of the issues behind the application," he said.

"Many transporters monitor the depth of tread and condition of tyres on their vehicles to ensure the safety of their drivers and cargoes, especially as many roads in South Africa are not in the condition they should be. The impact of price increases is concerning because tyres are often lost in incidents, such as through damage from a pothole," Kelly highlighted.

The road freight industry cannot absorb 17% to 18% increases in the costs of tyres and South Africa must carefully consider the impact of adding further upstream costs to supply chains, he said.

Further, De Villiers noted that all tyres sold locally must have secured certificates of compliance and that the tyres imported from China by Tiasa's members compete effectively on a cost-per-kilometre basis with tyre imports from other territories.

"Businesses that rely on transport are feeling the pain, including from the fuel price, which has increased from R14.86/ℓ in January to R26.74/ℓ in June. We are deeply concerned about the additional duties the local tyre manufacturers are requesting and their potential impact on businesses and people already struggling," he added.

Meanwhile, XA International Trade Advisors CEO and founder Donald MacKay highlighted that the anti-dumping application was "peculiar" because the domestic tyre producers making the application will not be able to meet demand in the market.

"The previous application for anti-dumping duties was terminated by ITAC owing to the level of imports by domestic tyre producers," he said.

Further, the domestic tyre producers refused to disclose the reason for the application, and Itac has accepted their claim to confidentiality; leaving the local industry bewildered, he added.

"In typical anti-dumping applications, the applicants must disclose their own imports in detail, and the reasons for the imports. This application is peculiar because many of these companies have factories in China, with [tyre manufacturer] Goodyear China responding to the anti-dumping application by Goodyear South Africa with a request for exemption," said MacKay.

Industry body the China Rubber Industry Association also recently took the European Union Commission to court to overturn provisional anti-dumping duties, in which it succeeded, added De Villiers.