Lahore: The efforts of incumbent government to curb smuggling via Afghan border have somehow managed to put local four-wheeler tyre manufacturers on a positive track.
Nevertheless, the developments in past one year i.e. Covid-19, higher import duty structures coupled with an increase in dollar rate and better surveillance on border to discourage smuggling have increased the prices of both local and imported tyres.
“The purchasing power of a common man has reduced to such an extent that demand of second hand imported tyre is on a rise since the lock down restriction eases”, said a Lahore based tyre importer.
He further added that currently Country’s only tyre manufacturer i.e. General Tyre is only catering to nearly 20% of the demand, rest is either imported or being smuggled via Afghanistan, and all recent developments have pushed up prices to an exorbitant level.
On the other hand, the Chief Executive Officer of GT, Hussain Kuli Khan said that improved profits of the company stated that strict surveillance of the borders during Covid-19 played a positive role in the company’s performance.
“This was the reason that smuggled tyres were not available in the local market which helped the local industry’s share to grow” he added.
The company has earned a profit after tax of Rs406 million in the first six months of the current financial year against Rs29.4 million in the same period of last year.
The company recorded net sales of Rs6.45 billion rupees in the reported period. This was up by 41% from Rs4.56 billion rupees in the corresponding period last year.
The Original Equipment Manufacturers (OEM) sales grew across the board by 23% value wise. They are nearing normal capacity and that also helped the company. The revival of the tractor sales this year is a heartening signal.
Besides local demand, the company’s exports also increased by two times in the reported period and it exported tyres amounting to Rs93.3 million.
“The curb in smuggling is a good sign but alternates should be created to stop the price hike in open market”, said Ali Bin Nasser, another importer.
Currently there is only one company manufacturing four-wheeler tyres in Pakistan, there is a need to simultaneously increase the number of such manufacturing units in Pakistan if government wants to truly benefit the end consumer, he added.
According to him, the shortfall of imported tyres, post lock down scenario, has resulted in price increase of tyre by 80%. “This hike is a direct result of little smuggling, higher import duties and dollar rate hike “, Ali said.
People still prefer used tyres over local manufacturer, though the arrival of smuggled tyres have reduced up to 70% but simultaneously the lower purchasing power of a common man forcing them to ask for such tyre category, he added.
Apart of open market, GT, which is in a process of developing new tyre size besides to exploit the long term business opportunities is still facing issues.
“The local tyre industry is still facing problems due to heavy under-invoicing on imports of tyres that is also resulting in revenue losses to the Government”, Hussain Said.
The Government needs to re-evaluate the ITPs value at least twice a year if not every quarter. As the raw material prices have been showing an upward trend since last November. This was further aggravated by many folds’ increase in freight charges.” said Hussain.
He hoped that the authorities will further strengthen measures to restrain under-invoicing and smuggling to provide a level playing field for the local manufacturers.