Tire industry players believe that apart from supply and economy-related problems, the government’s policy considering tires as a strategic product creates problems for the industry.
"When you consider a product strategic, decisions are made to reduce the risks associated with that product from the macroeconomic and consumer viewpoints and how it impacts other industries or society, which is a correct approach. But the problem is that considering tire a strategic product is wrong,” CEO of Yazd Tire Iraj Zamani-Fard was quoted as saying by Donyaye Khodro.
"For instance, the pharmaceutical industry is strategic, but not medicine. Because we do not use the medicine daily. But if we get sick or need a special drug, we should be able to procure it easily. Same with the tire industry; the industry should be considered strategic, but not the tire itself,” he added.
The CEO of Yazd Tire noted that on average, a consumer buys tires for his car once every four years, but not every day.
“Even the transportation industry, whether it pertains to public or cargo transportation, does not need tires every day. On average, vehicles carrying cargo or passengers need to change tires every two years. Therefore, tires are not a daily need even for the transportation industry,” he said.
“The tire industry should be able to meet the needs of the country based on the number of vehicles in the market, to the extent that we do not need to import tires."
Zamani-Fard stressed that when tires are considered a strategic commodity, wrong decisions are made and instead of supporting the strategic industry, the government supports its product.
Referring to the consequences of such decisions, he said, "One day they will allow imports to compensate for the lack of tires and the next day they don't allow tire prices to increase so that the transportation industry doesn't face problems. At one point, they don't allow the export of tires so that the country doesn't face problems, but at another point, they allocate subsidized currency for tires and create problems in the industry.”
The CEO stressed that such decisions have negative impacts on the industry.
"Using command pricing to control the price of tires in the market harms the industry. In the face of command pricing, there is no economic justification for development plans and mass production in tire companies, as production will decline and subsequently, unemployment will increase, small companies will be closed, investments will be lost and the country will remain dependent on tire imports,” he said.
Zamani-Fard proposed that the government should allow tire companies to enter the Iran Mercantile Exchange.
"As other goods are offered on the stock exchange, offering the products of tire industry on IME is the most legal, correct and clear method of selling products. But tire manufacturing companies are banned from offering their products on the stock market,” he said.
"This is while raw materials needed by the tire industry are offered on IME and manufacturers buy raw materials from the stock exchange. But for unknown reasons, they cannot offer their products in the stock market.”
Tire Output Tops 8m in 4 Months
Tires produced in the first four months of the current fiscal year (March 21-July 22) have increased in terms of number but declined with regard to tonnage.
Domestic tire manufacturing companies produced 8.15 million tires during the period, registering a 1% growth compared with the corresponding period of last year, IRNA reported.
In terms of tonnage, tire output hit 86,243 tons of tires, marking a 2% decrease year-on-year.
By the end of the fourth fiscal month, 53,266 tons of passenger car tires were produced, showing a 6% growth YOY. They accounted for 61.7% of the tire manufacturers’ total output during the four months.
A total of 8,125 tons of van tires were produced during the period, which indicate an 11% YOY decline.
A total of 16,980 tons of heavy duty and commercial truck and bus tires were produced, registering a 10% decrease YOY.
Agricultural tires reached 6,509 tons during the period, down 17% YOY.
Also, construction and industrial tires’ production hit 1,363 tons, registering a 17% decline YOY.
Bicycle and motorcycle tires hit 6,044 tons in the first four months of fiscal 2022-23, marking a 7% growth YOY. By including these tires, the total domestic output reached 14.99 million tires weighing 95,172 tons in the four months under review.
The production of inner tubes reached 2,885 tons during the period, down 8% YOY.
Domestic tire manufacturers produced 863,785 flaps, conveyor belts, hoses and other related products weighing 2,039 tons during the period.
The tire industry has been active in Iran for 60 years. Currently, 11 domestic tire companies are manufacturing tires for passenger cars, trucks, buses, vans, construction and agricultural equipment, as well as bicycles, motorcycles and inner tubes for tires.
About 15,000 people are employed directly and more than 250,000 people are working indirectly in the Iranian tire industry.
