Tire export restrictions, which were imposed after the four-year export ban was lifted in the fiscal 2021-22, have been abolished.
Tire producers are henceforth allowed to export without any restrictions, while ensuring that it does not create a shortage in the domestic market.
“Restrictions on tire exports, which were set after lifting the export ban last year, have been lifted and manufacturers can export their desired volume while taking into account the preconditions of supplying the domestic market,” Hamidreza Abdomaleki, the head of Iran Tire Association, was quoted as saying by Donyaye Khodro.
“Although we should not expect the current volume of exports to be more than 10% of the turnover of passenger tires and 30% of agricultural tires, these percentages will change when export promotion plans are implemented,” he added.
Abdomaleki noted that the 10% limit had caused tire producers to be involved in administrative procedures for up to 45 days once every three months to determine compliance with this clause.
“With regard to the tire size 195/R14, which the domestic customer is not particularly interested in, tire manufacturers can export this product to interested regions and countries," he added.
Under the current situation, exports have been made to Iraq, Pakistan, Afghanistan, Tajikistan, Azerbaijan and Turkmenistan, although interactions with Russia are impeded by the currency transfer procedure.
Abdomaleki noted that the previous law had created restrictions on obtaining loans from the National Development Fund of Iran, such that producers were required by operating banks to consider 30% of their production for export in the first step, which made it impossible to obtain a loan.
“With the removal of restrictions, tire manufacturers will face fewer problems in meeting their foreign exchange obligations and procuring raw materials. Instead of waiting for a month to receive foreign currency, they will use the currency provided by exports to supply equipment and raw materials within a week,” he said.
Smuggling of Car Tires Abetted by Import Obstacles
Due to a lack of authorized car tire import, the smuggling of tires is rampant, according to the secretary of Iran Tire Importers Association.
“If the government were to modify the current conditions and make it possible to import passenger car tires, it will be in the interest of both consumers and the government,” Mohammad Mir-Abedini was also quoted as saying by Khabar Khodro.
Currently, it is possible to import heavy vehicle tires, but due to foreign exchange obstacles, it is not possible to import car tires.
“The import of heavy vehicle tires is being carried out as per the needs, but the official import of passenger car tires is not possible due to fluctuations in the foreign exchange rate’s base price and the overall rise in the price of passenger tires,” he said.
The secretary of Iran Tire Importers Association noted that because of the reduction of customs duties and taxes, the import tariff for heavy and light tires has been reduced, and the tariff for passenger tires has decreased from 40% to 32%.
“However, due to the change in the exchange rate from subsidized currency [$1=42,000 rials] to Nima currency [$1=260,000 rials], and as a result of the 25-30% rise in the price of passenger tires, it is not possible to import from official sources,” he added.
In the Nima system, importers declare their currency needs, exporters register their currency proceeds and banks and authorized moneychangers act as dealers. As per the rules, non-oil exporters have to repatriate a portion of their foreign exchange earnings and sell it via Nima. They can also sell their currency to authorized exchange shops.
Referring to challenges facing tire importers, Mir-Abedini said, “The sample test by the Iranian National Standards Organization, the cost of tire clearance and value-added tax have imposed a heavy burden on traders.”
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 ending July 22.
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.
