Economy, Auto

Iranian Tire Companies Punctured by China Invasion

At present tires are imported with a 20% tariff using free market exchange rate.At present tires are imported with a 20% tariff using free market exchange rate.

Spokesperson of Iran’s Tire Producers Association, Mostafa Tanha, said that despite the domestic capacities to meet local tire demand, cheap Chinese competition continues to undermine local companies.  

“The Chinese usually offer their goods in foreign markets at cheap prices, and many see that policy as some kind of dumping,” Tanha told the Iran Economist on Tuesday.

Dumping is the export of a product at a price lower than its finished price or the sale of a commodity abroad at a price lower than its domestic price.

There are nine active tire producers in the country which have the capacity to make 360,000 tons of various types of tires per year. However, under the current circumstances, only 260,000 tons are produced by the domestic market and the rest is imported, he said.

Tanha referred to the capacity of the local tire production sector, stating that Iran should set tougher rules and higher tariffs to protect domestic production.

At present, tires are imported with 20% tariff at the free market exchange rate, while domestic producers are not authorized to use the official foreign exchange rate for import of raw materials.

This results in imports from other countries, especially China, which is a mass producer of cheap tires. Consequently, local production has reduced and the industry is in the decline because it cannot compete with cheap China products.

Abbas Abbasi, another member of the association, had recently said that more than 80% of Iran’s tire imports are from China and called on the Tehran government to invoke similar measures taken by other countries to curb the invasion of Chinese products.

Turkey, for instance, has imposed 60% tariff on Chinese tire imports while the US slapped 30-100% tariffs for the same China-made brands.

Tanha underlined that the lack of funding and credits by banks to boost domestic production sectors is another factor impeding local manufactures.

Meanwhile, Germany’s Continental, commonly known for its quality tires, signed a deal with Iran’s Crouse Company in March to set up a local auto parts production unit. However, to date the company has not shown any interest in tire production in Iran.

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