Bias tire prices have increased by 10% in the domestic market, after they were removed from the list of goods subjected to command pricing.
These tires are built with the plies on a bias. Meaning that the plies are crisscrossed across the tire from one bead to the other, usually at a 35- to 40-degree angle to the centerline.
Officials of the Tire Industry Association of Iran have invariably warned about the unprofitability of tire production, especially bias tires, and declared that its production is a loss-making venture.
Based on this issue, the Ministry of Industries, Mining and Trade, by examining various aspects of the production, supply and consumption market of bias tires, removed this product from the list of goods with command pricing.
Hamidreza Abdolmaleki, the head of the Board of Directors of the Tire Industry Association and CEO of Iran Tire Company, said, "MIMT has verbally announced its decision to remove bias tires from the list of goods subjected to command pricing to tire manufacturers, following which and considering the unprofitable production of this type of tires, the Tire Industry Association of Iran decided to increase their prices by 10%.”
He added that agricultural, road construction and mining tires have become 20% costlier and the prices of tubes have increased by 30% compared to the previous prices.
Noting that the production capacity of bias tires is sufficient to meet the needs of the domestic market, the head of the association said, "The removal of export restrictions and the possibility of increasing the export of these products will not affect the distribution of bias tires among tire distributors. Contrary to some predictions, the number of bias tires in the portfolio of sales representatives of tire companies will not decline."
Abdolmaleki clarified that no decision has been taken for increasing the prices of radial truck and bus tires, and tire companies have supplied these products to distributors at the previous prices.
Tire Export Restrictions Abolished
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,” the head of Iran Tire Association had earlier told 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 fulfilling 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 declined 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,” 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 tire businesses.
