Warning to motorists in South Africa: higher costs on the way

The Tyre Importers Association of South Africa (TIASA) warns that the cost of tyres could increase by up to 41% if the four large domestic tyre producers – Continental, Bridgestone, Goodyear, and Sumitomo, collectively known as the SA Tyre Manufacturers Conference (SATMC) – are successful in their duty application.

TIASA said it is opposing SATMC’s application to the International Trade Administration Commission (ITAC) to impose additional duties of between 8% and 69% on passenger, taxi, bus and truck vehicle tyres imported from China.

The imposition of duties is expected to have a material impact on the price of tyres, not only for passenger vehicles, but also for trucks and for the vast network of taxis and buses that transport citizens across the length and breadth of the country daily.  Tyres are the third biggest cost driver in transport, after wages and fuel, the association said.

If the application is successful, the taxi industry will be hit hardest, with the cost of taxi tyres set to increase by 41%, it said. “Consumers will also be hit hard, with small passenger vehicle tyres expected to increase by 38-40%; and truck and bus tyres by an average of 17%.”

“Rising inflation is putting South African consumers and motorists under extreme financial pressure.  The consensus is that there appears to be little light at the end of the tunnel,” said Charl de Villiers, chairperson of TIASA.

“The bottom line is that South Africa – and South African motorists and those operating in the trucking, taxi, and mass transport sectors – can ill-afford any interventions which may further drive up road freight or transport costs, which are key drivers of inflation.”

Stats SA noted that transport continues to drive inflation higher. Transport costs continue to climb, with the main driver being the surging price of fuel. The price of fuel was R14.86 in January 2021, and is now as much as R26.74 (inland) per litre.

A spokesperson for the National Taxi Alliance, Theo Malele called on the government to look at every way possible to arrest the surging cost of transport.

“We already estimate that taxi fares need to rise by up to 30% due to rampant petrol price increases. If tyres go up by 41%, it will have a devastating impact on our sector, and on commuters who rely on us to transport them to and from work. Government must intervene as a matter of urgency to reject SATMC’s application for these duties immediately,” said Malele.

According to the June 2022 report from the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD), someone working 21 days a month spends 34.5% of total wages on transport, whereas someone working 15 days a month, transport accounts for 55.25% of their wages.

Gavin Kelly, CEO of the Road Freight Association (RFA), said: “Based on the projected 17% increase in the landed cost of truck tyres – we estimate that this will translate into a 6% increase to operators. Transport companies already cannot afford the ever-rising operating and fuel costs, and so an increase in the cost of tyres could become the final nail in the coffin for many operators, leading to a collapse in the country’s critical road freight logistics sector.”

Tyres are a huge cost factor for road transporters in South Africa, and any increase in costs upstream, will ultimately filter down to consumers, as most operators will be unable to absorb the full cost increases, said Kelly. This will have a knock-on impact as over 80% of SA’s food, medicines, fuel and many other goods are transported by road, so rising costs have an impact on every single item transported to, and across South Africa.

“The shift from road to rail has seriously stalled over the past 18 months, as the country’s rail infrastructure has been vandalised, operating ability has deteriorated and the available rail network has shrunk.”

Read: Here’s what R1 million for a bakkie buys you right now