Consumers warned of nearly 40% tyre price hike

Consumers have been warned that some tyre dealers have increased the price of all tyres by almost 40% – and not just tyres imported from China in line with the 38.33% provisional antidumping duty imposed on the latter by the International Trade Administration Commission (Itac).

Francois Dubbelman, trade law expert and founder of FC Dubbelman & Associates, said on Friday he is “100% sure” some tyre dealers are taking advantage of the situation and increasing the price of all tyres by 38%, instead of only those of imported tyres.

Dubbelman said he had received WhatsApp and other messages from tyre dealers stating: “Put on new tyres because they are going up by 38%.”

He said if the tyres fitted are Goodyear and Sumitomo, they will increase in price by 38% – “but it’s not supposed to be like that”.

Moneyweb received an SMS sent to potential customers by a tyre dealer in Pretoria, indicating the increase only applies to imported tyres: “Beat the new 38% duty on import tyres. Pay the old price at *** at Menlyn.”

However, consumers might not know which tyres are imported. Dubbelman stressed the provisional antidumping duty only applies to tyres imported from China.

He said there is also substantial stock in the market of tyres imported from China that should not be subject to the 38% provisional antidumping duty.

“So they are [possibly] already making 38% more on the existing price [for imported tyres] plus the local manufactured tyres they are selling.”

Competition Commission spokesperson Siyabulela Makunga said on Friday the commission could initiate a complaint against the alleged prohibited practice and investigate such a complaint.

He said consumers can also lodge complaints with the commission regarding the alleged prohibited practice.

“Should the investigation reveal a contravention of the Competition Act, the commission will refer the matter to the Competition Tribunal for adjudication.”

The commission cracked down on price gouging during the Covid-19 pandemic. Price gouging occurs when firms increase prices despite no significant increase in input costs.

Excessive pricing is also prohibited in terms of Section 8 of the Competition Act. Tyre Equipment Parts Association (Tepa) national director Vishal Premlal said the association is unaware of, and has not received any reports that there are, untoward practices, nor that some tyre dealers have increased the price of all tyres by 38% since Itac imposed the additional duty on tyres imported from China.

He said Tepa would frown on such a practice if it were happening. South Africa’s four local tyre manufacturers are members of the SA Tyre Manufacturing Conference (SATMC), which submitted the application to Itac for antidumping duties on tyres imported from China.

Dubbelman cast doubt on whether the provisional 38.33% antidumping duty should result in an equivalent immediate increase in the price of imported tyres from China – and not only because of the substantial existing stock of these tyres in the market.

He said Itac must make a final determination on the SATMC application by 8 March, 2023, or the provisional antidumping duties on tyres from China will lapse.

There is a risk to tyre importers and dealers that they will be left out of pocket if Itac makes a final determination in the SATMC’s favour.

There is “an about 99%” likelihood that these provisional duties will lapse This is because of delays in Minister of Trade, Industry and Competition Ebrahim Patel signing off on final antidumping duties before the provisional antidumping duties lapse, resulting in importers being refunded all these duties that they have paid.

By Roy Cokayne

This article originally appeared on Moneyweb and was republished with permission.