Tyre Prices Set to Soar In South Africa

A weaker rand in recent months and price increases in raw material has put pressure on the South African (SA) tyre industry, according to the chief executive at Continental Tyres SA. Claudio Boezio told journalists the last 18 months had been expensive for the manufacturing industry.

Oil price fluctuations, mostly involving an increase in price, coupled with the increase in natural rubber, did not bode well for the predominantly Port Elizabeth-based tyre industry. Natural rubber had increased by 86 per cent since June 2005. This had translated into a 15 to 16 per cent increase in the price of producing a tyre.

In addition, exchange rate volatility and speed of change made it difficult to plan ahead. In the past year, the rand has depreciated between 25 per cent and 30 per cent, affecting the cost of imported raw materials.

“The increase in natural rubber has meant we have had to look at synthetic alternatives, which has led to a price increase for this resource as well, due to increase in demand,” said Boezio, adding: “Steel cord and fabrics have also increased due to exchange rate depreciation.”

Boezio said the increase in costs could no longer be contained completely, and had made it necessary for the industry to increase tyre prices to dealers.

“On the upside for the industry, the increase in new car sales in the past year has boded well for us and we expect the sale of replacement tyres to start increasing too. The rand depreciation has also meant that imports will slow down, meaning customers will find South African-made products more competitive – a benefit to our economy and the creation of jobs, ” he said.