Pakistani tyre maker still under pressure from ‘smuggling’

Years of under-invoicing and rampant cross-border smuggling are still putting pressure on domestic tyre suppliers in Pakistan. So what’s the solution? Raid tyre markets in big cities instead of trying to stop smuggling along the long Pakistan-Afghanistan border, says General Tyre Pakistan chief executive Mohammad Shahid Hussain.

“I can assure you that just a few months of raids on tyre markets will force vendors to stop dealing in smuggled tyres,” Hussain said in an interview with The Express Tribune, a local affiliate of internationally known newspaper The International Herald Tribune, adding: “Controlling just the big five cities will greatly hit tyre smuggling… We want to compete with local manufacturers. But we cannot compete with thugs who sell smuggled tyres at a discount of 7 to 9 per cent.”

According to the report published 12 September 2011, the total market in Pakistan is around 6.5 million tyres which is divided into thirds. A third of the market is captured by locally manufactured tyres while the rest of the market is equally divided into legally imported tyres and smuggled tyres.

Currently the local General Tyre and Rubber Company’s annual capacity is 2.1 million tyres per annum, but the company is reportedly running on 80 per cent of this. This is said to be due to the slowdown in last three years, which has also negatively affected car sales in the country. And as a leading local OE supplier this meant General Tyre saw its sales take a hit too.

According to Hussain, the top-selling smuggled tyres in Pakistan are Chinese brands while Indian and Iranian tyres are also said to be finding their way into the local markets.

When General Tire USA established General Tyre Pakistan in 1963, the initial production capacity was only 120,000 tyres per annum but today it produces nearer 2,000,000 tyres per annum (1.68 according to Hussain’s remarks). In addition the Tribune Express article pointed out the company’s signing of a technical services agreement (TSA) with Continental AG (Germany’s largest tyre manufacturer) to produce branded tyres.

In addition the company is the major supplier of tyres to the local automotive and tractor assembly plants. It supplies tyres to Toyota, Honda, Pak Suzuki Motor Company, Hino Pak, Ghandhara Industries, Ghandhara Nissan, Al-Ghazi Tractors, Millat Tractors and others.