Tyre manufacturers have voiced their frustration over unchecked smuggling and the practice of under-invoicing.
This the biggest reason, according to the distraught manufacturers, why they are performing below par and are reluctant to pump more investment into the industry.
In a further blow to the industry, consumers prefer smuggled or imported tyres as they believe that the quality of imported stuff is much better compared to local products and has a longer lifespan.
Tyre importers and dealers, however, say customers get more variety in imported tyres for four-wheelers whereas among local ones they have not much choice available.
They claim that majority of the people who purchase new cars immediately change their tyres and opt for imported and reliable brands for a better road grip and minimum risk.
“Local tyres for over 1,600cc cars cost around Rs5,200 per piece whereas an average imported tyre is priced between Rs6,800 and Rs9,000,” said Ali Bin Naseer, a tyre dealer and importer while talking to The Express Tribune.
“Still many people go for expensive and imported tyres especially those who have recently bought a new car.”
In Pakistan, General Tyres is the only local company which is manufacturing tyres for the four-wheelers. It has an agreement with all the car assemblers and manufacturers to provide them with the required quantity of tyres.
The car manufacturers approve these tyres after a thorough test and evaluating compliance with the certified quality standards as per global practices.
However, there is still a perception that the tyres manufactured in the country are of low quality that cannot compete with global brands and are abundantly available in the market.
In Pakistan, the demand for all categories of tyres including passenger cars, light commercial vehicles, trucks, buses and tractors was 8 million units in 2012-13. Of these, domestic production stood at 1.7 million, only 20% of the demand, while imports were 4 million, 48% of the demand.
During that period, say industry experts, about 2.3 million tyres worth Rs25 billion were smuggled into the country, which constituted 32% of the demand.
General Tyres has been insisting repeatedly that despite making an investment of $400 million the company has not been able to perform above par, putting the blame on unchecked smuggling and under-invoicing.
The company has the capacity to produce 2.1 million tyres annually, but could market only 1.6 million.
“The perception of ‘Made in Pakistan’ brand needs to be changed as a majority of people prefer imported brands, for which the government has to play its role,” commented an industry expert while seeking anonymity.
There was still around 45% of the market that could be grabbed as there was no competition and only one company was manufacturing tyres for the four-wheelers, he said. “It is a dilemma that despite such a huge opening, other brands are reluctant to enter Pakistan’s market.”
Now, he said, many varieties of local tyres were available in the market and all were of excellent quality.
The stakeholders were confident that as soon as core issues of the industry like smuggling and under-invoicing were addressed, existing as well as new entrants would immediately pour investment into Pakistan, leading to competition and a wider variety of products, he added.
The writer is a staff correspondent.