Owners of small cars driven round the bend due to non-availability of tyres

by Suresh Perera

A shortage of automobile tyres in the market is driving motorists round the bend amidst complaints that dealers still holding stocks have inflated prices in the backdrop of existing import restrictions.

The worst affected are owners of small cars, many of whom derive an income by operating passenger taxi and affiliated services.

“We have no option but to ground our vehicles and be deprived of earnings to care for our families”, some passenger taxi services operators complained.

There is also the risk of facing legal action as the traffic police are now examining tyres of passenger vehicles on the roads following the bus accident at Passara, they noted.

Moreover, in the case of an accident, there is every possibility that insurance claims will be dishonored in case the tyres are found worn out, they further said.

The market is not wholly dependent on locally manufactured products, as the import restrictions apply only to radial tyres for rim sizes 12 and 13, and for motorcycle and three-wheeler tyres, says Ravi Dadlani, Managing Director, CEAT Kelani Holdings, a key player in the local tyre industry.

“That’s the crux of the matter. Tyres for rim sizes 12 and 13 are used in small cars, which are aplenty in the country not only for private use but also in the taxi services business, the operators pointed out.

“How can we run hires with worn out tyres and endanger the lives of passengers especially on wet days?”, they asked.

There is no restriction on the import of all other tyre types and sizes, including those for trucks and buses, Dadlani said.

With regard to ‘import restricted sizes’ – cars rim sizes 12 and 13, motorcycles and three-wheelers, CEAT produces 31,800 car Radial tyres in 12 & 13 sizes per month (whereas the market demand for these sizes is 32,000) meeting 100% of the market requirement, he explained.

If that was so, where have all the tyres pumped into the market gone?, the operators queried. “With dealers claiming they have not received fresh stocks, we have been going around in circles to find the right (tyre) sizes”.

Even refurbished tyres are being now being sold for fancy prices due to the shortage. Unlike earlier, there are no small tyres dumped on roadsides now because everything is being refurbished as prices are good due to the demand, they asserted.

“They wanted Rs. 5,000 for a size 13 refurbished tyre with no guarantee on performance. Perhaps, road accidents have shot up because some motorists use them as there’s no option”, a taxi service driver remarked.

It’s a risk no doubt, but some people prefer to take the challenge rather than keep their vehicles grounded and go hungry, he said.

CEAT also produces 100% of the requirement for three-wheeler tyres and 50% of the requirement for motorcycle tyres, the Managing Director said.

“Together with other local manufacturers of three-wheeler and motorcycle tyres, we can meet 150% of Sri Lanka’s demand in these categories”, he assured.

“People who talk of statistics should go around and see for themselves the reality of the situation on the ground”, the operators suggested.

Those who are holding stocks are selling them at exorbitant prices, they claimed.

The dealers are provided a price list covering all sizes and types of tyres by each manufacturer and are entitled to discounts of up to, or more than 30%. They are expected to pass on a substantial discount to the end customer based on the purchase terms, and to our knowledge the majority of genuine establishments still do so, Dadlani said.

There may be a price list, but that does not necessarily mean it happens that way. The shortage in the market has seen the emergence of brokers and middlemen who can procure tyres for customers at fancy prices, the operators further asserted.

Those who sit in comfort and dish out figures should do a round and find out what’s happening in the marketplace. They will then be able to come to terms with reality, they said.

Dealers say that when they order 100 tyres, for example, they receive only 25 and these are sold in double quick time due to the demand, they added.

“Our supplies to each dealer are on the basis of an established demand pattern based on the size of the market served by each outlet. This has worked well over many years. However, some dealers are now arbitrarily demanding more tyres to build up a larger inventory and may complain if they do not receive the increased volumes they are ordering”, Dadlani pointed out.

“It is also possible that a particular tyre size may not be available on the day it is ordered, but given the production cycles we operate, that size will become available within that month. We are in touch with cab companies and have not received complaints of vehicle fleets being grounded due to lack of tyres”, he continued.

A tyre dealer in Colombo The Sunday Island spoke to said local brands were not available, but offered a size 14 Chinese product for Rs. 9,900 each. Another dealer said he has only Dunlop to fit rim sizes 13 and 14 and quoted Rs. 11,750 for each.

The Managing Director said that CEAT has the capacity to produce 100% of the car and van radial tyre requirements for rim sizes 12 and 13, and together with other local manufacturers, 150% of the requirement of motorcycle tyres and 150% of the requirement for three-wheeler tyres.

Asked whether CEAT increased prices after the import restrictions were enforced, he said the company reduced prices in December 2019 and kept them unchanged in 2020 and until January 2021. During this period, natural rubber prices in the world market increased by over 50%. As a result, CEAT revised prices by 11.8% in January 2021 purely to absorb the raw material cost/other costs increases.

Asked whether the temporary closure of the CEAT manufacturing plant due to some employees testing Covid-19 positive lead to a disruption in the supply chain and reflect on market availability of its products, Dadlani replied, “In line with the government mandated health and safety protocols and in the interest of employee safety, we suspended manufacturing for seven days in February this year. This did result in an unavoidable disruption of supplies, considering that we manufacture about 3,200 radial and motorcycle tyres per day. We however made up for the production loss through additional production on Sundays”.