The impressive development in the communication
sector besides an all time high growth in the automobile industry
altogether have elevated the tyre industry as a vibrant area of
investment in Pakistan.
Besides catching eyes of the local investors, several
other countries are also taking keen interest in the tyre industry of
Pakistan obviously due to robust growth in demand for tyres.
The multi-national tyre producing companies are
taking special interest in tyre industry because the capacity of local
industry was not suffice to cater to the need of growing vehicular
population in the country.
Despite a strong industrial growth, the tyre industry
of Pakistan could hardly meet 12 to 15% demand and the shortfall paves
the way for the international tyre companies in Pakistan. Apart from
vehicles population, the dilapidated condition of the roads stand was
another reason for high incidence of tyre consumption in Pakistan.
Tyre technology, at international level has expanded
that not only for every nature of vehicle a separate tyre is designed
but also two to three kinds of tyre are designed and manufactured for
one nature of vehicle depending of its use. For one vehicle two to three
type of tyres are manufactured internationally which are recommended for
nature of use of vehicles.
In Pakistan tyres of trucks and buses are on top of
consumption as 50% of the total consumption in the country for these two
four wheelers are on top of running which is a commercial use, while
bicycle and trolley tyres are in bottom of consumption figure.
There is no definite statistic of tyre consumption in
Pakistan, a tyre importer said. He said that there are many rough ideas
about the import, local production, and smuggled tyres. The government
of Pakistan's department of statistic too has rough ideas about the
figures as tyre consumption increasing without any scientific direction.
An importer said more than 50% tyres smuggled into
the country. The smuggling methods change according to situations at
boarders. This must be a fact that why no investors are establishing
tyre manufacturing plants in our country although the fact also remains
on the record that Karachi, Lahore, and Rawalpindi are the part of the
country where more than six tyre manufacturing plants are badly
Apart from tyre usage internationally, in Pakistan
tyre is sold from the rate of Rs. 250 to Rs. 350,000. The costly tyres
from the rate of Rs. 40,000 to 350,000 are used for earth moving
vehicles for construction and mining purposes.
There is a huge difference in the prices of smuggled
and legally imported tyres, as the importers pay 60 percent tax and
other duties, while the smugglers do not contribute even a single penny
to national exchequer, the huge influx of smuggled tyres in the country
is causing a loss of Rs 5 billion annually to the national exchequer and
is harming local industry and legal imports of tyres.
The price of 12-inch locally produced tyre is 1200
and the same size in smuggled category is available at Rs 1,000, while a
legally imported tyre of 12-inch costs Rs 1550. Similarly, the cost of
13-inch locally produced tyre for the end consumer is Rs 1,150, while
the imported ones are available at Rs 1,900 and the same variety of
smuggled tyres at Rs 1,200. The price of 14-inch tyres produced locally
is Rs 1,700, and that of imported ones is Rs 3,000, while cost of
smuggled tyre for end consumer is Rs 2,000.
The high cost of importing tyre is the main cause of
smuggling. According to a rough estimate, the total consumption of tyres
in the country, excluding two-wheelers, is around 3.5 million per annum.
There is only one major company — General Tyres — that is engaged in
manufacturing tyres of different categories here. General tyres is
producing one million tyres annually. A local company in Peshawar, named
United Tyres, also manufactures around 100,000 tyres annually.
But traders said that on the long run, the end
consumers do not benefit from the lower cost of smuggled tyres. There is
no benefit for the consumer while using smuggled tyres because they have
no warranty, as against the locally produced and legally imported tyres.
The use of smuggled tyres is also one of the main causes of road
accidents in the country. The locally manufactured tyres for Toyota
passenger cars are available at Rs 1,900 but the cost of same imported
tyre is Rs 2,500 and retail price of smuggled tyres is Rs 2,100.
According to another rough estimate with a local
dealer highest volume of smuggled tyres is for passenger and light
trucks. The annual consumption in the country of tyres for passenger
cars is 1.3 million, while that of the tyres for light trucks is
700,000. According to estimates, the consumption of trucks and bus tyres
is 1.2 million per annum. Smuggling of trucks and bus.
The General Tyre and Rubber Company of Pakistan
Limited however plans to raise exports of tyres worth one million
dollars next year. Although it has started exporting tyres to a number
of countries. This year exports has been estimated by the company as
US$700,000 and thus earn foreign exchange. The next year's target is
US$1,000,000. The GT, the country's largest tyre production company,
would also be expending its annual capacity by 30 per cent to 1.3
million tyres with an investment of Rs500 million. The GT has been
consistently investing in the expansion of its capacity to meet the
growing demands of tyres. The GT's capacity has been raised from 120,000
tyres annually to 1 million tyres in 5 phases. Although the General tyre
is a global brand, produced in five continents — North America, South
America, Europe, Africa and Asia. But it has not shifted tyre
technologies into the Pakistan it is manufacturing tyres for cars, light
trucks, heavy trucks, buses and tractors. The General Tyre uses the
number one tyre manufacturing technology in the world. But here in
Pakistan story is different. The company has estimated the total tyre
demand of the country 53 per cent which is met through import, 31 per
cent by local industry and only 16 per cent by smuggling.