A weaker rand in recent months and price increases in raw material has put pressure on the South African tyre industry, Continental Tyre’s senior official said on Tuesday.
Claudio Boezio, Continental Tyre’s managing director, said the last eighteen months had been expensive ones for the manufacturing industry with the oil price fluctuations, mostly involving an increase in price, coupled with the increase in natural rubber not boding well for the predominantly Port Elizabeth-based tyre industry.
Natural rubber increased by 86% from June 2005 to the present and this has translated into a 15-16% increase in the price of producing a tyre. In addition, exchange rate volatility and speed of change makes it difficult to plan ahead. In the last year, the rand had depreciated between 25% and 30%, and this had affected 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. Steel cord and fabrics have also increased due to exchange rate depreciation,” he said.
Boezio said that the increase in costs can no longer be completely contained within and have 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, which means customers will find South African-made products more competitive — a benefit to our economy and the creation of jobs, ” he added. – I-Net Bridge