Tire sales drop on smuggling from China

Mustaqim Adamrah ,  The Jakarta Post ,  Jakarta   |  Tue, 09/23/2008 10:04 AM  |  Business

Domestic tire sales plunged 4 percent in August, with the market allegedly flooded with cheaper tires smuggled from China and India, an association said Monday.

Chairman of the Indonesian Tire Producers Association Aziz Pane said illegal tires had been entering the market since July.

"Illegally imported tires, in the hundreds of thousands, have partly taken over the domestic market," he said.

"Local tire producers sold 3.7 million tires in August, down from 3.89 million in July."

Tires from India and China are sold in Indonesia for between 10 to 30 percent less than locally made tires, according to the association.

"The prices are lower because they don't comply with national standards and don't pay import taxes," said Aziz.

"Local producers will be dearly affected unless the government takes stern measures to curb smuggling."

Tire manufacturer PT Bridgestone Tire Indonesia sales manager Endjang S. confirmed the drop in sales.

"Our company recorded a 20- to 30-percent drop in sales in August," he said, adding that around 22 producers were already suffering from an average drop of 20 percent.

Besides the illegal imports, the drop could be the result of importers' stocking up on supply in July for the next two months, causing the 7.1-percent sales increase that month, followed by the drop in August, Endjang added.

To help address the issue, the Indonesian Tire Producers Association will send a letter next week to the Trade Ministry and the Transportation Ministry requesting more information on tire imports, Aziz said.

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