The conflict that paralyzed the tire industry for five months has already been passed, but some of its consequences seem to have remained. While production begins to normalize in the factories of the three large companies operating locally, the car terminals have already recovered the pace of production that they had to slow down due to the lack of coverage. But the effects will not go away in retail consumption, where there are still not enough stocks to restore full competition and, what is worse, prices have not only not fallen, but already predict that they will not fall.
This implies that the cipher increases by about one hundred percent observed during the worst phase of the crisis I’m already the floor established in the market to, from this platform, begin to transfer the subsequent increases that are established by the transfer of the inflation index. Here’s how they recognized Clarione from the same sector that brings together this industry, in which there are still signs of a shortage in the outlets.
In fact, although the conflict broke out in March amid wage claims made by the union representatives of the rubber workers, the sector has been plunged into a complex crisis for at least a year triggered by supply problems and shortages of stocks to cover strong demand. Why are there no tires? There are two fundamental reasons: anomaly in the import chain and production reduction.
Tires: the consequences of the crisis
The plants operated for almost the whole of the year 2022 at 40% of their capacity, never recovered production levels before the pandemic, and tire chain stores that usually had a stock of 300,000 tires only have 30,000. Some measures are practically no longer available and others may have four months delays in replacing them.
in that moment, a conflict has been added between the United Union of Pneumatic Workers of Argentina (SUTNA) and the national producers Bridgestone, Pirelli and Fate. This scenario forced some local car terminals to stop producing vehicles because they did not have tires to equip them.
Ford Y Toyota They have discontinued production of their national Ranger and Hilux pickups, respectively, due to a lack of covers. In June, both volkswagen What Renault Y nissan They had already stopped production of trucks due to a lack of tires, which severely affects the domestic pickup segment.
The president of the Association of Automobile Manufacturers (ADEFA), Martín Galdeano, spoke of the collateral damage of the crisis: “3.4% fewer vehicles were produced in September compared to the previous month. The conflict in the tire sector has had an impact on production, temporarily slowing down the growth process shown by the industry ”.
After the total cessation of activity in the Bridgestone, Pirelli and Fate plants, and after the agreement reached between the companies and the union on the basis of the reopening of the joint ventures, production has resumed its level. But supply problems still remain in the sector.
“The current situation has changed slightly compared to the end of September, when the factories were closed. The conflict between the producers and the union ended with a new wage agreement. From there, the machines were put into operation and gradually it was possible to meet the demand of the different segments. The situation should normalize towards the end of the year, in view of the summer holidays, a period of great tire change“, Explains a Clarione Horacio García, head of the Argentine Tire Federation.
Although the severe strain problem, therefore, seems to be heading, price increases will have no return. “The prices were already high, they have risen by 100% and it will continue to grow at the rate of inflation, around 9% per month. Another problem that drives prices up is the interest rates on credit cards (140% per year) to pay for the tire in installments. The vast majority of consumers need financing to buy, ”adds García.
Secondly, import barriers complicate the availability of products in the internal market too muchsince the necessary tires do not enter the country and not everything is produced in Argentina: 35% of the tires are imported. Right now – Garcia says- “Some models are missing for vans, high-end cars, tractors and industrial equipment”.
A crisis that fueled crime
The shortage of tires and the need to replace them in some way has generated an increase in crimes related to this product. The theft of wheels on the streets is on the rise in the country: According to the Argentine Association of Insurance Companies (AACS), around 300,000 wheels are stolen every year.. In addition, there is a significant amount of fraud against insurance companies, because car owners steal their tires.
Tires are considered safety parts by law, so they are not included in the list of items that can be sold in legal breakers. There are thousands of total destruction vehicle wheels that end up in wreckage and could be put back into a market that has very high demand.
On the other hand, smuggling is also growing. In the last quarter, the General Directorate of Customs seizure of over 4,500 contraband tires (the equivalent of 320 million pesos) from neighboring countries where they are obtained at a lower price.
Many Argentines travel to Paraguay, Uruguay or Brazil to purchase them, but to access them they must be put in the vehicle. For example, the customs regime does not allow you to carry blankets in the trunk. “If anyone tries to enter the country with new tires, for example in the trunk of their vehicle, he will be kidnapped,” the authorities warned.
Source: Clarin
