Tyres will be expensive in Latvia this winter

In Latvia, the use of winter tyres is compulsory from 1 December; however, as the colder weather approaches, the switch to winter tyres is already gradually getting underway. Motorists planning to buy a new set of tyres for their car this winter should bear in mind that they will have to dig a little deeper into their pockets – anti-dumping duties imposed by the European Union on tyres manufactured in China came into force this summer.

A tariff of 24.4 per cent has been imposed on companies that cooperated with the European Commission’s investigators, whilst those that did not cooperate face a tariff of 45.3 per cent.

The Ministry of Foreign Affairs (MFA) explained that the tariffs were imposed because Chinese companies had, for a long time, artificially kept prices lower in Europe, thereby harming the local European tyre manufacturing sector.

Tyre retailers in Latvia have adopted various approaches to tyre imports, but as end consumers we must in any case expect price rises, said Gundars Liekne, a representative of the car parts retailer ‘Inter Cars’.

“We tried to import these Chinese tyres – or budget-class tyres – for this winter season before the tax came into force. As Chinese manufacturers had already anticipated that such a tax would be introduced, they began relocating their factories to other manufacturing countries. So, to avoid this 45 per cent tax, by relocating production facilities and optimising production, the average price increase is, I would say, plus or minus 15 to 20 per cent,” noted Liekne.

At present, the price rise will primarily affect budget-class tyres, but this is the largest segment in the Latvian market – budget-class tyres account for approximately two-thirds of the entire new tyre market in Latvia, and it is precisely in this segment that buyers are more sensitive to price fluctuations. “It is predicted that, with a certain delay, the price increase will also affect premium-class tyres,” said Gints Ulnicāns, Managing Director of “Riepu garāža”.

“Usually, there is what is known as an avalanche or butterfly effect – if the price in the budget segment rises, so do the prices for the others. At the moment, we haven’t yet observed any clear signs that premium tyres have become more expensive, but we must take into account that raw materials are becoming more expensive, as is labour. Similarly, car manufacturing in Europe is, as they say, stagnating somewhat and slowing down, and this is having a significant impact on premium tyre manufacturers as well,” explained Ulnicāns.

Price rises are just one of the problems that will affect motorists at tyre shops this winter – as manufacturers are relocating their factories from China to other countries, the new production facilities are not always operating at full capacity. New supply chains also need to be established, both for the supply of raw materials and for the export of finished products. All this means that there is a possibility that tyres of certain sizes will not be available on shop shelves at all this winter, said Liekne.

“Availability of certain sizes and in certain segments may be insufficient. This applies particularly to our latitudes – that is, Latvia, Estonia and Scandinavia – where these ‘Nordic’-type tyres, or, shall we say, soft and studded tyres, are essentially required. Of course, any manufacturer primarily tries to cater for the vast majority, which are European-type tyres. Consequently, there may be insufficient availability in certain sizes within some of these segments,” Liekne noted.

The issue of supplies from Asia is not made any easier by the military conflicts in the Middle East – due to the hostilities, cargo ships are opting for alternative routes, which prolong delivery times, as well as increasing transport costs, which in turn are passed on to buyers in the form of higher prices.

“They’re about 15 days longer than before. But we’ve already factored that in. However, there’s another issue, which is transport costs, and these are very, as they say, volatile. There are times when you can bring a container for two and a half thousand dollars, and other times when it costs 9,000 dollars. Consequently, the difference amounts to several thousand. A medium-sized container holds around 900 to 1,000 tyres, so the difference is 5,000–7,000 dollars. So it’s simple maths – that alone can add some 7–8 dollars to the cost price of a particular tyre, which is sometimes even more than the 20 per cent anti-dumping duty on tyres manufactured in China. As all these factors come together, and the prices of budget-class tyres fluctuate quite a lot from year to year – due to both the dollar exchange rate and transport costs,” said Ulnicāns.

However, buying a new set of tyres is an investment for several years, so no significant changes in consumer behaviour have been observed so far. Taking into account the very high fuel prices as well, the running costs of cars have risen significantly this year.

Road safety expert Oskars Irbītis does not believe that the rise in tyre prices is so massive that people would choose en masse to drive on worn-out tyres for the sake of saving money, adding that the statistics are not all that positive anyway.

“At the moment, it is very, very difficult to predict whether people will actually drive those tyres right down to the tread or whether they will stick to their previous habits. If we look at the results of roadside checks, even before these price rises, those tyres were often worn down to the very last millimetre. I think it’s not so much a question of saving money as perhaps a risk of nihilism, an attitude towards safety as such, because, for example, wearing a seatbelt doesn’t cost anything, but when you look at how many people, for instance, don’t wear seatbelts, they are effectively ignoring these safety issues. Well, that’s a major problem on our roads,” noted Irbītis.

Experts pointed out that tyres are by no means the only spare parts segment where motorists must expect price rises and availability issues – risks may also arise regarding the availability of engine oil and other vehicle lubricants in the coming months.