A change in the way the Chinese government calculates the value-added tax on finished goods will boost prices by as much as 8 percent on Chinese-made tires and wheels in North America, according to importers.
China´s government in early June said it decided to reduce the size of VAT refunds it provides producers of goods for export.
For tires, the refund is being cut to 5 percent from 13 percent and on wheels to 9 percent from 17 percent, according to importer Greenball Corp. in a letter to customers.
As a result, Greenball-distributor of the Towmaster, Homaster and Secura brands-raised prices 8 percent on July 1 on direct container shipments and by the same percentage for warehouse shipments starting July 16, the company wrote in a June 19 letter to customers.
Less than a week later, China Manufacturers Alliance L.L.C.-importer and marketer of the Double Coin, Bluestar, Warrior and other brands-announced a price hike starting July 1.
In a letter to customers, CMA Vice President Aaron Murphy said the change "will affect factories in a different manner as each factory has its own ratio of domestic produced raw materials vs. imported materials."
Zisser Tire Wholesale Inc., importer and distributor of the Wanli high-performance line, will be adjusting prices upward, said Don Mathis, sales manager for the St. Louis-based firm. Zisser also is launching a second import line, Diamondback, made by Triangle Group Co. Ltd., in August.
The price increase will happen within the next 30 to 45 days, Mathis said. "We´re waiting to hear from our suppliers how much they´re going to raise prices."
The situation is similar at Sutong China Tire Resource Co. Inc. in Houston-distributor of the Hi-Run, Long March, Super Cargo and Super Strong brands. Manager Nancy Zhao said the company still is analyzing the data to determine the size of the price hike.
Cooper Tire & Rubber Co., which is importing millions of tires from China via its joint ventures there, said it is aware of the situation. As of June 28 the firm had made no decision regarding price adjustments.
Several companies said there probably will be a second wave of price increases several months down the road when non-Chinese makers that source raw materials in China have to account for the changes they will start experiencing in July and August.