by Editor News
The dip in the sales of the Indian automobile sector is affecting the Domestic Tyre Industry as well.
The country's overall vehicle production has dipped by 13.32 per cent. Due to this, the total tyre production is also witnessing a decline of 5.3 per cent in the first half of FY20.
The production of passenger car tyre dipped to 204.12 lakh units, down by 9 per cent and the production of motorcycle tyre dropped to 346.22 lakh unit, down by 4 per cent. The production of bus and truck tyre also dropped to 95.29 lakh unit, down by 9 per cent. The replacement sector was also affected, which is one of the major revenue generators for the tyre industry besides OEMs.
Kumar Subbiah, Chief Financial Officer at Ceat Tyres said, “When the OEM market turns weak, the impact comes in the form of lower utilisation of capacity and the fixed cost gets distributed over a smaller revenue.” He further added, “Overall, our capacity utilisation currently stands at about 75 per cent as against 85 per cent obtained in the last financial year, but at that time we didn't have the new truck and bus radial tyre capacity.”
The only good thing happening in the domestic tyre industry is the exports that reported a 13 per cent hike in April-September 2019. To overcome the impact of slowdown, domestic tyre companies are planning to step up their market where they are already exporting and also in new locations outside the country.
Growth in the exports was seen in the motorcycles and passenger car tyre segment, while the exports of truck & bus tyres were flat. Currently, exports account for over 20 per cent of the total turnover of the domestic tyre industry. North America is the largest importer of Indian manufactured tyres followed by some European and Middle East countries.
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