Tyre Industry Avoids Slowdown Depending on Replacements - TyreCafe

by Editor News


Tyre after-market growth, replacement of worn-out tyres and exports has helped the Tyre Industry to buck the slowdown in the automotive industry, which is the worst demand slump in 20 years. The tyre segment posted small single-digit growth in Q1 after closing FY18-19 with an 11% increase in revenues.

Automotive Tyre Manufacturers’ Association (ATMA) says that the after-market accounts for 50 per cent of the motorcycle tyre segment, 46 per cent of cars, 53 per cent of light commercial vehicles and 67 per cent of truck & bus segment. Overall, it makes up more than 60 per cent of the total tyre sales. Despite a sharp slowdown in OEMs, this replacement demand has allowed the tyre companies to overcome the slowdown.

“This segment has done much better than OEM-led demand. This is true of FY19 and in the April-June quarter too, when the after-market demand boosted sales, allowing the industry to post single-digit growth. This, despite the fact that Q1 of previous fiscal saw healthy demand from vehicle makers. July has also seen good after-market demand. After-market and exports have helped the industry during the slowdown,” said JK Tyre marketing director Vikram Malhotra.

“The after-market is growing at 4-6% and it has been pretty steady. The impact of the slowdown on us softened due to the replacement side remaining robust,” agreed Goodyear India VP (consumer business) PK Walia. Not surprisingly, tyre production has actually gone up by 8% in fiscal 2018-19, ATMA data showed. Tyre companies are matching their production to demand from vehicle makers.

“We do have to curtail production to allow for reduced OEM schedules, we are not laying off temporary workers due to the after-market demand,” said Walia.

Currently, tyre companies are more concerned about raw material sourcing. With the Kerala floods and the rupee depreciation, raw material costs will start to pinch soon.

“Production of Indian natural rubber was impacted after last year’s flood in Kerala and since then we have lost a lot of plantations. There is already a shortfall in local natural rubber sourcing,” said Malhotra.

















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