According to Automotive Tyre Manufacturers’ Association (ATMA) director general Rajiv Budhraja, in an interview with Reuters, these factors mean domestic manufacturers will remain under pressure in the short term.
The ATMA previously forecasted growth in 2008 to increase by 2% to 3%, to about 12% or 13%. According to Budhraja, however, “a steady, subdued growth” is now expected in place of this. “Fuel price is going to be a major dampener," he added, referring to a recent state-ordained 10% increase in the cost of fuel, the greatest price rise in more than a decade. He added that a drop in mileage covered by private vehicles would lead to a fall in demand for tyres in both the OE and replacement markets.
Data gathered by the ATMA shows India’s tyre production to have reached 81.1 million units during the year ending March 2008. Two-wheeler tyres account for almost half the market in terms of units produced. In terms of tonnage, truck and bus tyres dominate the market.
But rubber – which makes up over half the cost of a tyre produced in India – has of course been steadily rising in price, with the benchmark rubber contract on the Tokyo Commodity Exchange so far up 16.6% in this latest quarter. Such ballooning costs have prompted ATMA member manufactures to increase or consider increasing their prices, thereby making imported Chinese tyres more attractive for customers.
"On an average their tyres are 25% to 30% cheaper,” said Budhraja of the Chinese product. “Our concern is that significant part of our growth is being taken away by dumped and cheaper imports from overseas."
For the year ending March 2008, India’s tyre exports rose 11.8% year on year to 6.09 million units. The import of truck and bus tyres rose 47.2% to 1.2 million tyres during the same period. “The record breaking rise in dumped tyres will adversely impact future expansion plans of the industry, which has lined up an estimated 100 billion rupees for projects,” Budhraja concluded. (Tyres & Accessories/Staffordshire, U.K.)
