Supported by a vibrant domestic automotive industry, the Indian tire industry has been among the fastest-growing on a global scale during the past decade. With a total of 66 production plants and 41 tire producers (in all the sub-segments), the Indian tire industry registered a turnover of $8.5 billion in the financial year 2020-21. Exports of tires from the country stood at $1.9 billion during the same period.
Amidst COVID-19 and a sharp contraction in vehicle sales, tire demand has recovered sharply in FY22. According to provisional figures, the Indian tire industry has registered a growth of nearly 8% in terms of production volume.
Balkrishna Industries (BKT), MRF, Apollo Tyres, CEAT, JK Tyre & Industries, Goodyear India, TVS Shrichakra, Pix Transmissions and Indag Rubber are major tire-producing companies in India.
Replacement volumes are at record-high levels with improving economic activities while OE (original equipment) sales are partly affected by the sluggish demand for two-wheelers and supply constraints impacting passenger vehicle production.
Replacement demand dominates the Indian tire market. Replacement tire sales account for about 70% of total tire sales. Original equipment manufacturers (OEM) account for the remaining 30%. The prime reason for the high replacement demand in the country is the low ratio of new vehicle sales to existing registered vehicles in the country. Currently, the ratio is a meager 10.17%. (New vehicle sales were 22.9 million in 2021 compared to registered vehicles at 233 million).
Jump in Exports
Official numbers for exports from India have not yet been released by the Automotive Tire Manufacturers Association (ATMA) of India, but according to provisional figures, Indian tire producers registered a huge jump in exports during FY 2021-22.
In INR (Indian rupee) terms, the industry registered total exports of INR 211.78 billion ($2.68 billion) worth of tires in 2021-22. At present, tires manufactured in India are being exported to over 170 countries. The US grabs the largest chunk of India’s tire exports with 19% in 2021-22, followed by Germany (7%), Brazil (6%), UK (4%) and France (4%).
“China used to be really big in tire exports to the US, Europe and other global markets. However, strict anti-dumping duties on Chinese imports in these countries have enabled Indian tire producers to gain a huge market share in these countries. Exports will remain a key growth pillar for our company in the short and medium term,” said Anant Goenka, managing director for CEAT.
Indian Automotive Production
The Indian automotive industry registered modest growth in the 2021-2022 financial year, which ended in March. According to data from the Society of Indian Automobiles Manufacturers (SIAM), India produced a total 22.9 million vehicles including passenger vehicles, commercial vehicles, three-wheelers, two-wheelers and quadricycles from April 2021 to March 2022. This is compared to 22.7 million units from April 2020 to March 2021.
Total passenger vehicle sales increased from 2.7 million to over 3 million units. Sales of passenger cars decreased from around 1.5 million to 1.467 million units, while sales of utility vehicles increased from 1.061 million to 1.489 million units from April 2021 to March 2022 compared to the previous year. During the same period, 113,265 units of vans were sold compared to 108,841 units.
Overall commercial vehicle sales increased from 568,559 to 716,566 units. Sales of medium and heavy commercial vehicles increased from 160,688 to 240,577 units and light commercial vehicles increased from 407,871 to 475,989 units.
Sales of three-wheelers increased from 219,446 to 260,995 units, and two-wheeler sales decreased from 15.120 million units to 13.47 million units.
The Indian Ministry of Road Transport and Highways proposed a “star rating” or labeling norms for tires to better inform consumers on tires that provide better fuel-savings and comfortable driving. The labeling was proposed last year as part of an initiative of the Bureau of Energy Efficiency (BEE) to provide information about the energy- and cost-saving potential of products. Currently,
it is voluntary to be label tires in India. The proposal is in the initial stage, but it is expected that the Indian government will take action on it soon.