Decline In Auto Sector Affects Tyre Production, Exports Step-In As Saving Grace

All the tyre segments see a downfall in the April-December 2019-2020 period. Passenger car and motorcycle tyres observe a hit of 6% and 7% respectively.

Depriving demand in the automobile sector has miserably dented the tyre manufacturing industry in the country. In the past 20 months, auto manufacturing has come down to 13% with 20,736,410 units in April-December period of 2019-2020 financial year (FY) from earlier 23,853,770 units in the same period last fiscal. Important tyre categories dropped to nearly 7% in the initial nine months of 2019-2020. However, to cover up the loss, tyre manufacturers banked upon the aftermarket business and overseas market to keep the wheels moving.

According to Automotive Tyre Manufacturers' Association (ATMA) data around 13.65 crore tyres were manufactured cumulatively during April-Dec 2019 compared to the 14.63 crore tyres in the similar period of the last fiscal.

The Co-Head for Corporate Ratings, ICRA Ltd., K Srikumar, told ETAuto, “In the tyre sector the changes in production and demand largely coincide. A bulk of tyre volumes come from the motorcycle segment, so if this segment faces a demand crisis, it directly hits the overall tyre volumes in the Indian market.” Another vital point he added, “Lack of economic activities led to truck idling which extended the replacement cycle of fleets and thereby took a toll on the tyre replacement demand.”

Owing to the uncertain infrastructure activities, the truck and buses tyres volumes saw a dip of 13% to 1.37 crore tyres in FY 2019-2020 from a high of 1.58 crore tyres manufactured in the same period last fiscal. Motorcycle tyre demand too saw a slack of 7% at 5.11 crore units from the 5.47 crore units, due to passive demand in rural India.

Moreover, a squeeze of 1% was witnessed in the production of scooter tyres with 2.13 crore units compared to 2.15 units last year. A production drop of 6% was recorded in the passenger cars tyre with 3.10 crore units this fiscal period from 3.31 crore units in the same period previously.

The overall export increased by a good 10% to 87.70 lakh units from 79.97 lakh units recorded last year in the same period. Truck and bus tyres were the main drivers for this positive growth followed by passenger vehicles. During the April-December period, truck and bus tyres export amplified to 19.28 lakh units from 17.53 lakh units, while 8% surge with 15.85 lakh units from 14.66 lakh units was seen in the passenger tyres.

The outbreak of coronavirus is seen as an opportunity by Srikumar, “There can be opportunities for Indian tyre makers in geographies like the USA which are largely dominated by Chinese tyres and brands.”

Source:Economic Times