Tyre Industry To Grow 8-10% In Fy2018 Driven By Improving Demand, Rising Exports And Low Imports
MOTORINDIA|March 2018

The Indian tyre industry is expected to post a higher volume growth of 8-10% for FY2018. The growth, says an ICRA research note, will be supported by robust growth pick-up across all industry sub-segments. Automobile production in FY2018 is expected to rise strongly by 14% plus, up from 5.2% in FY2017 and 3.2% in FY2016. Thus a strong traction in OEM volumes during April 2017-January 2018, coupled with the traction in replacement markets post the Goods and Service Tax (GST) upheaval, the volume growth estimates for tyres has been scaled up from an earlier 7-8% to 8-10%.

Tyre Industry To Grow 8-10% In Fy2018 Driven By Improving Demand, Rising Exports And Low Imports

Says Mr. Subrata Ray, Sr. Group Vice President, Corporate Sector ratings, ICRA: “With stronger than expected volume uptick in M&HCV tyres (OEM and replacement segments), tyre tonnage demand is estimated to grow by ~8% (up from 7%). In unit terms, truck and bus (T&B) replacement demand is expected to grow by 4-5% during FY2018, up from the 3% de-growth in FY2017, supported by pick-up in infrastructure activity around the country.

ICRA’s five-year volume estimations indicate that FY2019-20 would continue to be strong years for the industry. While radialisation in T&B would promote higher retreading and therefore could lead to slower demand for new tyres, benefits from the visible trend towards higher tonnage multi-axle vehicles with an increasing number of tyres will support T&B volumes.”

On the exports front, the US, Germany and the UAE continue to remain the key destinations while South American markets have shown a strong recovery. Exports (in volumes) grew by 12% during 8MFY2018, riding on the healthy demand across product segments, mainly premium tyres. Export volumes are estimated to grow by 10-12% for FY2018 and ~8-9% during FY2019-22 with favourable demand outlook and rising competitiveness of Indian tyre makers, both in terms of quality and pricing.

However, low-cost Chinese tyres in overseas markets, especially post the removal of ADD by the US on Chinese tyres in February 2017, remains a key challenge.

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