Demonetisation: Tyre sales unaffected

The impact of the recent demonetisation of Rs500 and Rs1000 notes in India is less on tyre business than in the aftermarket as the trade between auto companies and tyre makers take place through banking and digital cashless transactions

- Sharad Matade

The demonetisation of Rs500 and Rs1000 notes announced on November 8 shook the Indian economy at its core. Though the move had longterm justification citing the need of curb on black money, many businesses have been suffering as the liquidity was sucked from the market. However, there has been no major impact on tyre business, according to tyre dealers.

Whatever, the impact in tyre business is in aftermarket as the trade between auto companies and tyre makers take place through banking and digital cashless transactions.

“The almost 100% purchase of all categories of tyres from top tyre manufacturers, who have 90% market share, make sales only through cheques/ e- banking system over the years,” says S P Singh, Convenor, All India Tyre Dealers' Federation ( AITDF). However, retail trades take various modes for money transactions, depending on the type of tyres, according to dealers.

“Our business has not been severely impacted due to demonetisation of Rs500 and Rs1000 but people are priorities their spending due to liquidity crunch and tyres purchase is not their first priority now,” a senior executive of a Nagpur-based tyre multi brand dealership, told Tyre Asia. The company has around 10 franchisees in the city. The Nagpur-based tyre dealer sells all major Indian and international brands in segments.

But the demonetisation has taken a toll on small tyre dealers in the interior places. According to Sachin Kachkure, proprietor, Adhira Tyres, located in Shendra MIDC near Aurangabad, cash transaction business is being hurt. “Since I am a sub dealer, I get different brand tyres from different tyre dealers. My both trades, with dealers and customers, happen mostly in cash. But now the business is getting affected.” Kachkure runs his business on one week credit basis and makes weekly payments of Rs35,000 to Rs50,000 to his dealers.