Indian Tyre Industry Poised for 7-8% Growth This Fiscal, Driven by Replacement Demand

The Indian tyre industry is gearing up for a robust performance in the current fiscal year, with projections indicating a growth rate of 7-8%. This positive outlook comes despite subdued demand from original equipment manufacturers (OEMs), as the industry finds its momentum primarily in the replacement market.

Export-Heavy Industry

JK Tyre & Industries' Managing Director, Anshuman Singhania, shed light on the industry's export prowess, revealing that outbound shipments have surpassed the ₹25,000.00 crore mark. This underscores the significant role of exports in the sector's overall performance and highlights India's growing presence in the global tyre market.

Growth Drivers

Several factors are contributing to the industry's growth trajectory:

1. Capacity Expansion: Tyre manufacturers are investing in expanding their production capacities to meet growing demand.
2. Manufacturing Efficiency: Companies are focusing on improving their manufacturing processes to enhance productivity and reduce costs.
3. R&D Capabilities: Enhanced research and development efforts are driving innovation in tyre technology and product quality.

Market Segments and Demand Dynamics

Replacement Market

The replacement segment, which represents the largest portion of the tyre industry, is expected to be the primary growth driver. This demand is supported by:

• Favorable rural sentiments
• Anticipated festive season demand
• Expected effects of potential rate cuts on consumption

OEM Segment

While the OEM segment is currently subdued, industry players are optimistic about a turnaround. Apollo Tyres anticipates improved demand momentum in the second half of the fiscal year, particularly in the infrastructure and mining segments post-monsoon.

Export Challenges

Despite the strong export performance, the industry faces challenges in this segment:

• Geopolitical developments affecting global trade
• Uncertainties surrounding US tariffs

Raw Material Costs and Pricing

Apollo Tyres has indicated that raw material costs are expected to be slightly lower, which could potentially benefit profit margins. However, the industry is also witnessing a trend towards premiumization, which is likely to boost realizations for manufacturers.

Industry Outlook

The tyre industry's projected growth of 7-8% reflects its resilience and adaptability in the face of varied market conditions. While challenges persist, particularly in the export segment and OEM demand, the strong replacement market and strategic focus on efficiency and innovation are expected to drive the industry forward.

As the fiscal year progresses, stakeholders will be closely watching how these various factors play out, particularly the anticipated recovery in infrastructure and mining segments, which could provide an additional boost to the industry's performance.