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Growth Factors of Tyre Industry In India

1) Future CAPEX by various companies –

Source – Nirmal Bang, Page no – 9

2)In June’20, the government imposed curbs on imports of certain new pneumatic tyres used in motor cars, buses, lorries and motorcycles to promote domestic manufacturing. Thus, Import restrictions to act as a tailwind for domestic tyre manufacturers and the threat of cheaper imports will remain low in the medium term.

Source – Nirmal Bang, Page no – 14

  • DGFT notification of moving tyre import to restriction list to benefit domestic players (Thailand contribute over 60% on TBR imports in India)

Source – ICICI Direct, Page no – 1 

3)Strong recovery in automobile demand to kick start tyre demand cycle – Tyre demand is highly correlated with automobile cycle and specifically commercial vehicle (CV) cycle. With economic activities firing all cylinders, tyre replacement demand will witness strong growth in the initial phase, post that OEM growth will catch up.

4)Strong replacement demand will ensure pass through of rising input prices by some extent

Source – Edelweiss on Tyre Industry, Page no – 4

5)OEM demand to pick up with revival in automobile sales

Source – Edelweiss on Tyre Industry, Page no – 8

6)Replacement demand to recover strongly as economy revives –

Source – Edelweiss on Tyre Industry, Page no – 9

7)Advantages of the upcoming tyre cycle to result in significant deleveraging –

Source – Edelweiss on Tyre Industry, Page no – 11

8)Expected scrappage policy in TBR is going to benefit tyre industry and India has very low car penetration compare to others nations which will lead demand in future terms.

9)In EVs, fuel efficiency matters the most that’s why tyre manufacturers are emphasis on fuel efficiency i.e. lower rolling resistance of the tyres.

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