Chinese imports, economic slowdown trim trucks & bus tyre production by 20%

Industry experts say the price of Chinese tyres is Rs 5,000-6,000 lower than local OEMs

A slowdown in economic growth and the dumping of Chinese tyres have badly hit the Indian tyre manufacturers who have invested about Rs 35,000 crore in the past five years or so. The truck and bus radial (TBR) segment, in particular, is feeling the pressure, with the production of TBRs declining from 5.5 lakh units in June to 4.5 lakh in December 2016, according to the Automotive Tyre Manufacturers’ Association (ATMA), the representative body of 11 large tyre companies accounting for over 90 per cent of tyre production in India.

TBR has been the fastest growing segment of the tyre industry, accounting for two-thirds of the Rs 35,000-crore investments made in recent years. TBRs’ average per month import rose to 136,177 units in 2016-17 compared to 1,07,181 units in 2015-16. Also, TBRs account for 55 per cent of tyre industry’s revenues in India, according to the association. But, with new capacities going on stream and production declining, the industry is staring at grim prospects of gross underutilisation of TBR capacities.

Tyre major MRF’s Chairman K M Mammen said, “It’s a tough environment for tyre manufacturing in India. The industry has been squeezed from both input and output sides”. 

Mammen, who is also the chairman of ATMA, said the indiscriminate surge in Chinese radials and slowdown in commercial vehicle sectors have been hurting the tyre production in India. Over the last one year, the industry has hardly grown in size and the top line is under pressure, he said. The situation coupled with increasing costs of all inputs is severely affecting the viability of tyre companies. “In view of excess capacities and continued surge in Chinese tyre imports, the industry is not in a position to pass on the increased cost of production, impacting competitiveness of the industry,” added Mammen.

The association has written a letter to the ministry of commerce, saying the contraction in manufacturing of tyres, often termed as wheels of the economy, is a matter of grave concern and policy enablers need to be put in place for the growth of the industry and to redeem the investments made.

This contraction is also a dampener for the rubber growers, as tyre industry consumes more than 65 per cent of the domestic natural rubber production, the communication has stated.

According to industry representatives, the prices of Chinese tyres are Rs 5,000-6000 lower than the local original equipment manufacturers.