The car tyre market is expected to grow at 12-13 per cent this year on the back of booming car sales in the country, according to VAJ Manikantan, general manager (sales), JK Tyre.
“We would focus on expanding capacity particularly for car tyres and radials. All car makers are expanding production capacities, and these original equipment manufacturers (OEMs) account for up to 60 per cent of the tyre market,” he told reporters here on Monday after handing over new cars to 33 of the company's channel partners in recognition of their sales performance.
The company's upcoming Rs 1,500-crore greenfield plant in Chennai was driven by this situation, and would start production by October next year. Together with the expanded capacity at its existing plant in Rajasthan and an ongoing greenfield facility in Mysore, the company's total capacity would touch 700,000 tyres in the next 24-30 months, he said.
The size of the car tyre market in India was about Rs 16,000-crore or 900,000 tyres, according to Manikantan, and JK Tyre has a 30-35 per cent market share in it. He said the company exports 15 per cent of its production to 77 countries.
On the competition from multinational companies, Manikantan said it would not be an issue “if we improve our technologies in line with global trends.” Tubeless tyres account for 30-35 per cent of the total sales in the country, and its market penetration was held back by the taxi segment's preference for tubed tyres, he said.
The major issue facing the tyre industry was the severe pressure on margins caused by the nearly 120 per cent increase in rubber prices this year, coupled with the limited space to raise prices.
“If raw material prices remain at the same levels, at least 2-3 per cent hike is possible in the next three to four months,” he said, adding the market was not in a position to absorb price hikes at the moment because of the relative slump in freight movement in the last two months.