Tyre firms raise prices for third straight quarter to combat rising costs

Both CEAT and JK Tyre maintain that strong demand in the replacement tyre market is helping to cushion the impact of price hikes

India’s leading tyre manufacturers are likely to hike prices for a third consecutive quarter, aiming to offset the persistent rise in the cost of raw materials, particularly natural rubber.

 

With inflationary pressures driving up input costs, CEAT and JK Tyre have seen their profit margins shrink despite steady revenue growth, leading them to pass some of the cost burden onto consumers.

 

CEAT recently raised prices by 3-4 per cent in its passenger and commercial tyre segments and has plans for further hikes in the current quarter. In its latest earnings report, the company highlighted a record second quarter (Q2) revenue of Rs 3,300 crore, marking an 8.2 per cent increase year-on-year. However, its operating margin declined from 12.47 per cent in the first quarter of the financial year 2025 (Q1FY25) to 11.71 per cent in Q2FY25 due to rising input costs.

   

“To manage these cost pressures, we’ve implemented price increases across segments and expect to adjust prices further in the coming quarter,” CEAT CFO Kumar Subbiah said.

 

The company’s OEM division also saw a 2.5 per cent price hike, though its impact will fully reflect in the next quarter. 

 

JK Tyre, also facing cost pressures, reported an “under-recovery” of around 3-4 per cent over the last two quarters. The company has taken selective price increases of 1-2 per cent in October and November and is considering further adjustments in Q3.

 

Anshuman Singhania, MD of JK Tyre, shared that while the company has made gains in cost recovery, it remains cautious of market dynamics. “We’re hopeful that recent corrections in rubber prices may ease some of the pressure, but we are prepared to take judicious price increases as necessary,” he added.

 

JK Tyre’s operating margins have also been affected, with figures slipping from 12.81 per cent in Q1FY25 to 10.69 per cent in Q2FY25.

 

Both CEAT and JK Tyre maintain that demand in the replacement tyre market remains strong, helping cushion the impact of hike in prices. “We don’t foresee a drastic impact on demand, particularly in the replacement market, where inherent demand remains robust,” said Singhania.

 

However, industry experts warn that the persistent volatility in natural rubber prices presents an ongoing challenge for the sector.

 

“Natural rubber prices have fluctuated dramatically, with a 13 per cent decrease followed by a 55 per cent increase,” said Shashi Singh, president of the All India Rubber Industries Association.

 

“Manufacturers couldn’t pass these costs on quickly enough, squeezing margins and creating supply chain disruptions. Compounding this is India’s current rubber shortage, which is only met through imports, subject to high tariffs,” he said.

 

Singh added that with a shortfall of approximately 550,000 tonnes, India’s tyre industry remains heavily reliant on imported rubber, and these duties are a significant burden on production costs.