Radialisation: India Poised for Explosive Growth
(India/Rubber Asia) In India, over 85 per cent of passenger car tyres are radials. This is expected to go up to 95 per cent in two to three years. In the light commercial sector the level has reached only 10 per cent. Truck and bus radialisation is worse still with only two per cent. A start has been made when it comes to radial tractor tyre production.
However, there are enough signals to say that the country is poised for radialisation in truck/bus/LCV segments like never before. Expert estimates vary but all agree that it won’t be long before we see exponential growth in radialisation in these three areas.
How do bias and radial tyres differ in this respect? And what are the reasons for the slow progress of radialisation in the CV segment?
Bias/cross-ply versus radial: In the case of bias/cross-ply tyres — which have been produced in India for decades — rayon tyre cords were used in the beginning. Later, nylon cords began to be used as the reinforcing medium.
The reinforcing mediums used in radial tyres are polyester, nylon, fibreglass and steel. Radial tyres have their cords running radially from bead at 90 degrees angle to the rim, hence the name. Among others, the positive attributes of radial tyres include lower fuel consumption, riding comfort, higher speed and improved safety.
Road blocks
Certain category-specific features of radialisation are as follows:
Truck & bus: Though production of radial tyres for truck/bus/LCV started in 1977, the current level of radialisation is very low, even when compared with the levels achieved in other developing countries, including Pakistan.
Original Equipment (OE) manufacturers — the truck/bus/LCV makers — in India have not started taking radials primarily because of the higher cost factor. Some inroads have been made in the case of bus tyres through government-run transport utility and fleet operators.
Besides, the somewhat controlled load conditions in buses give a comparative edge to radialisation initiatives. Any breakthrough in improving demand is possible only if the process of OE fitment is accelerated.
Legal load factors and “fair to good” road conditions will determine the pace of radialisation in the replacement market.
Prospects/trends: However, there are other factors hindering radialisation. Initial higher price is one. Improper usage resulting in damages, and hence, claims, is another. Reluctance of drivers to fit radials because of stiffness in the driving wheel is also a factor.
Technologically advanced trucks and trailers by a renowned Swedish automobile manufacturer are already being manufactured in India (though in small numbers). The other positive factor in favour of accelerated radialisation is the imminent improvement in road infrastructure. Besides, the greater acceptance of the hub & spoke concept of transportation (with multi-axle trucks plying on inter-city/long-distance routes and LCVs handling intra-city/short-distance cargo) also works in favour of faster radialisation.
A significant part of future investments by domestic tyre majors will be in radial truck tyre facilities. Several large companies have already started greenfield investments in truck radial plants or have plans to set up capacities.
Whichever way you look at it, increased levels of radialisation in the country’s truck segment are “on the horizon” as happened in several other developing countries (Brazil, Pakistan, etc.) with similar road and vehicular traffic conditions. Once the takeoff starts, the growth in demand could be really exponential.
OE segment, the key: LCV radialisation will follow the trends in the truck segment although the extent (in terms of percentage) would be marginally higher, as projected. This is likely to be due to improved vehicle technology; type of freight and load factor; comparatively short distance of haulage; possibility of plying on improved intra-city roads, etc.
As in the case of trucks, OE fitment will be the key-determining factor in setting the pace of radialisaton in LCV segment, too. In the passenger car segment, high growth in production of cars in the past 5 years has been instrumental in giving the much-needed spur to radialisation. The new-generation cars compete on the platform of power, safety and strength, and on all these counts radial tyres have a definite edge over cross-ply tyres.
It is not surprising, therefore, that, primarily driven by high OE fitment, the level of radialisation in the passenger car segment has gone up from an estimated 28 per cent in 1995-96 to 85 per cent in 2004-05 and is expected to touch almost 95 to 97 per cent in the next 2 to 3 years.
Future of radialisation
The future of radialisation in the Indian tyre industry is widely acknowledged to be promising, especially in the truck tyre segment. In any case, such progress in radialisation will be governed by the following factors:
· Cost-benefit ratio
· Road development
· Overload control
· User education
· Retreading infrastructure
Supply scene
The total number of radial tyres supplied in India in 2004-05 was 60.10 million units. Of this, the replacement segment accounted for nearly 50 per cent while the OE segment had a 41 per cent share. Exports came to 8 per cent, according to ATMA estimates.
But in the truck/bus tyre segment, OEs accounted for only 17 per cent of the total radialised truck tyre supply while the replacement market had 55 per cent. Exports accounted for 23 per cent and transport utilities four per cent. But you need to remember that radialisation of the total truck segment is still only about two per cent.
In the passenger car segment, the OEs account for as much as 40 per cent of the radial supply and the replacement market 51 per cent. Exports have a 9 per cent share.
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