Slowing Vehicle Sales & Tyre Imports Squeezing Indian Tyremakers

The share market value of several Indian tyre manufacturers has fallen in the wake of news that domestic vehicle makers such as Tata Motors and Ashok Leyland are reducing their OE tyre orders. Vehicle sales in India have declined in the last year, with a 15-20 per cent fall in growth recorded. Shares in MRF Ltd fell 3.22 per cent on June 6, while stock in Ceat Tyres and JK Tyres fell by 5.07 and 3.68 per cent respectively. Apollo Tyres closed 0.81 per cent lower. “There will definitely be a little downturn in tyre stocks as auto stocks are all down,” said Ms Vaishali Jajoo, an automotive analyst with brokerage firm Angel Broking.

Ashok Leyland’s CEO Vinod Dasari, speaking with CNBC, denied his company had significantly reduced the number of OE tyres the company was purchasing. “I don’t think it [a reduction] has happened per se the overall number of vehicles,” he said. “But if there is a change in mix then there will be a slight dip in the tyre demand. For instance, if we cut multi-axle vehicles and increase passengers there will be a slight dip in the tyre demand since MAVs have an extra axle. I don’t sense any drastic cut as a result of that.” However any reduction in orders for OE tyres, even if minor, has been further compounded by Chinese tyre imports, which, in spite of government levies, are often still cheaper than their locally made counterparts. A number of vehicle makers, including Ashok Leyland, have opted to fit Chinese sourced tyres to their vehicles.