The Competition Commission of India (CCI) has suggested that there may be an issue of price fixing within the Indian tyre industry.
According to a study carried out at the Jawaharlal Nehru University and commissioned by the CCI, certain companies have enjoyed similar sales realisation with “widely differing profit rates.”
Data released by India’s Automotive Tyre Manufacturers Association (ATMA) adds weight to complaints from Indian tyre manufacturers about the quantities of budget tyres arriving from China. According to the ATMA, since 2002-03 India has jumped from being the 39th largest market for Chinese tyres to being the third, and the organisation predicts it will slip into top place in the near future.
India’s Business Standard newspaper reports that during April-February 2008 Indian imports from China, at 1.2 million units, had almost doubled compared with the same period a year earlier. Chinese tyres hold a 15 per cent of the RS 78 billion (£927 million) replacement tyre market for trucks.
Confirming news first reported in December 2007, on May 2 India’s MRF Ltd initialled a memorandum of understanding with the government of the state of Tamil Nadu for establishing a greenfield facility. This new factory, at Perambulur, will be the tyremaker’s third in the state. The memorandum was signed by company chairman and managing director K.M. Mammen and M.F. Farooqui, Tamil Nadu secretary to government for the Industries Department.
A study into India’s tyre market reveals that MRF leads the field in terms of OE tyre customer satisfaction. The J.D. Power and Associates 2008 India Original Equipment Tire Customer Satisfaction Index (CSI) Study, released April 22, shows that, from a field of five leading manufacturers, MRF ranks highest with an overall CSI score of 836 out of a possible 1,000.
The manufacturers’ products were evaluated by 3,381 new vehicle owners, following 12 to 18 months of ownership, in five key areas: appearance, durability, traction, ride quality and handling. The 2008 survey, the eighth conducted, was also the third consecutive occasion in which MRF has topped the customer satisfaction list. Close behind in second place was Apollo Tyres, who achieved an overall ranking of 816 points.
J.D. Power and Associates reports the study’s findings reveal a strong link between the ownership experience and intent to repurchase. Amongst customers reporting a high level of satisfaction with their tyres, nearly 80 per cent said they “definitely would” repurchase their original brand. The factors for which owners reported the highest levels of satisfaction were tyre appearance and ride quality at highway speeds.
Repurchase intent, however, drops by nearly 40 per cent among customers who are highly dissatisfied with their original tyre brand. For customers who say they “definitely would not” or “probably would not” repurchase their original brand, tyre noise is the most commonly cited reason for their decision.
“Consumers may not have much choice in which tyres come standard with their new vehicle, but they definitely have a choice when it comes time to replace those tyres,” said Mohit Arora, senior director at J.D. Power and Associates, Singapore. “Having a satisfying tyre ownership experience will certainly strengthen a customer’s decision to purchase the same brand that came on their vehicle. Hence, it is vital for manufacturers to increase product quality to achieve high levels of customer satisfaction in order to foster higher loyalty and advocacy levels.”
According to the results, almost 20 per cent of new vehicle owners report problems with their tyres, the most common of these being puncture damage, an issue reported by 65 per cent of these owners. It is thus unsurprising that the second most important consideration for owners when purchasing new tyres, behind brand name, is a tyre’s self-sealing qualities. “While puncture damage is typically beyond the control of manufacturers, and considering that self-sealing tyres have the second strongest impact on vehicle purchase, having this feature on their tyres may prove advantageous for manufacturers,” commented Arora.
The average score amongst the five manufacturers was 818. Individual scores are as follows: MRF 836, Apollo 816, JK Tyre 798, Bridgestone 795, Goodyear 783.
India’s government has asked the national fair trade regulator MRTP Commission – a quasi-judicial tribunal established to investigate monopolistic, restrictive and unfair trade practices – to look into suspected cartel-like behaviour amongst India’s major tyre manufacturers. On April 16 the commission’s investigative division issued notices to five leading tyre makers who, combined, control more than 80 per cent of the Indian market: The five include MRF, who alone controls 24 per cent, Apollo (22 per cent), JK Tyres (17 per cent), Ceat (14 per cent) and Goodyear (6 per cent).
MRF Tyres, one of India’s leading tyre manufacturers, is planning to produce aircraft tyres for planes and helicopters. According to local news reports, MRF has taken the initiative following aircraft manufacturer Boeing’s decision to sign an agreement with Tata Automobile Limited (TAL) Manufacturing Solutions, a wholly-owned subsidiary of Tata Motors to make structural components for the 787 Dreamliner. MRF is also said to be in the process of producing tyres for military helicopters.
Tire Group International (TGI) has bought US-based Brazil and the Caribbean tyre export specialist, Serit Tire Wholesale (STW). According to an official statement announcing the acquisition, TGI purchased all STW’s assets for an undisclosed sum.
“This acquisition gives TGI an instant presence in Brazil, which is a market we have been absent for the last nine years. We are also retaining the services of STW’s president Ernie Rodriguez. Rodriguez will be responsible for the continuing development of this market, as well as developing other key markets we have targeted. Rodriguez has over 15 years experience in International Tire Sales and his expertise will be another asset TGI can count on,” said Tony Gonzalez, Tire Group International’s Chief Executive Officer. Gonzalez also stated that TGI will continue to be aggressive in its growth strategy and will look for other acquisition opportunities that make business sense and fit into TGI’s growth plans.
Tire Group International (TGI) recently opened new sales offices, expanding its Caribbean and South American operations. The first is located in Santo Domingo, Dominican Republic and the other in Barquisimeto, Venezuela. Heading these new sales office will be Esteban Martinez (Venezuela) and Guillermo Quintanilla (Dominican Republic). Mr. Martinez comes to TGI with over 25 years of experience in the tyre industry with particular expertise in the Agricultural, Off the Road, and Industrial segments, and Mr. Quintanilla was formally with Shell Oil Company and has extensive experience in the passenger and light truck segments.
Tyre makers and automobile component manufacturers in India are now venturing into the production of aircraft components. India-based MRF Tyres, Minda NTS and Sundram Fasteners are going ahead with plans to supply components to aircraft manufacturers.
Tire Group International (TGI) has just opened a new office in Qingdao, China. Heading it will be Jing Dong Ling, formerly a quality and mixing engineer with Yellow Sea Tire. Mr. Ling brings over 10 years of experience and knowledge from the quality control side of the tyre building process and will be overseeing all of TGI’s private label production coming out of China (Cosmo, Luna and Industar).
“We are now building three private labels in China. The addition of Mr. Ling will ensure that TGI’s quality standards are being met and that our supply chain is being supervised directly at the source,” said Tony Gonzalez, Tire Group International Chief Executive Officer. “We expect this move will help us better serve our distributors throughout the world with more consistent quality.”
Management at India’s MRF Tyres brought the company’s lockout at its Tiruvottiyur facility to an end on February 4. This move came after an assurance to this effect was given by company chairman K.M. Mammen Mappillai the previous day. It was also decided that MRF management would resolve employee grievances with the relevant government representatives.
The government in the Indian state of Tamil Nadu may assume control of the MRF Ltd tyre manufacturing plant in Tiruvottiyur, near Chennai, if the company does not promptly re-open it. The facility has been closed since last December, following industrial disputes in which MRF accused its employees of “indiscipline and being unable to meet productivity norms.”
“The MRF management should find a solution to the labour problem in its units within a week’s time,” electricity minister Arcot N. Veerasamy told the Tamil Nadu state legislative assembly on January 30. He said that the Tamil Nadu chief minister, M. Karunanidhi, would intervene to find an amicable solution, adding that “if no solution was found even then, the government would take over the unit.”
The Ninth Auto Expo in New Delhi was selected as the venue for the January 10 launch of the world’s cheapest car, India’s Tata Nano. In its most basic form the Nano will retail for Rs 100,000 plus taxes. That’s around £1,300, less than one-third of the cost of the cheapest model sold in the UK. What buyers get for their rupees is a fairly spartan vehicle – the entry level Nano features no radio, air conditioning, power steering or any related luxuries, and comes fitted with a single windscreen wiper and a driver’s side only door mirror. But despite the lack of frills, the car is a genuine four-seater, and its two cylinder 623cc engine is said to deliver 33 hp and 5 litres/100km fuel economy. Furthermore, Tata reports that the Nano exceeds current safety and environmental standards.
A Study by the Indian credit agency Credit Analysis & Research (CARE) Ltd. expects the Indian tyre industry to register a tonnage growth of 9-10 per cent in the next five years to the end of 2012, say reports. Truck and bus and LCV tyre categories are expected to record increases of 8 per cent and 14 per cent respectively during this period.
According to CARE, in 2007 the Indian tyre industry produced 73.6 million units, or 1.1 million tons, earning Rs 190 billion (3.280 billion euros) last year. MRF Ltd. was the market leader (22 per cent market share), followed closely by Apollo Tyres Ltd. (21 per cent), with JK Tyres & Industries Ltd. (18 per cent) and Ceat Ltd. (13 per cent).
Indian tyremaker MRF is reported to be preparing to build its anticipated new facility in the state of Tamil Nadu during the first half of 2008. This news was disclosed by a regional government official, Mr. A Rajah, who added that most of the 140-hectares of land required for the Rs9 billion (£112 million) facility in the district of Perambalur had already been acquired and construction work on a new Rs250 million (£3.1 million) ring road connecting with the plant would begin within six months. MRF has previously stated that much output from this new facility would be earmarked for export markets.
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