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Amid demonetisation, the sales of Chinese tyres in India has taken a heavy toll. The sales that were steadily going on at 40% growth have now slowed by a significant 17% since November, 2016.
According to industry specialists, the reason for the slowdown is the fact that the business was generally conducted in cash and the lack of cash has resulted in the decrease of Chinese tyres sales in the Indian market for the last two months. This has also meant that Indian tyre manufacturers (who have had their issues with the sale of Chinese tyres in the market) can now breathe a sigh of relief, at least for the 1st quarter of 2017.
According to Rajiv Budhraja, Director General, Automotive Tyre Manufacturers’ Association (ATMA), Chinese tyres are largely traded in cash, as they don’t do any billing to avoid duties and taxes. ATMA represents eleven large companies in India, which collectively account for over 90 percent of the country’s tyre production. He also said, that because of demonetisation the exchange rates were not stable and this will impact the importers and dealers too.
Gaurav Kumar, chief financial officer, Apollo Tyres, said that the demonetisation announcement would have some impact on tyre sales, particularly in rural markets as they typically happen in cash. For several other industries, this would have a short-term impact.
While Apollo Tyres, CFO, Gaurav Kumar believed that the demonetisation affected the rural markets particularly as there the transaction mostly takes place in cash.
Indian tyre manufacturers will get some respite for few months as the competition with the “cheap Chinese tyres” will be lessened. But, they are not yet happy their appeal for “anti-dumping duty” against Chinese tyres is yet not heard by the government. According to Budhraja, the government is yet to act on the industry’s petition, and no action has been taken so far.
China is dumping its tyres, which are priced 40-50 percent lower than Indian ones, thereby affecting the domestic industry. Over the past two years, Indian tyre prices have come down 10 and 15 percent and are still climbing down. Despite that, Chinese ones are about 30 percent cheaper.
