Despite the weak volumes during the rollout of GST in the first quarter and second quarter, the Indian tyre industry has found itself at a sweet spot with the expected growth of 7-8% i.e., (1,805 lakh tyres) during FY 2018.
As per ICRA Limited (ICRA), an independent and professional investment information and credit rating agency of India, talking in tonnage terms, the tyre demand is estimated to increase by 7% during the FY2018, which is supported by growth in trucks and buses replacement demand after having two years of slumped growth. For FY2019, the tonnage and unit growth are pegged at 6.5-7% and 8-8.5% respectively.
Subrata Ray, Sr. Vice President, Corporate Sector Ratings, ICRA, said that the tyre volumes across the commercial segments de-grew during the H1 FY 2018 due to GST implementation, which had its impact on Q1 FY2018 demand due to de-stocking by dealers. But barring this short-term slump, the domestic market has remained favourable and is likely to recover during the second half of FY2018.
As far as tyre exports are concerned, they have remained strong for the second straight year, thanks to the revival in demand across various product segments. Due to the 27.5% growth in FY2017, the volume of exports has increased by 14.1% during the first half of FY2018.
Tyre exports are estimated to grow by 10% during FY2018 and by 8-10% over the next three years lead by the increasing acceptance of Indian tyres overseas and stable demand. But rising incoming of low-cost Chinese tyres in the overseas markets will remain a key challenge for the Indian tyre makers.