Local Tyre Companies Face Financial Crunch, Slowed Growth
Due to the recent financial turmoil in Infrastructure Leasing & Financial Services (IL&FS) and an anticipated slowdown in the infrastructure sector because of the upcoming general elections, the domestic tyre industry is hit with some financial problems along with timid growth in sales in the last quarter.
In India, the Medium and Heavy Commercial Vehicle (MHCV) segment accounts for the bulk of revenue for local tyre makers. During the period of April – November, the sale of MHCV tyres had increased by around 55 percent, but during the Diwali season sales plummeted. Furthermore, a weak trend this month has dampened any hopes of a recovery for high growth that was seen in the first half, industry executives explain.
Rajiv Budhraja, Director General of Automotive Tyre Manufacturers’ Association (ATMA) has said that MHCV tyres mostly depend on Non-Banking Finance Company (NBFC) finance and the ongoing liquidity crunch has limited the financing options for the heavy vehicle owners.
Growth during November was lessened and could be single digit during the month of December 2018. During the period of April to November, tyre sales in the passenger car segment were slowed down due to fewer launches, while the sale of two-wheeler tyres was impacted due to an increase in insurance cost. Sales in both segments registered single-digit growth, as per Rajiv Budhraja.