Market Survey

8 FACTS FOR YOU

JULY 2013
BY: DR S. MAHESKUMAR
THE INDIAN TYRE INDUSTRY:
DRIVEN BY TECHNOLOGY
The Indian tyre industry has been quick in adopting the latest technology trends through
foreign collaborations and tailoring these to Indian needs. The manufacturers are also
investing in development of green tyres.
Major technological changes
have taken place in tyre design from
the conventional bias or diagonal ply
of the past to the current steel-belt-
ed radial tyres, tubeless tyres, tyres
with low aspect ratios, puncture-
resistant tyres, etc. Testing stand-
ards have also evolved accordingly to
ensure high performance, mileage,
safety, reliability and longevity of
the tyres. The Indian tyre industry
has been quick in adopting the latest
technology trends through foreign
collaborations and tailoring these
to Indian needs. The manufacturers
are also investing in development
of green tyres and in capacity ex-
pansion for radial tyres. Innovative
technologies like self-inflation and
run flat tyres (RFT) are also gaining
popularity in the Indian market.
The market for radial tyres in
the commercial vehicles segment
has seen rapid growth in recent
times. In the medium and heavy
commercial vehicle segment the
current adoption levels of radial
tyres is around 15 per cent. In the
light commercial vehicle segment, it
is estimated to be 18 per cent. The
passenger car segment switched to
radial tyres earlier, and within a
short period of time, penetration
levels reached almost 100 per cent.
This segment will surely be the fo-
cus for Indian tyre manufactures as
it is expected to grow at about 15
per cent over the next few years to
Rs 393 billion by 2015.
Global scenario
Increasing sales of passenger
and commercial vehicles in develop-
ing countries and a strong demand
for replacement tyres is providing
significant opportunities for players
in the automotive tyre industry. A
projected CAGR of around 4 per cent
T
he Indian tyre industry
has been reporting good
growth figures over the
past few years, spurred
by the growing passen-
ger vehicle and two-wheeler market.
It has emerged as one of the most
competitive markets in the world
and with the emergence of new tech-
nology, ultra-modern production
facilities and availability of raw ma-
terials, the sector is poised to grow
further.
Market Survey
JULY 2013

FACTS FOR YOU 9

over the next five years for the glob-
al tyre market means an estimated
$187 billion by 2017.
The passenger car segment
is forecast to witness the highest
growth over the next five years. Re-
gionally, the APAC region is antici-
pated to lead growth during the fore-
cast period. It is expected to see the
strongest growth in rubber demand,
reflecting the strength of the tyre
market in China, India, Thailand
and Vietnam.
The global automotive tyre mar-
ket is highly consolidated and con-
sists of passenger car tyres, heavy
truck tyres and other segments.
North America dominates this mar-
ket with approximately 30 per cent
of the total global demand for tyres.
Fuel efficiency and safety concerns
are key factors influencing the pur-
chase of tyres in developed mar-
kets, which are transitioning into
higher-performance tyres. Japan
and Europe have implemented strin-
gent tyre perfor-
mance criteria
(covering rolling
resistance relat-
ed fuel saving,
wet grip-related
braking distance
and noise reduc-
tion). Europe
anticipates a 20
million tonnes
reduction in
traffic-related
carbon dioxide emissions per year
due to enhanced tyre performance.
Indian scenario
In 2011-12, the Indian tyre in-
dustry recorded a turnover of Rs
300 billion, producing 119.2 million
tyres, amounting to 1.49 million met-
ric tonnes. Currently, India has 40
listed tyre manufacturing companies,
of which the top 10 account for over
96 per cent of the countrys total tyre
production. The tyre export market
in India is valued at Rs 3.6 billion.
While the tyre industry is largely
dominated by the organised sector,
the unorganised sector dominates
the bicycle tyre market. With the
focus on providing better products
and services, Indian tyre manufac-
turers are setting up well-equipped
in-house R&D centres with emphasis
on developing cutting-edge technol-
ogy for new compounds, new designs
for different segments and new rein-
forcement materials. Cost
optimisation for quality im-
provements and orientation
towards changing customer
requirements are also areas
of research.
The concept of green
tyres is now emerging as
a benchmark for the in-
dustrys competitiveness.
Though the technology
has been around since the
1990s, due to higher manu-
facturing costs, it was put
on a backburner until re-
cently. Green tyres provide
numerous benefits over
normal tyres, including
lower fuel consumption.
Domestic and
export markets hold
huge potential
India is set to break into
the league of the top five
vehicle producing nations.
Table I
Domestic and Export Potential
(US$ billion)
Domestic market potential Export market potential
Year After-
market
Original
equipment
Year North
America
Western
Europe
Other
markets
2010 4.0 18.0 2010 1.1 2.3 0.4
2015 6.1 42.9 2015 3.6 4.2 1.7
2020 103 69.7 2020 10.6 12.9 4.0
Source: ACMA, Aranca Research
Table II
Tyre Production in India
(in 1000s)
Category 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Trucks and buses 11,941 12,367 13,137 12,839 14,811 15,668 16,085
Passenger cars 13,605 14,264 16,437 16,571 20,047 26,201 27,141
Jeeps 1272 1368 1467 1469 1402 1500 1595
LCVs 4529 4820 5320 5298 5739 6029 6688
Tractor fronts 1383 1754 1814 1842 2386 2595 2756
Tractor rears 1134 1296 1234 1315 1634 1777 1889
Tractor trailers 596 823 886 758 903 1051 1022
ADVs 325 381 409 281 294 311 293
Scooters 9519 9643 11,604 10,882 13,558 20,140 22,194
Motorcycles 21,053 26,079 27,921 30,148 35,664 43,118 44,857
Mopeds 55 0* 0* 0 0 0 0
Industrials 514 635 733 568 538 616 681
OTR (off-the-road) 106 115 141 136 161 191 196
Aero 0 0 0 0 0 0 0
Total 66,032 73,545 81,103 82,107 97,137 119,197 125,397
*With effect from April 2006, moped tyre production has been included in the scooter category
Source: ATMA
Market Survey
10 FACTS FOR YOU

JULY 2013
The total turnover of Indias auto-
components sector is expected to al-
most treble in size to $113 billion in
the financial year 2021-22 from $43.5
billion in FY 2012-13.
The domestic market is expected
to account for 80 per cent
of the total sales by 2020.
Exports will account for
the balance 20 per cent of
the market by 2020.
Top 10 tyre
companies in India
in 2012
Here is a list of the top
10 tyre companies, ranked
on the basis of net sales, as
of 2012:
1. MRF. MRF, which
stands for Madras Rub-
ber Factory, has been the
market leader for the last
21 years. Starting out as a
toy-balloon manufacturer,
it become the first Indian
tyre company to touch a
turnover of Rs 50 billion.
MRF has built a strong
association with sports,
mostly cricket and mo-
tor sports. Most cricket
lovers will remember the
MRF logo on Sachin Ten-
dulkars bat.
2. Apollo Tyres.
With its portfolio of six
brandsApollo, Dunlop,
Kaizen, Maloya, Regal and
VredestienApollo Tyres
caters to all segments of
customers ranging from
passenger and commercial
vehicles to off-highway
tyres. It is the 15
th
largest
tyre manufacturer in the
world. The company man-
aged a growth rate of 37
per cent in 2012, having
been slightly hit by rising
raw material costs. In the
car segment, Apollo is the
biggest supplier of tyres.
3. JK Tyres. The com-
pany was hit by slowdown
in the automotive sector this year as
the truck/bus segment, in which it is
the market leader, recorded a growth
Table III
Tube Production in India
(in 1000s)
Category 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Trucks and buses 10,522 11,257 12,016 11,911 14,142 14,990 15,404
Passenger cars 6990 8509 11,490 10,773 9922 9127 10,219
Jeeps 1066 1132 1416 1411 1430 1746 1980
LCVs 3775 4156 4147 4213 4912 5232 5417
Tractors 1232 1425 1443 1334 1970 2006 2145
ADVs 165 213 181 184 235 198 166
Scooters 7044 7461 9128 8242 11,610 16,321 17,177
Motorcycles 22,263 28,067 30,817 31,526 37,095 43,156 45,091
Mopeds 227 0* 0* 0 0 0 0
Industrials 99 108 112 79 64 74 100
OTR 38 48 60 60 68 97 112
Aero 0 0 0 0 0 0 0
Total 53,421 62,376 70,810 69,733 81,448 92,947 95,835
*With effect from April 2006, moped tube production has been included in the scooter category
Source: ATMA
Table IV
Category-based Tyre Exports
(Numbers)
Category 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Trucks and buses 2,408,759 2,276,049 2,431,545 1,933,959 2,052,946 2,008,859 2,247,268
Passenger cars 1,052,874 966,046 1,091,715 991,558 845,688 1,116,192 1,564,804
Jeeps 885 1420 7461 10,263 6946 93,356 119,292
LCVs 1,390,814 1,599,230 1,621,880 1,630,483 1,465,991 1,454,027 1,692,673
Tractor fronts 13,408 11,078 17,072 13,051 12,052 10,899 18,463
Tractor rears 98,807 56,186 66,644 46,347 46,206 43,472 33,305
Tractor trailers 3833 8665 17,468 20,067 4692 1320 3537
Motorcycles 84,908 151,677 322,630 453,226 362,784 755,892 950,236
ADVs 0 0 30 0 0 0 0
Scooters 289,984 320,536 45,338 435,778 441,965 627,093 913,157
Implements 2447 4045 5637 9962 15,693 106,430 88,675
Industrial 7303 11,543 12,777 7605 8002 124,943 105,063
OTRs 33,480 43,085 45,919 36,774 35,515 111,902 184,635
Antique 0 0 0 0 0 0 0
Total 5,387,502 5,449,560 6,094,116 5,589,043 5,298,480 6,454,385 7,921,108
Source: ATMA
Market Survey
JULY 2013

FACTS FOR YOU 11

of just 7 per cent and the car sales
saw a growth of 2.7 per cent. Overall,
the company registered a growth of
just 17 per cent, which is pretty low
by industry standards. On a positive
note, its all-radial plant coming up in
Chennai is on course. Increased ca-
pacity is expected to give JK Tyres a
renewed strength in the market.
4. CEAT Tyres. CEAT, owned
by the RPG Group since 1982, is
probably the most visible face of the
Indian tyre industry. Cricket lovers
are familiar with the CEAT Cricket
Ratings, which was the first inter-
national cricket rating system. More
recently, its advertising campaign
The road is full of idiots won many
awards and critical acclaim. The
company scaled the Rs 10 billion ex-
port benchmark in 2012.
5. Balkrishna Tyres. BKT op-
erates in the niche category of off-
highway tyres used in segments
like agriculture, construction, indus-
trial and earthmovers. The company
has enjoyed a year-on-year (y-o-y)
growth rate of 46 per cent in 2012.
Its sales mostly come from overseas
markets and hence the continued
downturn in Europe and US could
slow down its growth in the coming
years.
6. Goodyear Tyres. The com-
pany was named after the inventor
of vulcanised rubber, Charles Good-
year. Internationally, it has been
associated with motor racing for a
Table V
Production, Consumption and Imports of Natural Rubber
(tonnes)
Year Production Consumption Total
consumption
Total
imports
Tyre sector Non-tyre sector
2004-05 749,660 406,220 54% 349,170 46% 755,390 68,700
2005-06 802,625 442,921 55% 358,189 45% 801,110 45,285
2006-07 852,895 462,081 56% 358,224 44% 820,305 89,799
2007-08 825,345 495,577 58% 365,878 42% 861,455 86,394
2008-09 864,500 508,121 58% 363,599 42% 871,720 77,616
2009-10 831,400 576,210 62% 354,355 38% 930,565 177,130
2010-11 861,950 597,623 63% 350,092 37% 947,715 190,692
2011-12 903,700 631,410 65% 333,005 35% 964,415 213,785
2012-13(E) 912,200 631,800 65% 340,180 35% 971,980 216,642
Source: ATMA
Table VI
Automobile Production Trends
(numbers)
Category 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Passenger vehicles 1,309,300 1,545,223 1,777,583 1,838,593 2,357,411 2,982,772 3,123,528
Commercial vehicles 391,083 519,982 549,006 416,870 567,556 760,735 911,574
Three-wheelers 434,423 556,126 500,660 497,020 619,194 799,553 877,711
Two-wheelers 7,608,697 8,466,666 8,026,681 8,419,792 10,512,903 13,349,349 15,453,619
Total 9,743,503 11,087,997 10,853,930 11,172,275 14,057,064 17,892,409 20,366,432
Source: Society of Indian Automobile Manufacturers
very long timeboth as a supplier
of tyres and as a sponsor. Goodyear
also supplies tyres to tractor compa-
nies in India. It was conferred the
Super Brand status in 2010-11. Its
active marketing campaignsbe it
the Women With Drive programme,
the Highway Helper iPhone app or
the Goodyear blimphave a high re-
call value with customers.
7. TVS Srichakra. This com-
pany is primarily a manufacturer
of rubber tyres, tubes and rubber
products for two and three wheelers.
It supplies tyres to vehicle manufac-
turing units, OEMs and the domestic
after-market segment as well. With
its two manufacturing units at Ma-
durai and Rudrapur, TVS Srichakra
produces nearly 11 million tyres
every year. Growth in the overseas
market and the domestic OEM seg-
ment helped the company register a
y-o-y growth rate of 28.44 per cent
in 2012.
8. Falcon Tyres. Falcon Tyres
is known under the brand name of
Dunlop in India. It was taken over
by the Ruia Group in 2005. Its as-
sociation with Sumitomo Rubber
Industries Ltd of Japan has given it
access to the latest technology and
enabled it to streamline its process-
es. Based in Mysore, it has clientele
including big names like Hero Motor
Corp, Bajaj Auto and Honda Motors.
9. Govind Rubber. Though
it started off as a small player in
the bicycle tyre industry, GRL has
Market Survey
12 FACTS FOR YOU

JULY 2013
Table VII
Category-wise Tyre Production in India
Financial year 2011-12 to 2012-13 (April-December)
(million)
Types for 2011-12 2012-13 Per cent
Change
Trucks and buses 11.951 12.709 6
Passenger cars/jeeps* 21.379 23.883 12
Light commercial vehicles 5.052 4.495 11
Small commercial vehicles (SCV)** 1.697
Tractor fronts 2.059 2.113 3
Tractor rears 1.413 1.426 0.3
Tractor trailers 0.748 0.677 9
Scooters/mopeds 16.636 12.158 27
Motorcycles 34.067 32.08 6
Industrial/off the road (OTR) 0.144 0.225 56
Other tyres (Industrial & ADV)*** 0.718 0.742 3
Total 94.184 92.205 2
* W.e.f. FY 2012-13, the jeep tyre production merged with the passenger car
tyre category
** New category
*** W.e.f. 2012-13 industrial and ADV tyre production merged as other tyres
(a new category)
Source: ATMA
Table VIII
Category-wise Tyre Export
Financial year 2011-12 to 2012-13 (April-December)
(numbers)
Category 2011-12 2012-13 Per cent
change
Trucks and buses 1680837 1778527 6
Passenger cars/jeeps*
1268163 1314184 4
LCVs 1228694 1374309 12
Tractor fronts
12725 19164 51
Tractor rears 21808 27342 25
Tractor trailers 2480 1963 -21
Motorcycles
708993 849653 20
Scooters (2/3 wheelers)
643193 601571 -6
Implements 69238 103895 50
Small comm. vehicles (SCVs)** 1236
Other tyres (Industrial & ADVs)*** 56305 82362 46
OTR
170662 116648 -32
Total 5863098 6270854 7
* W.e.f. FY 2012-13 jeep tyre exports merged with the passenger car tyre category
** New category
*** W.e.f. 2012-13 industrial and ADV tyre exports merged as Other Tyres (a new
category)
Source: ATMA
grown from its humble beginnings
to become known for its high-quality
and innovative products in this seg-
ment. GRL has given this industry
many breakthroughs in the form of
puncture-protection tyres and self-
sealant tubes. It has recently started
manufacturing tyres for other vehi-
cles as well.
10. Krypton Tyres. Krypton
Tyres was solely into manufactur-
ing PU tyres for bicycles when it
was set up in 1990. But with time,
it has expanded its product line and
now manufactures a range of tyres
for not only bicycles but also wheel
chairs and trolleys. It has further di-
versified into the footwear industry
by launching its own brand Softflex.
Current market status
of Indias automotive
industry
1. The Indian automotive market
is one of the most competitive mar-
kets with low manufacturing costs,
which makes it an attractive as-
sembly base for foreign automobile
manufacturers.
2. India is the second fastest
growing automobile market in the
world after China.
3. Cars comprise the major seg-
ment in the Indian automotive in-
dustry with a growth rate of more
than 19 per cent annually.
4. The large population growth
of more than 20 million a year and
the rising living standards are two
important indicators that logically
lead to an increasing demand for au-
tomobiles in India.
5. The Indian car industry is wit-
nessing a shift from two wheelers to
cars, due to the rising availability of
low-cost cars and the car becoming a
status symbol.
6. Based on the overall produc-
tion of cars in the country, the In-
dian automotive industry is now
the sixth largest in the world be-
tween South Korea (5th) and Bra-
zil (7th). India is the fourth largest
in the Asian region after China,
Japan, and South Korea, in that
order.
7. Car brands like Jaguar have
an advantage when they are pro-
duced in India, since they become
less expensive to sell. Imported cars
are very expensive to acquire in In-
dia, due to the many import licences
and tariffs that lead to higher prices
of imported cars.
The industry produced 1,684,011
vehicles in April 2013 as against
1,721,455 in April 2012, showing a
decline of (-) 2.81 per cent over the
same month last year.

The author is head, Department of

Commerce, K.S.R College of Arts and
Science (Autonomous), Tiruchengode,
Tamil Nadu