Indian tyre industry sees sluggish demand in Q1 and Q2 of Fy 2012-13

The past six months have proved to be slow-moving for the Indian tyre industry. After seeing growth to the tune of 14% in the past year following a boom in the auto industry, sales this year have been somewhat slack. There are a number of reasons for this turn of events, of which the present economic situation in the country is right on top followed by increases in fuel prices, rising interest rates all of which have affected the tyre markets badly.

The weakening Indian Rupee against the Dollar too has accounted for higher input costs and cost of manufacture which has put immense pressure on the tyre industry. Passenger sales increased by just 2.5% in the first quarter of this year while sales of trucks and buses declined 11%. With the Indian tyre industry dependant on the market situation it naturally suffered a setback with this falling demand. What is even more depressing is the fact that this scenario is not likely to change in the coming months.

However tyre manufacturers are optimistic of the coming festive season while they are also concentrating on exploring the export market where they will channelize their products to markets like South America. The Indian tyre industry is also presently enjoying stable raw material prices. Natural rubber which accounts for 50% of input costs now hovers around Rs.185 per kg in domestic markets after touching a high of Rs.260 to Rs.270 last year. This is what companies are hoping will help them improve their margins in the coming months.