The Indian tyre industry is set to experience a shakeout
as the industry is entering its second round of consolidation.
tyre industry, which had about 12 players until a few
years ago, has narrowed down to six to seven major players;
these will further dwindle as corporates are forced
to consolidate to face the competition.
Rubber Industry Association president Anil K Sampat
says the tyre industry, plagued with an average 8-per
cent drop in prices and increasing raw material costs,
will now go into its second phase of consolidation.
adds: "Tyre companies'' per-unit cost with auto
majors is fixed. Which means, even if the rubber prices
shoot up, we have to bear the brunt with the auto companies
unwilling to share the increase in cost. Besides, the
government is supporting the growers'' domestic rubber
prices, which has already been increased substantially.
All this has made non-viable for tyre majors to continue
MRF director K M Philip: "For the past five years,
the tyre industry has been struggling and the first-round
consolidation is just over. The high raw material cost
and unstable oil prices have emerged as major threats
to the industry and if they continue on the current
level, the tyre industry may face a second round of
a senior JK Tyre official: "The tyre industry is
seeing several changes and the consolidation phase will
continue. Compared to foreign countries, the cost of
production in India is high. Besides, the import of
cheap truck tyres has created some damaging effect on
the truck tyre market."
Indian tyre market is valued at around Rs 10,000 crore.
The industry sweepstakes are pegged with four major
players at the top, two medium-scale ones and a few
says the current industry scenario will force tyre companies
either to move their production base outside India or
be forced to shot shop. "The high input price hike
and increasing competition are the major threats to