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Tyre sector hopes e-commerce festive discounts will rev up business

Tyre industry feels that the massive discounts could result in greater movement of vehicles for transportation of goods.

, ET Bureau|
Sep 27, 2019, 12.31 PM IST
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The truck and bus tyre segment, a major revenue earner for the tyre companies, has been going through poor sales for the past several months.
Kochi: Saddled with rising inventory and plummeting sales, the tyre sector is pinning its hopes on an ecommerce boom during the festival season to provide some relief.

The tyre industry reckons that the massive discounts offered by the ecommerce companies could result in greater movement of vehicles for transportation of goods which may lift tyre sales to an extent.

“The light commercial vehicles, trucks and even trailer trucks may be needed to transport the goods across the country which could raise truck tyre sales. We will have to wait till November to know the result,’’ said Anup Mangaserri, senior vice president sales of CEAT Tyres.

The truck and bus tyre segment, a major revenue earner for the tyre companies, has been going through poor sales for the past several months. “We have seen a pick-up in replacement demand for tyres in two-wheeler, three-wheeler and four-wheeler categories. Normally this happens during the June-July period. But this year, heavy rains since August has resulted in people changing tyres frequently,’’ he said.

Overall, the situation is worse than last year. “The data for July show all the categories of tyres are showing a negative growth vis-à-vis last year. August could be equally bad. Heavy rains in states like Madhya Pradesh and Jharkhand during these months had restricted vehicle movement,’’ said Rajiv Budhraja, director general of Automotive Tyre Manufacturers Association (Atma).

Earlier during the year, the replacement tyre segment, especially in truck tyres, had seen higher demand than the original equipment (OE) category, which has been consistently on decline during the year. “But now the replacement tyre segment has become sluggish. We have to wait till the end of the festive season to make an assessment about how long will it take to recover,’’ Budhraja said.

Meanwhile, the plunging demand and increase in production have led to 10% drop in sheet rubber prices, which are at Rs 126 per kg, during September. “The prices may see further fall as peak tapping season is approaching and the weak demand from the tyre sector is likely to continue,’’ said George Valy, a rubber dealer based in Kottayam.

With the difference between international and domestic rubber prices narrowing, the tyre sector may not go for fresh import contracts, which may fuel local demand after December, he said. The tyre makers had imported large quantity of rubber in the past few months taking advantage of lower prices in the global market.
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