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Tyre Prices May Go Up by 25 Per Cent Due to High Rubber Costs

By Motortrend India Staff   |   04 May,2010

Tyre manufacturers may hike product prices by up to 25 per cent to offset rising input costs. In March, Automotive Tyre Manufacturers’ Association (ATMA) had written to Prime Minister Manmohan Singh seeking government intervention to address the issue of rising rubber prices and its impact on the tyre industry. ATMA met the Prime Minister but has found no solution.

The tyre industry demanded that the government scrap the 20 per cent import duty on natural rubber and ban futures trading of the commodity, besides excluding natural rubber from negative lists under regional trade agreements.

The prices of new cars have increased. Tyre manufacturers have already increased products prices and more will follow unless steps are taken to soften rubber prices. ICRTMA Chairman Rummy Chhabra said cycle and rickshaw tyre makers will also be forced to hike prices by around 20 per cent if no change in the natural rubber situation happens.

“Around 300 large plantation growers in Kerala have formed a cartel and are selling natural rubber at over Rs 100 higher than the production costs. Cycle and rickshaw tyre makers are already facing negative margins and we may be forced to adopt price rise, which we have avoided all these months,” he said.

Cycle and rickshaw tyres comprise around 17 per cent of the estimated Rs 22,000 crore tyre industry in India. The All-India Rubber Industries Association (AIRIA) said many companies are facing a tough time due to the rising input costs. “Many of the small scale rubber users are on the verge of collapse due to the rising natural rubber prices,” AIRIA President T K Mukherjee said.

Commenting on the demand-supply scenario, ATMA Chairman Neeraj Kanwar said, “The country is going to face a shortfall of around 1.75 lakh tonnes of natural rubber this year, as production lags behind domestic consumption. Last fiscal it was around one lakh tonnes.”

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