India’s 2010-11 tyre production is likely to rise to a record 121.4 million units as tyre companies boost capacity to meet booming demand from the local auto industry, a senior industry official said.
“Every (tyre) company is expanding capacity. Demand is good from both OE (original equipment) and replacement segments,” said Rajiv Budhraja, director-general of the New-Delhi based Automotive Tyre Manufacturers’ Association.
He said tyre production in 2010-11 is likely to rise by a quarter from last year’s 97.13 million units, primarily driven by passenger car and two-wheeler segments at the crest of India’s current auto boom. Passenger car sales rose 33.6 per cent on year between April-September this year.
“Passenger car tyres production is growing by 25-30 per cent. Demand is very strong in this category. Off the road is also rising by 20-25 per cent,” Budhraja said. Leading tyre makers like MRF Apollo Tyres, JK Tyre & Industries, Ceat have all been furiously working to ramp up capacity.
Budhraja estimates an investment of Rs 10,000-12,000 Crore on expansion in three years to 2011-12. “Such kind of investment had never happened before.” Price of rubber, a key raw material used for tyres, has been rising on demand-supply mismatch and it may force tyre-makers to raise prices again this year, he said.
Indian tyre makers have raised prices by 11-14 per cent in the commercial vehicle radial segment and by 18-20 per cent in the passenger car tyre segment in 2010 so far, JK Tyre director marketing A S Mehta said last month.
The spot price of the most traded RSS-4 rubber (ribbed smoked sheet) was Rs 17,450 per 100 kg on Monday at Kottayam in Kerala, up a whopping 63 per cent on year, Rubber Board data showed. In 2009-10 the country’s rubber imports more than doubled to 170,679 tonnes and the industry expects the world’s fourth biggest producer of natural rubber to import a nearly equal amount in 2010-11.