Continental strengthens its position in TBR; launches high-tread mileage tyre
Continental India has launched 2 new commercial vehicle tyres for highway applications. Called the HSR2 and HDR2 (10.00R 20), they are designed specifically for high tread mileage (within the recommended GVWs). These tyres are expected to help the company increase its reach and strengthen its position in the truck and bus radial (TBR) segment.
The tyres are armed with cooler running compound and robust tread design structure to suit the needs of fleet operators and they are engineered to cost less.
Since the acquisition of Modi Tyres for Euro 18.5 million in 2011, Continental India has been producing bias and radial ply truck and bus tyres and passenger car radial tyres in its facilities at Modipuram and Partapur.
According an ICRA report, over the last 5-6 years the TBR segment had installed Rs 350 billion worth of capacities. Continental also made significant investment in this area. The pick-up in rural expenditure, because of a good monsoon, is expected to drive continued growth in the CV industry coupled with strong replacement-driven sales.
Maturing tyre market
The Indian CV tyre market has matured to accept the latest technologies. Transporters are increasingly opting for high-quality products and improving their truck maintenance processes by adopting technologically advanced products like GPS trackers and latest tyre pressure monitoring systems. The tubeless radial tyre technology, which is prevalent in other markets, is finding more takers, mainly to be ready for the BS VI emission norms by 2020.
Continental has been appointing new dealers and commissioning new showrooms to expand its reach, Mallika Rawal, National Marketing Manager, Continental India, said. The company recently commissioned its first commercial vehicle tyre showroom at Rudrapur, in Uttarakhand, which is a vital transportation and industrial hub.
Overloading has been a problem in the Indian CV industry. The practice has been continuing in spite of a Supreme Court ban. Carrying loads beyond the permissible limit is detrimental both to the trucks and to the supporting infrastructure. The fleet operators are changing by opting for radial tyres made with the use of modern technology. They are keen on optimising their operations and getting the most value. They are giving preference to tread mileage and fuel economy over tyre durability. Knowledge-driven transporters and better government policies are rapidly changing the way the transporters operate.
The last 6 years, according to an ICRA report, were a mixed bag for the domestic tyre industry. Revenues had seen a negative growth of 2%, led by realisations ranging between 6% and 8%. This is despite the volumes that grew up to 5% and the industry benefiting significantly from the 15% fall in natural rubber prices in 2015-16.
The tyre industry has completed investments worth Rs 200 billion with projects worth Rs 80 billion in the pipeline for the next 12 months. According to ICRA, overall, the credit profile of the tyre industry is expected to remain stable. “While industry-wide revenues are expected to grow by 9% during FY2016-17, supported by around 6-7% growth in volumes owing to the automotive OEM demand, operating margins are expected to contract by 250-300 bps,” Subrata Ray, Senior Vice President, ICRA Ratings, said. Ray attributed the lower operating margins to the modest increase in raw material prices, hike in wage costs and increased fixed costs (with large capacities getting commissioned).