Tyremakers will be hit by slowdown in sector: ICRA

Slowdown in the automobile industry is likely to cut the tyre industry’s revenue growth to between 3-4 per cent in this financial year, as compared to 6.7 per cent in 2018-19, says ratings agency ICRA.

The replacement segment, 55 per cent of industry volume, is likely to grow by 5-6 per cent (5.7 per cent last year). While demand growth in the original equipment (OE) segment is pegged at only 2-3 per cent (7.8 per cent a year before), affected by subdued vehicle production.

Beyond this, Indian tyre demand is expected to grow by 6-8 per cent annually during FY202024, estimates ICRA.

“Being a derived product, the industry’s fortunes are linked with the automobile sector and the overall economy’s growth,” said Rajiv Budhraja, director-general, Automotive Tyre Manufacturers Association. His members accounts for nearly 90 per cent of total production capacity.

With automobile sales and economic growth touching multiyear lows, the industry is facing revenue pressure.