Sunday, December 2, 2012

Hey! I’m leavin’ dude…

As Dunlop cuts production, other tyre manufacturers should consider following suit

The tyre industry in India has evolved in myriad ways in terms of technology over the years. So much that they can withstand some of the rudest shocks that Indian roads can throw at them. But unfortunately, there is one huge, long bump the Indian tyre industry may not be able to shield itself from; the economic one.

The sector (forecasted on a growth path for at least 5 years as recently as May, 2008 by CARE) is not going through its best times. Dunlop’s suspension of production at its Shahgunj facility is a case in point. More importantly, Dunlop’s move has again raised questions on India’s credibility as a viable destination for manufacturing tyres.

Going by figures, the tyre industry posted a CAGR of 9.69% during the time frame of 2002-2007, in a situation where almost 40% of the industry’s turnover comprises of exports and the rest 60% is the replacement market. And as auto expert Murad Ali Baig asserts, “There is enormous scope for the tyre industry as against every vehicle, the replacement demand is very huge in India.” So, fundamentals of the industry are undoubtedly very strong, but with recessionary pressures and prevailing slowdown in the auto sector, the tyre industry has also taken a beating. Exports are bound to fall for the tyre industry in the period of this economic meltdown.


Source : IIPM Editorial, 2012.An Initiative of IIPM, Malay Chaudhuri

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