Tyre Industry Sees Single-Digit Growth Amidst Economic Pressures

The tyre industry is projected to grow by 7-8% this fiscal year, primarily due to increased realisations and replacement demand. High natural rubber costs and limited volume growth hinder operational profitability, but tyre makers are optimizing prices and capital expenditure to sustain capital efficiency.

The tyre industry is expected to post a 7-8% revenue growth this fiscal year, according to Crisil Ratings. This growth stems from a 3-4% rise in realisations and increased volumes.

Despite a surge in revenue, the industry faces challenges from high natural rubber prices and modest volume growth, affecting profitability by approximately 300 basis points. The tyre makers continue to adjust pricing and capital spending appropriately.

Replacement demand from commercial and passenger vehicles will drive volume growth domestically. However, export growth remains subdued due to weak demand in key markets and supply chain issues, said Naren Kartic K., Associate Director at Crisil Ratings.