The Hindu Business Line : Tyre makers likely to raise prices again

Input pressure
Tyre companies are facing pressure on margins due to increasing input costs - rise in prices of natural rubber and crude.
Also, overall costs have gone up by 10-12 per cent in the last one year. In comparison, prices have gone up by 8-10 per cent.

Kolkata. May 20

Tyre market is expecting another round of price increases before the onset of the monsoon. This is over and above the price hike effected during the last two months.

"Market continues to be firm and there are signals of a possible price rise in the near future from tyre makers," says Mr S.P. Singh, convenor of All- India Truck Dealers Federation (AITDF).

According to him, tyre manufacturers have increased the prices of the entire range of products by three to four per cent during March-April.

Summer months generally record the highest sales of tyres, especially that of the commercial vehicles which constitute up to 70 per cent of the total sales, in the replacement market.

Truck tyres costlier

According to Mr Singh, truck tyres have become costlier by Rs 600-800 a pair following the last round of price rise.

Since tyres constitute roughly 35 per cent of the operating costs of trucks, further hike in prices may also call for a rise in road transport charges.

In a general note though, an Apollo Tyres spokesperson confirmed that tyre companies are facing pressure on margins due to increasing input costs - rise in prices of natural rubber and crude.

The latter has severely impacted the prices of rubber chemicals, nylon, carbon black, synthetic rubber and so on during the last two months.

"If costs keep on rising at this rate, tyre prices may be subjected to revision sooner or later," he said, adding that price of natural rubber, the prime raw material, has gone up by 11 per cent in a span of two months and is at least 60 per cent higher than what it was an year ago.

Attempts to get MRF's views on the issue failed.

Cost-push

Talking on the cost-push, Mr D. Ravindran, Director-General of Automotive Tyre Manufacturers Association (ATMA), told Business Line that overall costs have gone up by 10-12 per cent in the last one year.

In comparison, prices have gone up by 8-10 per cent.

During April-May, costs are up by two to three per cent.

He, however, made it clear that pricing decisions are the prerogative of the individual companies and ATMA had no relation with the same.

Though admitting that tyre manufacturing costs are on the rise, AITDF, however, alleged that there is lack of transparency in the way prices are revised especially in the replacement market.

It may be mentioned that Tata Motors recently made similar allegations with respect to OE tyre supplies.