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The two-wheeler tyre market is expected to see intense competition and pricing pressure with the entry of about half-a-dozen new players.
This market is currently served by TVS Srichakra, MRF, Ceat, Birla Tyres, Metro Continental and Ralco. The new entrants include Michelin, Apollo Tyres, Bridgestone, JK Tyres and Balkrishna Industries.
The total two-wheeler tyre demand, including OEM and replacement segments, is estimated at 70-75 lakh units a month, and the top three — MRF, TVS Srichakra and Ceat — account for 80-85 per cent of the volumes.
Good margins, a favourable growth outlook and not-so-intense competition such as in the car and truck segments appear to have attracted more players into the segment.
“The key reason for the entry of more players is that the two-wheeler segment has relatively been insulated from the volatility of the market and it continues to grow. At Apollo, we wanted to go rural with the two-wheeler business as part of our vision 2020 plan,” said Sathish Sharma, President, Asia-Pacific, Middle East and Africa of Apollo Tyres, which entered the market earlier this year.
The segment has been growing at a CAGR of 8.5 per cent with an estimated 150 million units of two-wheelers on the road, indicating a huge potential of replacement demand. With a strong growth curve, the replacement segment is expected to account for 50-60 per cent of the market. “Two-wheeler tyre demand grew 12.3 per cent in the last three years vis-a-vis the overall tyre industry volume growth of 10 per cent. The growth was led largely by strong replacement demand, both from scooters and motorcycles, even as motorcycle OEM demand faltered with weak rural sentiments,” said Subrata Ray, Group Vice-President - Corporate Ratings, Icra Ltd.
Leading domestic players in the car and truck tyre categories, such as Apollo and JK Tyre, have drawn up big plans for the two-wheeler business. While Apollo will come out with its range of two-wheeler radial tyres in two years, JK Tyre has a production capacity of about six lakh units after its acquisition of Cavendish Industries.
A few other new players are gunning for bigger growth in the performance bike segment (150-cc and above), which is expected to grow faster than other categories.
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