Comments
Hit by the slowdown in automobile sector, the tyre industry is witnessing subdued demand not only from OEM (original equipment manufacturers), but also from replacement market and exports.
However, the softening prices of key raw materials such as natural rubber and crude derivatives provide relief to the tyre makers. This will help them to protect their margins, said ICRA.
Subrata Ray, Senior Group Vice-President, ICRA, said while the short-term outlook of the tyre industry remains subdued in the wake of the demand slowdown in the automotive industry, the tyre makers’ margins have been cushioned by the softening of rubber prices and other crude derived inputs.
Slowdown in the domestic auto industry and the weak export outlook to the European Union region is likely to curb demand growth during the current fiscal. ICRA anticipates volume growth in the OEM segment to taper off to five per cent, while the replacement demand is estimated to grow by 5-7 per cent.
The recent hike of 1.5-2.5 per cent in tyre prices and weak rupee will boost realisation for tyre makers.
Despite contraction in OEM demand, ICRA expects a moderate revenue growth of 13-14 per cent in this fiscal on the back of modest replacement demand and export revenues.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.