Car tyre prices are all set to shoot up by up to ₹2,000 for a pair for car models of mainstream brands. A pair for luxury car tyres will become expensive by up to ₹6,000 for a pair. The steep rise in tyre prices is happening due to the surge in raw material costs that have increased by up to 25%.
This will directly impact the tyre replacement market that contributes a major chunk of the total sales volume in India. Around 60% of the tyre sales are driven by the replacement industry and 28% of sales is fuelled by the automobile industry.
The prices of tyres are all set to increase across categories in March-April 2021 due to increased manufacturing costs. This would be the third hike in tyre price since lockdown happened in 2020 due to COVID-19 pandemic.
Organized tyre manufacturing industry is pegged at ₹60,000 crore in India and holds the market share of up to 80%. Leading tyre manufacturers including Apollo, Ceat, JK, and Michelin have already hiked the tyre lineup by up to 8%. As per manufacturers, the tyre prices should have gone up by up to 10% but it is not viable in the Indian market.
Apart from increased raw material costs, the import restriction on rubber has also put a strain on supply chain that has further pushed the prices of raw material for tyre manufacturers.
As per tyre manufacturers, raw material contribute to around 62% of the total costs of the tyre. Hence, price hike passed is such a significant number. In Q3 FY21, tyre prices were increased by 2%. And by the end of March 2021, they will increase more by up to 4% hike.
Indian tyre manufacturers use the ratio of 50% synthetics and 40% natural rubber, along with 10% miscellaneous inputs including steel to manufacture tyres.