Is the threat of imports for tyre makers overhyped?
While the domestic tyre makers are crying foul about the threat of cheap imports of Chinese/Korean tyres, data circulated by the All-India Tyre Dealers Federation (AITDF) tells a rather different tale. The chart shows that in the passenger car segment, the number of containers of tyres imported has fallen in the last three months. Even if it is a seasonal variation, the imports have not increased when compared with even a year ago. The same is true of truck and bus radials, where imports tend to be higher than in the car segment.
Meanwhile, dealers say that domestic tyre makers should have cut tyre prices over the last 12-14 months, given the sharp decline in natural rubber and crude-linked inputs that are key raw materials to make a tyre. This has not been the case. Asks S.P. Singh, convenor, AITDF, “if there was a real threat of imports, would tyre makers not cut prices in the replacement market?” On the contrary, there are reports alleging cartelization of tyre prices in the replacement market, as has been the case in the cement industry, too.
A flat or a marginal increase in the revenue of tyre makers is often blamed on imports. But then, the revenue drop could also be a fallout of the weak growth in car sales over the last four years. In any case, profits of domestic firms have been sheltered well by the falling rubber prices.