Rising Chinese imports could put Indian tyre cos in trouble

An increase in tyre imports in India could result in a revenue decline for Indian tyre companies with downward pressure on both volume and pricing in the key segment of truck & bus (T&B), according to a report.

The decline in revenue could particularly be attributed to a higher-than-expected decline in the T&B bias (TBB) segment as a result of increasing imports of truck & bus radials (TBR), India Ratings has said in its latest report.

The import volume of tyres in T&B and two-wheeler segments increased by 25.3 per cent and 120.5 per cent respectively, in Q1 FY16 year-on-year.

Out of the above, of the particular concern is the increase in imports in the T&B segment which accounts for around 60 per cent of domestic tyre industry’s revenue.

Ind-Ra’s analysis indicates that growth in the TBR imports was 80 per cent in Q1 FY16, with import volumes reaching 0.3 million tyres which is around 22 per cent of the domestic TBR production on an annualised basis. This could be attributed to higher imports from China.