Domestic Tire Demand Expected to Grow 7-9% This FY: ICRA

Tire industry revenues continue to hit record highs on growing domestic demand and exports and increasing achievements, ICRA said.

By : HT automatic office
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Updated:
April 21, 2022, 5:38 PM

Stock photo of tires used for representational purposes only (Reuters)

Domestic tire demand is expected to rise 7-9% in fiscal 2022-23, but rising input prices are expected to keep industry margins under pressure, ratings agency ICRA said. Rising domestic demand was projected on factors such as the gradual easing of supply-side constraints, improving growth momentum in the commercial vehicle segment and stable replacement volumes.

Tire industry revenue continues to reach record highs on the back of growing domestic demand and exports and increasing achievements, said ICRA Assistant Vice President and Sector Head, Nithya Debbadi. “While domestic demand was relatively subdued in the third quarter of fiscal 2022, industry revenue grew 12.5% ​​(year-on-year) supported by higher realizations,” she said. added.

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Tire demand rebounded in FY22 with estimated growth of 11-13% after two years of contraction driven by the automotive downturn and the Covid-19 pandemic. However, OE demand was impacted by weak two-wheeler sales, lower passenger vehicle production due to supply chain issues such as shortages of semiconductor chips and a high base limiting growing demand for tractors, added CIFAR.

The rating agency further said that replacement demand was strong across all product segments, although there were headwinds in the third quarter of FY22 in commercial segments due to factors such as as cost inflationary trends, weak rural sentiments and the base effect.

Commenting on tire exports, the rating agency said there was robust growth in FY22, supported by healthy demand from major export destinations such as the United States and countries Europeans. “ICRA expects tire export prospects to remain favorable over the medium term given the growing acceptance of Indian tires in international markets. Tire imports remain weak, supported by favorable government regulations” , he added.

(with PTI entries)

Date of first publication: April 21, 2022, 5:38 PM IST

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