ARE TYRE PRICES SET TO RISE IN THE NEXT QUARTER ?
ARE TYRE PRICES SET TO RISE IN THE NEXT QUARTER?
From one year ago in August 2017 , crude oil prices have risen from around USD 48 per barrel to USD 78 per barrel.
The obvious implication is that the prices of almost all the raw materials for making tyres (except natural rubber) would face an upward push.
The demand for tyres in India has been steadily increasing due to increase in automobile sales and therefore the OE and the replacement segment in tyres both are showing robust volumes.
Tyre manufacturers are going to need price increases from the customers.
Probably the customers in the OE segment would as usual be tougher to tackle but the replacement segment will be more pliable.
A person buying a tyre once in 3 to 5 years would not be so hard to convince as compared to a purchase manager buying tyres every day.
Car sales have seen very strong growth in June 2018 , Maruti’s Brezza , TATA thanks to models like Nexon and Tiago , Toyota with Yaris , Honda with Amaze and others have had a wonderful end to the first quarter.
However July 2018 is not as good as June 2018 for any of the car manufacturers.
With an increase in raw material prices all around and car sales tapering the 2nd quarter of this year may be a dampener.
Indian tyre companies have seen volume growth and profits have also increased in the last few quarters, but there might be tougher times ahead.