As Rubber Keeps Inflating, Be Ready to Pay More for Tyres
This may be the right time to change the tyres of your car, if you haven’t already.
For tyre makers are preparing to hike prices by 3-5% as a relentless surge in input costs is making it difficult for them to maintain margins.
While JK Tyres has already announced its plan to increase prices by 4-5% this month, Balkrishna Industries, the specialty tyre manufacturer and exporter, said it will hike prices between 6% and 8%.
Ceat said it will raise tabs by 2-3%. “We are gradually increasing prices instead of taking a big price jump. We had hiked prices by 1-2% in December,” a Ceat spokesperson said.
Prices of natural rubber doubled in 2010 and was ruling at Rs206 per kg on December 30. Natural rubber comprises a third of manufacturing cost of tyres.
The prices of steel, another component that goes into the making of tyres, are also expected to rise this month.
Shweta Mungre, analyst with Batlivala & Karani Securities India, said in a note that the Automotive Tyre Manufacturers’ Association and rubber dealers see little possibility of a decline in rubber prices in the near term.
That’s because of the global supply constraints arising from erratic weather conditions in key rubber-producing regions and continuously growing demand from the domestic and Chinese tyre industry.
As a result, domestic natural rubber prices are expected to touch as much as Rs230 in the coming months.
“In past 18 months, the input cost have gone by 35%. However, the manufacturers were able to pass on only18-19% of the cost. Margins have shrunk in the last quarter,” said Ragupati Singhania, vice chairman and managing director of JK Tyres.
“We don’t see a respite as far as input cost is concerned. With heavy rains in rubber growing countries, we see severe situation ahead. We foresee another round of price hike in the month of April next year,” said a spokesperson for Balakrishna Industries.
“We have been getting indications from the tyre companies on the decision of price hike. We expect the tyre prices to go up by 4-5% from January onwards,” said S P Singh, convenor of All India Tyre Dealers’ Federation.
According to Singh, the consumption of tyres have gone down by 10-15% in the North and Eastern regions.
Life of a tyre remains longer during the winter season, due to which the replacement market is moving slower. Tyre makers are feeling a pressure as sales are dropping and prices are increasing.
Processing your request, Please wait....
