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Will 2015 be a game changer for Indian tyre industry ?

By Rajiv Budharaja

The onset of a New Year certainly kindles hope for a better year ahead but rarely ever the beginning of a New Year has brought the kind of expectations and excitement for tyre industry in India as the onset of 2015 has. And reasons are not hard to fathom. Rajiv-Budhraja,-ATMA300

For over two financial years, Indian economy posted sub-5 per cent growth (lowest in more than 10 years). Runaway inflation caused Reserve Bank to hike interest rates even as the growth fumbled. Cost of capital went up for the industry even as the cost of finance went up for consumers and coupled with rising fuel prices, the cost of vehicle ownership (both commercial and passenger) also went up. It didn’t help that consumer sentiment was down in a slowing economy. A large number of projects got stuck up as necessary permissions could not be granted, regulatory hurdles slowed down the pace of investments and governance issues cropped up leading to alleged policy paralysis.

Auto and tyre industry, being closely linked to economic growth had to bear the brunt. Growth rates in passenger cars significantly declined and Commercial vehicles have seen two consecutive financial years of contraction leading to a concomitant impact on the tyre industry.

(Full Text in PTA Feb/March issue)

 

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