AN Industry Overview
This project looks at the Car Tyre industry in India and how the Distribution channel helps this industry to grow and serve the needs of the End consumer.
| PROJECT DONE BY:VIKRAM FALOR : DM14157RAMYAA RAMESH : DM14266AMIT SHUKLA : DM14104
The Indian Tyre Industry is a critical part of the Auto Sector and there is a huge interdependent on those of the Automobile players. The Indian tyre industry accounts for approximately 5.0% of the Global tyredemandgeneratingrevenuesofapproximately`30,000cr for FY2011. Out of which 90-95% has come from the domestic market. There are around 40 tyre manufacturers in India and the top 10 tyre player’s account for approximately 90-95% of the total tyre production in India. The growth in domestic tyre industry was negatively impacted by the global slowdown in2009.Nevertheless,the industry experienced are mark able recovery in 2010. This growth was primarily driven by strong revival in automobile demand on the back of improvement in macro economy and easing of interest rates.
The Indian Tyre Industry produced 119.2 mn units of tyres (1.5mntonnes) in 2010‐11. On an average, In Indian early 60.0% of the production is for replacement market, followed by 25.0% sold to OEMs directly and the balance is exported. Globally, the OEM segment constitutes 30.0% of the tyre market, exports 10.0% and the balance from replacement market. Exports turnover for India during 2010‐11 stood at `3,600cr. Segmental Breakup of Industry Turnover FY11:
The Indian Tyre industry is characterized by its raw material intensity (Raw material costs account for approximately 70% of turnover). There exists huge competition among the top few players who dominate the market and that results in low margins. These players are constantly focused on advertising, branding their products and strengthening their distribution network by increasing dealer network so as to increase their market share.
Inputs in Tyre:
The industry is highly intensive with the Raw material Consumption. The Raw material costs accounts for 65-70% of the total production cost of tyres. Natural rubber constitutes is the major raw material for the product and is used by the industry which accounts for around 43% of the total cost. The other raw materials consumed by the tyre industry are crude derivatives such as carbon black, rubber chemicals, synthetic rubber and nylon tyre cord fabric, Therefore, rising crude oil prices increase raw material costs and affect the profitability of the company.
Based on the customer segments, the tyre market has been broadly divided into 2 categories: Original Equipment Manufacturers (OEM)
1) Original Equipment Manufacturers – This includes automobile manufacturers like – Hero Honda, Tata Motors, Marathi Suzuki etc. The demand from the OEM market fluctuates directly in line with end-use demand for the automobile/construction equipment segment; hence prone high degree of cyclic variation. The total tyre sales to OEMs are on an average 40-45% of the total sales. 2) Replacement Market – These are the end customers who replace old tyres of their vehicles. This demand depends on factors such as vehicle population on - road, road conditions, overloading norms, miles driven. This is less cyclical than OEM demand and is generally provides higher-margin business for manufacturers. The replacement market accounts for 45-50% of the total sales. Radializationof Cartyres:
Radialization of Car tyres has brought a significant change in the industry. In the Passenger Car market, Radialization has reached 98.0%. These tyres have their cords running radially from bead at 90 degrees angle to the remora long the outer surface of the tyre. Reinforcing mediums that are used in these tyres are nylon, polyester, fibre glass and steel. These tyres are generally 20.0% more expensive than the Bias Tyres. These tyres have longer life and...
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