Tyre dealers, makers spar over price hike

On the other hand, Automotive Tyre Manufacturers Association (ATMA), comprising leading manufacturers, has justified the raise. It said that prices of raw materials like natural rubber, synthetic rubber, oil, and steel have hit the roof.

Most tyre makers are likely to raise prices again this month in the range of 5 per cent. In April, manufacturers such as Ceat and JK Tyre had raised product prices by 5 per cent, while MRF increased it by 2 per cent.

AITDF says the hike is not in line with the international market. A circular distributed by the association says the cost of imported tyres has risen marginally, while that of domestic tyres has risen by 25-32 per cent.

The association has asked the finance minister to abolish import/custom duty on radial truck, bus tyres, and tubes to provide some relief. Cost of tyres and running fuel are the two largest operating expenses incurred by the truck freight market.

SP Singh, head, AITDF, said: "Tyre prices never came down when raw materials prices eased out last year. Also, imported tyres form a considerable chunk of the total sale of tyres in the commercial vehicle (CV) segment. Despite that, there is no respite in import duty, which should be waived off to provide a level playing field. This will also break the cartel created by players in the market."

According to AITDF, the industry sold about 8 lakh truck and bus tyres last year. Of these, 17.5 per cent (1.4 lakh) were imported. Despite being sold at a premium, imported tyres have a significant demand in the country. Imported tyres have radial technology whereas most domestic tyres in the CV category are produced using the dated cross-ply technology.

Radials have a higher shelf life, 50-80 per cent more, than a cross-ply. They also give improved fuel efficiency, about 5-7 per cent more. Indian manufacturers have only recently adopted radialisation.

ATMA, however, says that raw material prices have risen phenomenally. Prices of butyl rubber, a key ingredient in making rubber tubes, have risen by 134 per cent in the last six months. Prices of natural rubber saw 29 per cent rise in the same period.

"Contrary to expectations, there is no relief in the rising cost in the current fiscal. What is unique in the recent price increase is that, for the first time, prices of all materials have gone up in at the same time", Rajiv Budhraja, director general, ATMA, said.

Companies like Ceat (which hiked tyre prices this month), Apollo, MRF Tyres and, JK Tyres are looking announce a price hike in the coming month.

A senior official from Ceat tyres, India's fourth largest tyre maker, said" "Raw material prices have risen substantially in the last two quarters. The current quarter will also be very tough. We are waiting to see how the next few quarters behave."