Premium tyres market to treble in 3-5 years: CEAT MD & CEO Arnab Banerjee

Amid pressures on margins with rising prices of natural rubber, tyre companies are increasingly focusing on premium tyres that offer better margins and are a fast growing segment in the domestic market. Mumbai-based tyre maker Ceat, which launched a new range of tyres under its SportDrive  brand on Wednesday targeted at luxury sedans and sports utility vehicles (SUVs), expects premium tyres to contribute more than 30 per cent of its passenger car radial (PCR) sales in the next 3-5 years.

 

Speaking to Business Standard, Arnab Banerjee, MD & CEO of Ceat said that premium tyres (above 17 inch) currently constitute roughly 8-10 per cent of the domestic market, which has the potential to go up to 30-40 per cent in the next 3-5 years.

 

Of the 2.4 million PCR sold every month in the domestic market, Ceat enjoys a 16 per cent share.

 

Currently, commercial vehicle tyres and passenger vehicle tyres are split 50:50 in Ceat’s sales. PCR sales account for around 20 per cent of passenger vehicle tyres.

 

Banerjee said that margins are better in premium tyres. “We have a gross margin of around 35-36 per cent. We are comfortable at a 40 per cent range. Focus on premium range would help boost the margins definitely,” Banerjee admitted, adding that rising prices of natural rubber are a concern.

 

“Raw material prices have not softened in Q4FY25 compared to the previous quarter, and in Q1FY26 too it is expected to remain at similar levels. Tyre makers are passing on some of the input cost rise to consumers, but this comes with a lag, and companies have not passed on the full burden, thereby taking a hit on the margins,” he explained.

 

In early 2025, natural rubber prices saw a surge due to supply constraints and strong demand, particularly from China, with prices reaching a seven-year high in late 2024, and are expected to remain elevated despite some recent easing.

 

Global production is expected to rise by a modest 0.3 per cent to 14.9 million tonnes in 2025, while demand is projected to grow faster at 1.8 per cent to 15.6 million tonnes. Indian prices are also likely to remain elevated.

 

Ceat launched three advanced innovations for its SportDrive range -- run-flat tyres, 21 inch ZR-rated tyres capable of handling speeds greater than 300 km per hour, and ‘calm’ technology for a less noisy experience. Priced between ₹15,000-20,000 for the run-flat-tyres, and ₹25,000-30,000 for the other variants, these tyres are targeting luxury cars from the Mercedes Benz, BMW, Audi, and Jaguar Land Rover stable.

 

 2024 saw the highest ever luxury car retail in India at 51,000 units. Banerjee said that with this range, CEAT now covers 90 percent of tyre sizes and formats required in the Indian market.