The tyre manufacturing industry in India faces significant competition and pressure on costs and prices from the growing automotive industry. While vehicle volumes have increased, profitability has decreased for tyre manufacturers due to rising raw material costs. The industry has high barriers to entry due to being capital intensive and requiring large investments. There is also high intensity of rivalry among the top five major players that control over 80% of the market.

1. THE TYRE MANUFACTURING INDUSTRY

2. INTRODUCTIONFaces huge competition, cost and price pressure.The zooming auto industry has driven the growth.The number of vehicles is swelling.The truck and bus market is the largest segment in terms of value.

3. Economic expansion and road development has made a contribution. eg. The golden quadrilateral and the NSEW Corridor project.Though the volumes have increased the profitability has gone down due to the increase in raw material cost.

4. Five forces model

5. A 2 tier IndustryTier 1 players Present in all three segment - 1)Replacement market 2)Original equipment manufacture(OEMs) 3)ExportTier 2 player

6. Key Players

7. Major Sales Segment

8. Intensity of Rivalry : High The tyre industry in India is fairly concentrated, with the top 5 companies accounting for more than 80% of the total production of tyres.

9. BARGAINING POWER OF SUPPLIERS- High

11. Number of Suppliers – LowAvailability/ acceptability of raw material substitutes – LowSwitching costs – HighThreat of forward integration – HighTyre industry not the key customer

12. Demand for Tyres

13. Bargaining Power of BuyersOEM’s HighIn Replacement Market ModerateSwitching Cost LowThreats of Backward Integration Low

14. THREAT OF POTENTIAL ENTRANTSLOW, due to HIGH ENTRY BARRIERS

15. ENTRY BARRIERSHighly capital intensive industryRs4bn for radial tyre plant with a capacity of 1.5mn tyres Rs1.5-2bn for a crossply tyre plant of a capacity to manufacture 1.5mn tyresHigh raw material costs

16. Shortage of raw materialForce of rivalryHigh risk

17. THREAT OF SUBSTITUTES Low, but increasingImport of tyresISI mark made compulsory

18. Porter’s ModelEntry High returns BarrierHigh risksHighLowHighLowExit Barrier