About the Tyre Industry, Porter Five forces Future of the industry

2. Introduction
 A rubber covering, typically surrounding an inflated inner
tube, placed round a wheel’s rim to form a soft contact
with the road.
 Characteristics
- rolling resistance depends upon its air pressure,
material and width, etc.
- load bearing capacity proportionately to the
weight.
- a grip is the detrimental one due to less material
engaged.
- tyre fitting varies with width of the wheel’s rim.

3. Origin of the Industry Nature of the Industry
 Dates back to 1926,
when Dunlop Rubber
Ltd. setup the first
tyre company in India.
 Then followed by MRF
tyre in 1946.
 Ancillary to the
automobile industry.
 Driven by the
demand and supply
conditions.
 Mainly controlled by
two wheelers and
four wheelers.

4. Major Products
Radial Tyre
Bias Tyre or Cross Ply
 Tube
- tyres having inner
tube in between the rim
and the tyre.
 Tubeless
- tyres work by sealing
the spoke well of the
rim, either spoke or
butyl strip
 Tyres where fabric
cords run from one
bead to another at an
angle with respect to
the central line of the
tyre.

5. Market Share of Companies
28%
27%
13%
12%
8%
4%
4% 3% 1%
MRF
Apollo
JK Tyres
Ceat
BKT
TVS
GoodYear
Falcon
Others

6. Growth Rate & GDP
 Not stable growth.
 In 2015-16 by 4% after 13% in 2014-2015.
 As per ICRA in 2016 - the tyre production was
affected by tyre imports and falling exports.
 But it grew moderately at 3.4% in Q4 FY2017.
 Now registers 1.7% in Q1 2017-18
 The Industry contributes about 7% of India’s
GDP and employs around 19 million people.

7. PEST Analysis
 Political Factors
- custom duty rates high on rubber 20% and 10% tyres
 Economic Factors
- decline in rupee with increase in raw material cost result
in low margins.
 Social Factors
- explosion in the status of the families resulting in more
demand of 2/4 wheelers affecting demand of tyres.
 Technical Factors
- introduction of new technologies in plants require
capacity expansion

8. Porter’s Five Forces
 Threat of Substitutes
- availability of cheaper options around 20-25% of cost.
 Threat of New Entrants
- highly capital intensive with specific level of technological expertise.
 Industry Rivalry Firms
- existence of various established players like MRF, Apollo, CEAT, JK Tyres,
etc.
 Bargaining Power of Suppliers
- low because of 150 days credit and credit being offered at LIBOR (London
Interbank Offered Rate).
 Bargaining Power of Buyers
- OEMs in strong position due to contracts with relative tyre manufacturers
resulting in stable price.

9. Impact of GST
 Benefited from implementation of GST.
 Elimination of complex multi-layered indirect taxation
system.
 GST tax – 28%
 Help in evasion of unfair trade practices and falsification of
costs.
 Increased demand of tyres.

10. Future Prospects
 Exports will account for 26% by 2021.
 India – expected to become 4th largest tyre
manufacturer by 2020 after China, US and Japan.
 India – 3rd largest by 2025.
 Domestic market expected to account for 71% of
total sales by 2021 with overall market size of US $
115 billion.

11. Thank You…