• Domestic tyre volume growth to slow to 4-6 percent in FY2025 due to a high base and subdued commercial vehicle demand.
• Replacement market to remain stable, supporting overall volume expansion.
• Tyre exports to see low single-digit growth after contracting in FY2023.
• High natural rubber and crude oil prices to squeeze margins by 200-300 basis points in FY2025.
• Investments in new capacity to be moderate due to adequate existing capacity and a modest demand forecast.
• Focus on debottlenecking, digitalisation, and R&D for sustainable and smart tyres.
• Organised tyre retreading to grow at a CAGR of 7-9 percent on rising environmental focus and government support.

Domestic Growth to Ease

According to ICRA, India's tyre industry is expected to moderate domestic volume growth in FY2025 due to a high base effect and subdued demand from the commercial vehicle segment. However, healthy replacement market demand and growth in original equipment manufacturer (OEM) sales for passenger vehicles and two-wheelers are expected to partially offset this slowdown.

Nithya Debbadi, Assistant Vice President and Sector Head, ICRA, said: “Tyre exports are expected to remain moderate in the near term because of muted demand growth in key export destinations, namely the US and Europe. Further, supply chain issues arising from the Red Sea crisis have raised freight costs (resulting in increased cost of tyre) and elongated transit times. In terms of domestic factors, despite an elevated base, consumer segments are expected to record a mid-single digit growth (PV at 4-6 percent, 2Ws at 5-7 percent), on the back of healthy underlying demand. However, growth in the CV segment is expected to be impacted by the brief pause in infrastructure activities because of the Parliamentary Elections, with the Model Code of Conduct, which is in force because of the Parliamentary elections, and the impact of high base. Tractor demand growth is expected to be supported by the forecast of above normal monsoons, aiding rural cash flows.”

ICRA expects the replacement market, which contributes to over two-thirds of the industry volumes, to remain stable, aided by healthy demand across the segments. Tyre export volumes, which contribute approximately 25 percent of the industry’s sales (by value), are estimated to have recorded a low single-digit growth in FY2024 after contracting by around seven percent in FY2023, owing to demand shrinkage in key markets amid inflationary pressure and higher interest rates.

 “After a strong growth in two consecutive years, the tyre industry’s revenue growth (consolidated for ICRA’s sample set of seven leading tyre manufacturers) is estimated to have moderated to mid-single digits in FY2024 with estimated domestic volume growth of 6-8 percent, flattish realisations and subdued exports. For FY2025, the industry revenues are expected to grow by 5-7 percent, primarily driven by domestic OEM and replacement segments,” added  Debbadi.

Margins to Contract on Rising Input Costs

Indian tyre companies' operating margins, which soared to 15-17 percent in FY2024 on the back of favourable raw material prices, are expected to take a hit in FY2025. This comes after a sharp increase in input costs since January 2024.

Global supply shortages triggered by adverse weather in Southeast Asia, a key natural rubber (NR) producing region, have caused international NR prices to jump 25-30 percent in the past four months. The RSS3 grade, a benchmark NR type, is currently trading around INR 185-186 per kg, with domestic prices mirroring this rise due to India's reliance on NR imports. This, coupled with increasing crude oil prices, is likely to squeeze tyre industry margins by 200-300 basis points in FY2025, according to ICRA.

Focus on Efficiency and Sustainability

With existing capacity utilisation at 75–85 percent, investments in new plants are expected to be moderate. The industry will likely shift towards debottlenecking existing facilities, process improvements, digitalisation, and research and development (R&D) for sustainable and smart tyres with lower rolling resistance and improved safety features.

Growth in the Retreading Segment

Rising environmental concerns and government initiatives are expected to drive the organised tyre retreading market at a CAGR of 7-9 percent during FY2023–FY2026. Focusing on sustainable practices, improved technology, better road infrastructure, and increasing radialization in the commercial vehicle segment will support this growth.

Credit Metrics to Remain Comfortable

Despite the expected margin contraction, the industry's credit metrics are forecast to remain healthy due to ongoing profitability and moderate capital expenditure plans. The industry is expected to continue investing 6–9 percent of its revenue in capex during FY2025.

As part of a strategic effort to increase its presence in the region's premium original equipment (OE) market, Kumho Tire has confirmed its plans to establish its first tyre production facility in Europe by 2027.

The company has shortlisted Poland, Serbia and Portugal as possible locations for the plant, which is projected to need an investment of more than KRW1 trillion (USD 705 million). The decision is closely linked to Kumho’s ambition to strengthen its partnerships with European automakers and was revealed by Kumho Tire CEO during the South Korean premiere of Kumho's new Ecsta Sport tyre line.

Kumho has recently secured OE supply contracts with major brands such as Mercedes-Benz, BMW and Volkswagen Group. At the moment, Kumho runs eight tyre production plants in China, Vietnam, South Korea and the US. Its capacity to compete in the premium OE market, however, has come to be perceived as being constrained by the absence of a European production base. Through the benefits of local production, the new facility will improve response to European client requests, save freight costs and shorten delivery times, all of which will strengthen the company's partnerships.

Sentury Tire USA has opened pre-enrolment for its two associate dealer programmes (ADPs), the Delinte HYPERDRIVE Associate Dealer Program and the Landsail Elyte Associate Dealer Program, underscoring the company’s commitment to rewarding dedication and partnership to the Landsail and Delinte brands.

The ADPs, which are customised for each brand and intended to encourage dealers, will formally start on 1 June 2025. Both programmes give dealers access to special benefits, incentives and strong tools to help them expand their businesses. This involves dependable customer service, effective marketing and worthwhile financial incentives to promote dealers' success at every stage.

Beginning in Q3, dealers may earn up to USD three per tyre through the Delinte HYPERDRIVE Associate Dealer Program. Dealers can receive retroactive benefits for purchases completed in Q2 if they register before 1 June. The awards are available for all Delinte PTR, LTR and the new DV3 LMD AS last-mile delivery tyres. For all Landsail PTR and LTR tyres, independent dealers that sign up for the Landsail Elyte Associate Dealer Program can also earn up to USD three per tyre. For customers who sign up by June 1, the new LMD 100 AS last-mile delivery is also eligible for the benefits and will get the same early bird incentive for Q2 2025.

No initial order is necessary. Dealers only need to register to begin making money. According to the monthly programme rewards structure, 48 tyre purchases each month are eligible for a reward of USD one per tyre, 120 tyres are eligible for a reward of USD two per tyre and 240 or more tyres are eligible for a reward of USD three per tyre.

ENSO, a London-based tyre manufacturer engaged in the production of sustainable tyres specially designed for electric vehicles (EVs), has launched its new ENSO Premium range of EV-specific ultra-high-performance (UHP) tyres aimed at drivers of high-performance EVs such as the Tesla Model 3 and Model Y.

Specifically designed for electric passenger vehicles, the ENSO Premium range comes with A/A EU-label ratings for both energy efficiency and wet grip. The tyres are designed to provide safety, increased range and a reduced total cost of ownership. Conventional tyre designs frequently fall short of the special performance needs of electric vehicles, which include greater vehicle weight, regenerative braking and higher torque loads. By lowering tyre wear and rolling resistance, ENSO Premium takes care of these issues.

The company is an authorised provider of replacement tyres for LEVC's electric taxis and has partnered with Uber to install its tyres in high-mileage metropolitan areas. The company now plans to grow throughout Europe and North America, and with ENSO Premium, it is now offering its services to individual EV owners throughout the United Kingdom. According to ENSO, the range offers advantages including longer tyre life and fewer replacements, lower energy usage, fewer charging stops and lower CO₂ emissions and tyre particle pollution.

Gunnlaugur Erlendsson, CEO and Co-Founder, ENSO, said, “We’re plugging a long-standing gap in the tyre market by offering EV drivers a purpose-built, affordable, premium EV tyre alternative that matches the innovation of their EV.”

Kraton Corporation, a leading global sustainable producer of specialty polymers and high-value bio-based products derived from pine wood pulping co-products, has announced a general price hike in North America for its SBS, SIS and HSBC product lines with effect from 1 May 2025.

Following a careful analysis of the effects of recently implemented tariffs, related cost increases and a conclusion that the company cannot independently absorb these repercussions, Kraton is adopting these pricing hikes, according to a company statement. The company further said that it will keep an eye on the scene and reassess these measures promptly in the event that conditions and US import tariffs alter.