Natural Rubber Prices to Pressure Profit Margins; Credit Profiles Remain Stable

Tyre manufacturers in India are bracing for a second consecutive year of single-digit revenue growth as rising natural rubber prices and global economic challenges weigh on the sector. Revenue is forecast to grow seven percent to eight percent in the current fiscal year, driven by a three percent to four percent increase in both realisations and volume, according to an analysis by CRISIL Ratings. 

While this marks a significant improvement from the previous fiscal year, when revenue grew at approximately four percent, it falls short of the compound annual growth rate of 21 percent between fiscal years 2021 and 2023. 

Gradual price increases to offset cost pressures 

Tyre makers are implementing gradual price hikes to mitigate the impact of surging natural rubber costs, which account for nearly 50 percent of raw material expenses. Realisation growth is expected to be staggered throughout the year as manufacturers carefully balance price increases with market demand. 

Volume growth, projected at three percent to four percent, will be driven primarily by replacement demand rather than new vehicle sales. However, the limited ability to fully pass on higher input costs will strain operating margins, which are expected to shrink by approximately 300 basis points to 13 percent this fiscal year, down from 16 percent in the previous year. 

 “Domestic demand accounts for around 75 percent of the industry’s sales (in tonnage terms), while the rest is exported. About two-thirds of the domestic demand is from the replacement segment and the rest is from original equipment manufacturers (OEMs). This fiscal, replacement demand, mainly from commercial and passenger vehicles, will drive volume growth, while OEM demand is expected to rise only between one and two percent due to slow growth in commercial vehicle sales,” says Anuj Sethi, Senior Director, CRISIL Ratings.

Stable cash flows and balance sheets 

Despite these challenges, tyre makers are expected to maintain stable credit profiles due to robust balance sheets and prudent capital expenditure. Cash flow generation, though modestly affected, will remain substantial. Gearing and interest coverage ratios are projected to stay steady at approximately 0.3 times and seven to eight times, respectively, consistent with last fiscal year’s levels. 

A CRISIL Ratings analysis of the six largest tyre manufacturers, which together account for about 87 percent of the industry’s revenue, supports this outlook. 

Export growth weakens 

Export growth is forecast to remain muted at two percent to three percent for the year, reflecting sluggish demand in key overseas markets such as North America and Europe, which collectively account for 60 percent of India’s tyre exports. Geopolitical tensions and supply-chain disruptions have exacerbated the situation, leading to higher freight costs and extended transit times, further curbing export demand. 

Global shortages drive up raw material costs 

The sharp rise in natural rubber prices is primarily attributed to a global supply shortage caused by adverse weather conditions in leading producer countries like Thailand and Vietnam, which together account for approximately 50 percent of global rubber production. 

In addition to natural rubber, the cost of other critical raw materials, including nylon tyre cords, carbon black, styrene-butadiene rubber and polybutadiene rubber, remains volatile due to their dependence on crude oil prices. 

Outlook and challenges 

Looking ahead, tyre makers will likely continue to face pressures from raw material price volatility, original equipment manufacturer (OEM) demand fluctuations, potential changes in import duties, and the implementation of Extended Producer Responsibility regulations. 

Naren Kartic. K, Associate Director, CRISIL Ratings, says, “To support domestic tyre manufacturers, the Indian government has extended the countervailing duty on Chinese radial tyres for five years to ease competition. Plus, given the sluggish demand and pressure on operating margins, tyre makers are implementing appropriate price increases and prudent capital expenditure to ensure that capital efficiencies remain satisfactory. With capacity utilisation at  around 80 percent, tyre manufacturers rated by us are investing around INR 55 billion this fiscal, slightly lower than last fiscal, with a focus on necessary capacity enhancements and debottlenecking.”

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Anyline, a global leader in mobile AI and intelligent data capture technology, has stepped in to help transform how aircraft tyre inventories are managed in New Zealand, supporting logistics firm B&H Worldwide with its mobile AI and data capture tools. The technology has been woven into B&H’s existing FirstTRAC platform, targeting the unique demands of aerospace supply chains where precision and tracking are essential.

Processing times for tyre-related stock tasks have fallen by 60 percent since the system went live. Error rates have dropped sharply, landing between 80 and 90 percent, while data accuracy now sits above 99 percent. The number of tyres handled per hour has also climbed by roughly 30 percent, with warehouse teams using mobile devices to log key tyre details directly on the floor.

New Zealand was chosen as the launch pad for the global pilot, setting a template for future rollouts across B&H’s broader network. The Anyline mobile and web software development kits feed a continuous stream of live data into FirstTRAC, covering stock checks, dispatch requests and bulk uploads. That real-time visibility strengthens compliance and creates a clear digital trail for high-value assets.

For Anyline, the project shows how AI can remove friction from manual logistics work, especially in aerospace where every part must be traceable. The next site already lined up is Melbourne, marking a clear step forward in B&H’s wider push towards digitised, resilient operations.

Christoph Braunsberger, CEO, Anyline, said, “We’re proud to support B&H Worldwide in transforming a highly specialised aerospace logistics workflow with AI. This implementation demonstrates how intelligent tyre data capture can improve speed, accuracy and traceability in safety-critical operations.”

Lee Hedges, Branch Manager, B&H Worldwide New Zealand, said, “This implementation represents a significant step forward in how we manage high-value, safety-critical inventory. By introducing real-time tyre scanning, we’ve improved accuracy, speed and traceability across our operations. For our customers, it means greater visibility, faster reporting and increased confidence in the integrity of their stock.”

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Continental has emerged as the dominant force in the 2026 independent European summer tyre tests, securing 13 outright wins and 19 podium finishes across 24 evaluations conducted by leading automotive publications and mobility organisations. The results span a diverse range of tyre segments and test conditions, reinforcing the German manufacturer’s reputation for consistent top-tier performance.

The company’s tyres excelled particularly in braking, wet grip and overall balance, showing reliability across vehicle classes from sustainable products to ultra-high-performance applications. Independent testers repeatedly highlighted Continental’s strong braking performance, high levels of wet adhesion and well-rounded driving behaviour, confirming its premium ambitions.

Among the standout achievements, the PremiumContact 7 was named overall winner in the Auto Zeitung UHP summer tyre test, praised for its balanced wet and dry handling. The SportContact 7 claimed first place in the Auto Bild sportscars UHP test, recognised for precise handling and shortest braking distances. Meanwhile, the UltraContact NXT achieved a leading position in the AvD summer tyre test, proving that sustainability-focused designs can deliver strong core safety performance.

Continuous development in tread design, compound technologies and tyre construction underpins these results, allowing a blend of safety, efficiency and driving dynamics. The 2026 test season ultimately demonstrates Continental’s ability to deliver reliable top-level results across a broad portfolio and a wide range of independent evaluations.

Andreas Schlenke, Tire Expert at Continental, said, “These results confirm the consistency of our product performance across different segments and test conditions. They show that our focus on braking, wet grip and overall balance translates directly into strong results in independent testing.”

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Hankook Tire is supplying its Ventus F200 racing tyre to the HWA EVO.R sedan, competing in the 2026 Nürburgring 24 Hours, taking place from 14 to 17 May in Germany. Serving as the Official Technology Partner of HWA AG, Hankook is providing technical assistance throughout the race weekend with the Ventus F200 fitted to the HWA EVO.R in the open SP-X class for high-performance tuned vehicles. The racing slick is engineered for dry conditions and aims to deliver stable performance under extreme endurance racing demands.

Recognised globally in motorsport, the Ventus F200 incorporates advanced compound technologies that enhance driving performance and achieve roughly a 10 percent weight reduction over its predecessor. The tyre offers strong grip, high-speed stability and precise handling under demanding race conditions. HWA AG, founded by former Mercedes-AMG Co‑Founder Hans Werner Aufrecht, is a noted global motorsport engineering company specialising in high‑performance vehicle development.

This collaboration expands an existing strategic partnership, following Hankook’s original equipment tyre supply for the limited‑production HWA EVO last year. Hankook currently provides several ultra‑high‑performance OE products for that model, including the Ventus evo Z, Ventus evo and Winter i*cept evo3. Moving forward, Hankook plans to strengthen its premium brand competitiveness by deepening cooperation with HWA AG in both OE and motorsport sectors.

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HS HYOSUNG ADVANCED MATERIALS has secured a place on the Dow Jones Best-in-Class (DJ BIC) Korea Index for three years running, marking consistent recognition from the S&P Global benchmark for corporate sustainability. This index, released by a major global financial information provider, is known as a highly trusted gauge of ESG performance. Membership is limited to the top 30 percent of companies per industry, drawn from the two hundred largest listed firms in South Korea by market value.

In a related achievement, the company also appeared in S&P Global’s Sustainability Yearbook 2026 for the second straight year. The latest assessment reviewed over 9,200 businesses across 59 industries worldwide, and HS HYOSUNG ADVANCED MATERIALS earned a Yearbook Member designation by placing within the top fifteen percent of its global industry.

To drive these results, the firm has built an ESG framework on four pillars: Zero Fatality for safety, Zero Emission for carbon reduction, Zero Waste for circular resource use and Zero Impact for stakeholder accountability. Senior management directly oversees a Sustainability Management Committee and specialised subcommittees, ensuring that ESG strategies are implemented across the entire organisation to boost corporate value.

Jim Jindal Lim, CEO, HS HYOSUNG ADVANCED MATERIALS, said, “Our inclusion in DJ BIC Korea for three consecutive years and our second consecutive listing in the S&P Global Sustainability Yearbook demonstrate that HS HYOSUNG ADVANCED MATERIALS has consistently implemented meaningful changes for sustainable management. We will continue strengthening our response to climate change and enhancing our corporate social responsibility.”

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