India’s tyre industry is bracing for a tough fiscal year, weighed down by sluggish demand, volatile raw material prices and muted export growth. Revenue is forecast to expand just 7-8 percent – supported by modest price hikes and a marginal rise in volumes – marking a second straight year of single-digit growth. However, operating margins are set to contract sharply as natural rubber prices remain elevated despite recent moderation. In a wide-ranging discussion, Anuj Sethi, Senior Director at CRISIL Ratings, unpacks the factors shaping the sector, from price pressures and replacement demand to global headwinds and evolving trade dynamics.

How would you characterise the current fiscal year for the Indian tyre industry, considering its challenges and opportunities?

With volume expected to grow just by about 3-4 percent due to sluggish demand, overall revenue growth will remain in single digit for the second straight year, this fiscal. On the other hand, high raw material prices, especially of natural rubber, rose sharply over the past 12 months and have only recently begun to moderate. To a moderate extent, tyre manufacturers are increasing tyre prices in the replacement market to offset the impact of higher input prices, albeit operating profitability will still be impacted this fiscal.

The report mentions 7-8 percent revenue growth this fiscal year, supported by a 3-4 percent increase in realisations and volume. What specific factors could push growth beyond this forecast, and what risks might undercut it?

While realisation growth due to price hikes being undertaken by tyre manufacturers is a certain given sharp increase in natural rubber prices, higher than projected volume growth could take the growth higher than expected. With about 2/3rd of the domestic demand

coming from replacement segment, and it being the primary volume driver, any significant decline in that demand can impact the growth forecast other way.

Given that replacement demand is the primary volume driver, how do you assess the longevity of this demand surge in the context of evolving consumer preferences and vehicle usage patterns?

The replacement demand is expected to sustain over the medium term driven by the strong automotive sales achieved in previous fiscals.

With operating profitability projected to drop 300 basis points, what contingency measures are tyre makers considering beyond gradual price increases to mitigate this impact?

The price of natural rubber, which constitutes about half of the raw materials, continued to surge sharply in the first half of fiscal 2025. However, ability to pass on this increase is limited due to modest volume growth. Small price hikes and continued focus at improving operating efficiencies on an ongoing basis is another way to offset the impact to some extent.

Natural rubber prices have been highly volatile, reaching record highs and then falling to around INR 170 per kg. What is your outlook for natural rubber prices in the near to medium term, and what factors will likely influence their movement?

The sharp rise in natural rubber prices is due to a global shortage caused by inclement weather in major producing countries such as Thailand and Vietnam, which account for about half of the global production. Going forward, increase in supply with improving hectarage and slowdown in global economies is likely to drive correction in international rubber prices. In the last couple of months, some moderation in natural rubber prices has happened.

China has a surplus in crude oil-derived raw materials, including carbon black and other chemicals. Do you anticipate this surplus impacting global prices for these commodities, and how might Indian tyre makers benefit or face challenges as a result?

Share of natural rubber in tyre manufacturing is 47 percent, while carbon black accounts for ~20-22 percent. Should carbon black prices remain under control, it will benefit domestic tyre manufacturers.

Export growth is expected to remain muted at 2-3 percent. How does the current geopolitical climate, including sanctions or trade restrictions, further complicate Indian tyre makers’ access to markets in North America and Europe?

Export growth is expected to remain sluggish due to challenging business conditions in US and Europe. However, certain segments like off-the-road tyres are beginning to see better prospects as stocks with dealers are moderating. This could help players with presence in the off-the road- tyre segment.

Exports to key markets such as North America and Europe are under pressure due to economic challenges and unviable operating costs, leading to plant shutdowns in regions like US, Europe and Israel. Is the Indian tyre industry at risk of facing similar challenges, or does it have structural advantages that mitigate these risks?

Indian players are better placed compared to some of the western peers due to comparatively lower cost of operations, though operating profitability has come under pressure this fiscal because of higher imported rubber prices. Also, Indian players have flexibility to supply in small batch sizes unlike Chinese peers, and hence this also works to their advantage, more prominently in higher margin segments such as off-the road tyres.

Have tyre makers explored new international markets or alternative trade routes to counter supply chain disruptions and higher freight costs?

Not really; to circumvent the difficult environment around the Suez Canal, vessels are going around the Cape of Good Hope, adding 2-3 weeks and additional freight cost on exports. Some of the costs are being shared with the customers.

The report references Extended Producer Responsibility (EPR) regulations. How significant is the financial and operational burden of compliance for tyre makers, and what progress has been made in addressing this?

Adoption of EPR regulations is not expected to have a very sizeable impact on profitability, though it will lead to investments in strengthening processes and in technology.

Iochpe-Maxion SA, a world leader in automotive wheels production and a leading producer of automotive structural components in the Americas, has appointed Pieter Klinkers, the current Chief Executive Officer (CEO) of Maxion Wheels, as President and CEO of Iochpe-Maxion SA with effect from 16 April 2025.

Klinkers replaces Marcos Oliveira, who will step down at the end of his term in line with the senior leadership succession plan. The Iochpe-Maxion Board of Directors has nominated Oliveira to be a member of the slate for the Board of Directors election at the upcoming regular general shareholders' meeting, which is also set for 16 April 2025.

Over the course of more than 30 years, Klinkers has built a prestigious career in the automotive sector. After a 10-year stint at Michelin, he joined Hayes Lemmerz Inc in 2005, which was later purchased by Iochpe-Maxion. He has been in charge of the company's worldwide wheels division since 2015. Klinkers will be replaced as CEO of Maxion Wheels by Mark Gerardts. Since joining the firm in 2015, Gerardts has held a number of positions with progressively more responsibility, most recently serving as the Business Unit President for Europe, Middle East and Africa (EMEA).

The Automotive Tyre Manufacturers’ Association, the apex body representing automotive tyre manufacturers in the country, has announced its new leadership structure.

The apex tyre body has elected Arun Mammen, Vice Chairman & Managing Director of MRF as the new Chairman of ATMA and Hiroshi Yoshizane, MD, Bridgestone India as the new Vice-Chairman of ATMA.

The appointment comes at a crucial juncture as ATMA celebrates 2025 as its Golden Jubilee year.

Mammen hold a graduate degree from the Madras Christian College and MBA from the Ashland University, US. He became the Managing Director of MRF in 2004 and Vice Chairman and Managing Director in 2017.

He believes that the Indian tyre industry should strive to be a major global manufacturer in the next decade and he will work on policy enablers to make the industry more competitive and technologically superior for meeting the needs of developed countries.

ATMA highlighted that given the global push towards carbon emission, there is a clear need to reduce carbon footprint in manufacturing and supply chain among others. The tyre industry on its part is already investing towards regenerative and recycled raw materials, along with using clean energy and reduction in water usage in manufacturing.

Furthermore, the INROAD Project as an industry initiative is expected to further add 200,000 hectares of new rubber plantation in the next two years.

“Over the next five years, focus needs to be given to upgradation of quality and training of the stakeholders,” added Mammen.

Continental is celebrating the 40th anniversary of its iconic TKC 80 motorcycle tyre with the launch of its ‘On the Trail of a Legend’ campaign. The campaign will focus on the success story of the TKC 80 and will also showcase its unfading popularity among fans.

The TKC 80 motorcycle tyre, which has been providing exceptional grip for dual-sport and long-distance enduros on anything from endless off-road trails to twisting rural roads since 1985, is known for its rough tread and precise tuning. The TKC 80 was well greeted by the several foreign journalists that covered the event from the very beginning of its market introduction in Estoril, Portugal. With a 50 percent on-road and 50 percent off-road concentration, it was specifically designed for the first travel-ready enduros of the era and provided reliable durability in all circumstances.

Continental will also be providing end consumers in specific areas with a limited-edition anniversary package beginning in March 2025. A birthday package with special extras, such as motorcycle accessories and an air compressor to handle the obstacles of their respective areas with the correct air pressure, will be given to customers who purchase a TKC 80 set.

Raphael Michels, Product Manager for Motorcycle Tyres at Continental, said, “Since its introduction, we have continuously developed the specifications of the tyre while maintaining its distinctive and renowned tread design. For a lot of motorcyclists, this tyre is more than just a product – it is a companion on unforgettable journeys. It is thanks to our continuous development that the TKC 80 remains the first choice for those who know no limits. Let us take another step on our journey ’On the Trail of a Legend' and explore the next destination together.”

Kraton Corporation, a leading global sustainable producer of speciality polymers and high-value biobased products derived from pine wood pulping co-products, has appointed Prakash Kolluri as President of Polymer Business.

Having previously held executive roles at both Kraton and Cariflex, a Kraton spin-off under DL Chemical, Kolluri has a lot of polymer industry knowledge. He effectively oversaw Cariflex's worldwide isoprene rubber latex growth as CEO, enhancing the company's market dominance in specialist and medical applications. Kolluri will concentrate on growing the company's footprint in high-growth areas, simplifying processes, fostering innovation and reducing complexity in his new position as President of Kraton's Polymer Business.

Kolluri said, “I am honoured to return to Kraton and take on this new leadership role. Kraton has a rich legacy of innovation in polymer solutions, and I look forward to working with our talented team to accelerate growth, enhance sustainability and deliver value to our customers worldwide.”

Marcello Boldrini, CEO, Kraton, said, “We are thrilled to welcome Prakash back to Kraton. His deep industry expertise, strategic vision and track record of successful global expansion make him the perfect leader to drive the next phase of growth for our Polymer Business.”