What does ‘Tyre Labelling’ guarantee? It shows schematically the classification of tyres in terms of fuel consumption, noise and wet performance. The tyre manufacturer is obliged to demonstrate the values ​​indicated on the label in tests carried out in accordance with the test method described in EU regulations. This essentially means that the performance parameters of the tyres in question are at least exactly at this level or above the positive side of the limit scale, but only when the tyres are new, i.e. at the beginning of tyre installation. It is technically expected that the stated performance values ​​will not change until the end of the first 10,000 kilometres or until wear of approximately 1.5 mm occurs.

Who knows what the actual grading of tyres will be after the second 10,000 kilometres or at 3 mm down wear stage? No one can correctly estimate what the wet noise and traction will be after most of the mini-kerf or notches are eliminated or reduced, but only when the tyre is tested it can be monitored. Or if the tyre's grooves are completely ‘V’ type, and after a period of time the tyre's traction forces change significantly, then rolling resistance and wet braking behaviour will become significantly different.

The performance level of worn tyres might be therefore quite uncertain and must be taken into account on a legal basis. The wet performance of worn tyres will be a check point for ‘wet grip class’ grading on EU Tyre label after 1st July of 2024, which is in line with the demand of tyre industry parties asking more sustainability.  Thanks to the introduction of a new EU regulation R117-04, tyres sold in EU distribution channels meet the same minimum wet braking performance requirements not only when new but also when worn down to the legal minimum tread depth of 1.6 mm.

EU is the most sensitive and advanced market to sustainability in the world. It is driven at any time by the increasingly aspiring regulatory agenda and there is always a constant development in this respect. Requirements of consumers or the automotive industry are more demanding by a more conscious society. Tyres’ life cycle contributing to a more sustainable future proactively identifies and addresses the potential human health and environmental impacts associated with the industry. Therefore, safer and more environmentally sound mobility options are always geared towards resource conservation and fuel economy amongst the focus points of innovations.

 

Thanks to the introduction of a new EU regulation R117-04, tyres sold in EU distribution channels meet the same minimum wet braking performance requirements not only when new but also when worn down to the legal minimum tread depth of 1.6 mm. They must therefore be tested both as new and as worn tyres before receiving the 'wet grade’ on the label. This means that EU drivers can now buy safer tyres that meet the legal minimum standards for wet braking performance, even when worn down to the legal minimum tread depth.

As a weak point of R117-04 regulation, it only covers wet braking of new and worn-out tyres. It does not cover ‘noise’ and ‘rolling resistance’ items given on labelling or more simply endurance performance level of especially cheap tyres in the market with a 1.6 mm tread depth assuming they will not change!

Informal wet braking tests conducted by ETRTO show that the wear rate of group ‘C1’ tyres can decrease by up to 50 percent, while the loss rate of group ‘C2’ and ‘C3’ tyres remain in 10 percent. The new regulation R117-04 therefore does not apply to group ‘C2’ and ‘C3’ tyres, as they normally have a greater tread depth and it is assumed that the level of wet braking does not change during the wear phase. However, since group ‘C1’ tyres have a smaller tread depth, it is assumed that their contact patch is more subject to negative changes, so that the wet braking performance also changes more after use. 

As a weak point of R117-04 regulation, it only covers wet braking of new and worn-out tyres. It does not cover ‘noise’ and ‘rolling resistance’ items given on labelling or more simply endurance performance level of especially cheap tyres in the market with a 1.6 mm tread depth assuming they will not change!

The new R117-04 regulation may mainly be considered as sustainability issue rather than total safety. It promotes tyre usage until defined min tread depth creating a room to consumers to trust the tyres above minimum tread depth level. However, it should still be positively considered a step forward to the worn tyres’ safety regulation. It accepts that wet braking level of worn tyres are more critical and important safety issue and should be regulated. By the way, consumers may use their tyres in longer stage, giving a contribution to a greener world.

The transparency provided by the new regulation, which came into force on 2024 July, is even more essential, as some performances deteriorate over time, especially in terms of safety. R117-04 in this term guarantees enhanced safety, better respect for the environment and the protection of motorists’ purchasing power. 

Common consumer behaviour shows that 50 percent of car tyres are demounted before reaching a residual depth of 3 mm and replaced with a new set of tyres.

Michelin has studied the safety margin of used tyres since 2018 and has stressed the importance of tyres to be used until 1.6 mm remaining tread depth. The best way was to test worn tyres because it can easily reflect the real risks a driver can face on the road. During the study, the results were surprisingly varied. It was shown that some worn tyres performed better than new tyres when braking on wet roads. This was exactly what Michelin has been saying for a long time. The performance of different tyre brands also varies considerably.

Common consumer behaviour shows that 50 percent of car tyres are demounted before reaching a residual depth of 3 mm and replaced with a new set. In global scale, this makes around 400 million tyres are prematurely scraped every year. A quarter of this amount, or almost 100 million tyres, would save at least 6 million tonnes of CO2 instead of reproducing it. The implementation of this regulation will certainly have an impact on the demand for new tyres in Europe.

R117-04 presently focus mainly on only tread depth attribute, while aspects such as ageing or rubber structural integrity degradation remain outside the scope of this amendment.

In addition, in the hope that higher performance requirements will not result in higher costs for consumers, the changes are designed to encourage consumers to continue using sustainable tyres instead. Once drivers are confident in their tyres, they will drive to a tread depth of 1.6 mm, potentially saving EUR 6 billion a year by not complying with proposals to reduce tread depth to less than 3 mm.

R117-04 presently focuses mainly on tread depth attribute, while aspects such as ageing or rubber structural integrity degradation remain outside the scope of this amendment. We also mentioned some additional weak points above. However, imposing these standards, will increase the driver’s awareness for worn tyres performance limits and let them to make more informed decisions when purchasing tyres.

On the other hand, understanding the ‘NEW AND WORN PHASE TESTS CONCEPT’ will become the standard mentality of the customer, who will be able to assess the attitude towards the initial performance of the tyres, which may change over time, but should not! The new challenge will be to weed out products that are not gripping in the wet when worn and have not met these expectations for years..!

Making a tyre is an extensive process that includes everything from formulation to testing. With the advancement in software-defined technology, tyre testing is increasing within a simulated environment. However, as real as the rubber wheel is, its testing in real-world environment stands as imminent in future course despite the current trend of simulation.

Alluding to this, Black Donuts Head of Tyre and Material Development Ilkka Lehtoranta told Tyre Trends, “Alongside the advanced laboratory equipment and various simulation methods, real-world tyre testing remains essential now and in the future. Physical testing in diverse conditions is critical for final evaluation and validation. Real-world tyre testing will continue to play a significant role moving forward. At Black Donuts, we offer comprehensive tyre testing services through our subsidiary, BD Testing. This company specialises in outdoor testing to ensure that products perform reliably in all environments.”

Commenting on the role of simulation in tyre development, he said, “Simulation plays a critical role in tyre development, offering a proven and essential part of the design process. One key type of simulation is finite element analysis (FEA), a mathematical method used to model and simulate physical phenomena. FEA is widely employed across industrial sectors including tyre manufacturing to predict and validate design performance before creating physical prototypes.”

“For tyre development, simulation tools provide significant advantages. By conducting design verification and validation virtually, companies can reduce the need to produce experimental tyre, which saves raw materials and minimises waste. This approach not only supports environmental goals but also accelerates the development timeline, allowing for faster iterations and refinements. Black Donuts integrates various simulation methods into its development process, heavily relying on the results to optimise designs,” he added.

Testing facilities

The Finnish company offers comprehensive tyre testing services with a primary focus on outdoor testing rather than indoor facilities. While indoor testing facilities are widely available globally, including in Europe, Asia, India and North America, Black Donuts has chosen to concentrate on outdoor testing. The company leverages the expertise of skilled test engineers and drivers, who understand the nuances of environmental and external factors, to deliver dependable testing outcomes. 

“We operate a proving ground in northern Sweden, where winter tyres are tested under snowy and icy conditions. Additionally, we have a testing centre in Finland’s Tampere region, which serves as a hub for evaluating tyre properties across a range of conditions. The facilities enable grip testing on ice, snow, wet and dry surfaces; noise testing for internal and external evaluations; handling and comfort assessments; aquaplaning analysis and tailored tests developed to meet specific customer needs,” informed Lehtoranta.

He mentioned that test drivers are central to Black Donuts' outdoor testing process as their expertise in assessing tyre behaviour is critical for validating designs and providing feedback to engineers. This collaboration ensures the test results are seamlessly integrated into the design and development process, allowing engineers to refine tyre properties based on real-world performance insights. 

Winter testing is conducted during the colder months to utilise natural snow and ice conditions. While the company does not have an indoor snow-testing facility, it makes use of local resources such as ice halls for ice-related evaluations. For summer tyres, the focus shifts to testing grip, handling and noise levels under both dry and wet conditions. 

In addition to testing during tyre development, Black Donuts supports homologation and certification processes. Through its subsidiary, BD Testing, the company provides accredited testing services and official test reports required for certifications by authorities. This includes European homologation tests for snow and ice performance, as well as specialised assessments such as road wear impact evaluations for studded tyres in Scandinavian markets. 

The company also conducts internal testing to collect data, monitor market trends and benchmark tyre performance. “This continuous research helps us to identify industry standards and emerging trends, ensuring that our tyre development projects remain innovative and competitive,” averred Lehtoranta.

Industry peek

Black Donuts provides end-to-end solutions for the global tyre industry, catering to both manufacturing and tyre research and development needs. Its services cover tyre design and production, materials research and development, making the company a comprehensive partner for tyre manufacturers globally. Whether supporting the establishment of new tyre plants, upgrading existing facilities or offering specific technical expertise, it has a broad portfolio of engineering and technological solutions. 

In production, Black Donuts assists manufacturers with everything from setting up greenfield projects to improving brownfield facilities. For existing manufacturing lines, the company conducts thorough audits to identify bottlenecks, inefficiencies and quality issues. The focus often includes increasing automation, enhancing productivity, reducing manufacturing costs, improving quality, minimising scrap and waste and even reducing tyre weight. These solutions are tailored to meet the specific demands of the client. 

For greenfield projects, it offers turnkey solutions. These include site selection support, plant layout design, architectural planning, defining machinery specifications, automation strategies and utility calculations. During the execution phase, an on-site engineering team supervises construction, machinery installation, commissioning and the ramp-up of production processes. The company also trains operators, troubleshoots quality issues and supports clients in improving efficiency. The level of post-production support is flexible with options for ongoing assistance tailored to the client's needs. 

Alluding to how the design and production process differ across regions, the executive said, “The design and production processes themselves are generally consistent across regions. However, automation levels may vary based on factors like labour costs and plant location. European facilities, for instance, often require higher automation levels due to higher manpower costs, though automation is increasingly being adopted in Asia as well. This trend has significantly reduced manpower requirements in tyre manufacturing globally, driven by advancements in automation technologies.”

Research and development

In tyre development, significant trends include the growing demand for sustainability, increased automation in production processes and evolving design needs tailored to regional and market-specific conditions. Tyre materials development is a subset of tyre development but is critical due to its role in addressing environmental and performance challenges. Black Donuts works on both these aspects, helping clients innovate while navigating changing demands in the tyre industry.

The push for sustainability is the most pressing challenge in tyre material development. There is an increasing emphasis on replacing fossil-based materials with sustainable alternatives like bio-based and recycled raw materials. Black Donuts plays a pivotal role in identifying and testing new materials available in the market, integrating them into tyre compounds and ensuring its compatibility with production processes.

In addition to working with existing materials, Black Donuts has initiated its own research and development efforts to explore innovative, out-of-the-box sustainable solutions. These include new bio-based raw materials currently under internal development, which are expected to be launched soon.

On the tyre development front, it offers comprehensive services for creating new tyre lines across segments like passenger car radial (PCR), truck and bus radial (TBR) and off-the-road (OTR) tyres. The designs cater to various markets including Europe, US, Asia and Africa, ensuring optimal performance under different environmental and regulatory conditions.

Customisation for specific client needs, whether summer or winter tyres, and adapting designs to suit regional preferences are also part of the company's everyday operations.

Competitive edge

The rapid evolution of technology, automation and sustainability trends demands agility and adaptability. Black Donuts maintains an active presence in the market, staying updated on global developments by leveraging its extensive partner network, including machinery and raw material suppliers, to gather insights and anticipate emerging trends.

Alluding how the company selects partners, the executive revealed, “The partner selection process is fundamental to delivering high-quality, innovative solutions. Many members of our team have decades of experience and longstanding relationships with suppliers, which provide a solid foundation for selecting trusted partners. Besides, there are several factors that are taken into account to source new partners.”

One of the most crucial factors in selecting partners is the technological capability. Black Donuts prioritises partners that offer cutting-edge technologies, which can add value to both the company and its customers. It also carefully evaluates the ability of potential partners to deliver machinery, raw materials and components as promised. Moreover, the company seeks partners who share values of sustainability.

While Black Donuts draws on its established relationships with trusted suppliers, the company remains proactive in sourcing new partners and exploring the latest advancements in technology and materials.

Sustainability

The executive noted that in the next five years, the proportion of renewable or bio-based materials in tyre production is expected to remain relatively modest. “Currently, aside from natural rubber, which makes up around 20 percent of tyre materials, the use of other renewable materials is almost negligible. While the industry faces challenges in sourcing and incorporating bio-based and recycled raw materials, it is estimated that within five years, the share of such materials could reach 30-35 percent of the total tyre content,” said Lehtoranta.

Alluding to industry goals of incorporating 100 percent renewable materials in tyres by 2050, he noted, “Incorporating 100 percent renewable materials in tyres is possible, but it will require collective action across the entire industry. All stakeholders must align and collaborate towards this common goal. Many mid-sized and smaller companies may struggle with this transition on its own, which is where industry partners can offer valuable support. This is also why companies are increasingly focusing on researching and developing new bio-based raw materials in order to expand the availability of these alternatives in the market. However, scaling these innovations to a commercial level remains a challenge as many promising ideas have not yet been fully realised on a large scale,” informed the official.

He also noted that achieving sustainability in tyre production will undoubtedly require significant investment. A key challenge is that sustainable raw materials are currently more expensive than conventional alternatives. Unfortunately, many end consumers are not yet willing to pay a premium for tyres made with sustainable materials.

Market presence

Black Donuts has a presence on all continents. “We have a strong market footprint, serving a wide range of regions. For instance, of the 25 largest tyre manufacturers, 20 have been or are currently our customers. We also have upcoming projects across Europe, Asia, North America, South America and Africa, highlighting our global reach and ongoing expansion,” said Lehtoranta.

He added, “In terms of revenue, our biggest business segment revolves around providing end-to-end solutions for tyre plants including services related to tyre factory setup and operations. This is the largest segment in terms of financial impact. Additionally, tyre and material development is another major part of our business contributing significantly to our overall revenue.”

North America is one of its largest markets, followed by Europe and Asia, though revenue distribution can vary year by year due to the nature of projects.

He also noted that regulations play a crucial role in driving the business. The regulation concerning studded tyres, for instance, which has been important in the European market. Winter tyre regulations, particularly the requirement for the snowflake symbol on tyres, are also significant, especially in Nordic countries.

Additionally, a newer regulation being prepared by the European Commission concerning tyre abrasion, which is becoming a more prominent issue due to sustainability concerns, is also slated to drive business.

Commenting on the same, the executive said, “Tyre abrasion, especially concerning microplastic emissions, has gained attention in Europe as tyres are recognised as a major contributor to microplastic pollution. The industry and authorities are now focusing on reducing this issue by improving tyre wear properties. The goal is to ensure that tyres generate less microplastic per kilometre driven. This is particularly relevant in regions with snowy and icy roads, where tyre performance and durability are critical.”

Furthermore, he highlighted that the difference between snow and ice significantly impacts tyre performance. Ice presents much lower friction than snow, which is why ice poses a more challenging driving condition. Tyres perform worse on ice, resulting in longer stopping distances. In regions with icy roads, like the Nordic countries, manufacturers often use studs to enhance grip on ice, improving safety by reducing braking distances.

Expansion and demand

The executive mentioned that the company is expanding in the Asian and North American markets. “While winter tyres are a big demand in these regions, it's important to note that winter tyre usage varies by region. In China, for example, there is a significant demand for winter tyres, particularly in colder regions, and Japan has a large market for them as well, with regulations encouraging its use. North America, especially in regions with harsh winters, also has a strong market for winter tyres,” said Lehtoranta.

“Despite the slowdown in the European market and concerns about the US market, we still see North America as a strong growth area for us. We haven't noticed any significant slowdown in our business there and the market remains promising. However, we also see great potential in Africa, where we are seeing a lot of investment activity,” he added.

Answering what factors led the company to explore avenues in Africa, he said, “Several factors are driving the growth potential in Africa. Currently, there is little local tyre manufacturing in the region and many countries are looking to establish local industries to boost the economies and create jobs. Additionally, Africa has significant natural resources including natural rubber and oil, which can be used to produce synthetic rubbers and other raw materials needed for tyre manufacturing. Local production would enable companies to add value by refining these raw materials into finished products like tyres, creating a more sustainable and profitable cycle.”

Commenting on future plans, he said, “Our focus will be on the entire tyre lifecycle, from raw materials to production, performance and ultimately, the end of life of the tyres. We are working on developing solutions that handle tyre disposal and recycling with the goal of creating a fully sustainable tyre manufacturing process. This approach would ensure that our products and services are environmentally friendly throughout the entire supply chain.”

Industry challenges

Tyre manufacturing factories often encounter several challenges when setting up greenfield and brownfield projects. One of the primary challenges is managing the project’s schedule and budget, ensuring that the project stays on track and within financial constraints. Another critical aspect is reaching the targeted capacity for the plant, which can be challenging given the complexities of large-scale projects.

Additionally, there are technological hurdles that the company must overcome, especially in terms of innovation and research. Developing new technologies and sustainable solutions for the industry is not an easy task and requires a long-term commitment.

In terms of business challenges, the company is focused on technological innovation and research. Developing cutting-edge technologies and creating sustainable solutions for tyre manufacturing is a key priority. However, this process is often time-consuming and requires significant effort.  This is where Black Donuts’ know-how and cutting-edge solutions come into play. The company is currently focused on pushing the boundaries of what is possible within the tyre industry, particularly regarding sustainability.

Regarding operations in India, the company is in the early stages of its expansion. Although it does not have a physical office in India yet, it has begun operations under the leadership of a technical director. The goal is to develop the business in India and gradually establish a technical centre that will focus on tyre simulation and other technical areas of tyre development.

The Chinese market is another area of focus. While it is not the largest market for the company, it remains an important one, with ongoing projects and customers in China. The company recognises that China is a significant player in the global tyre industry, and it continues to engage with the market, even though it is not the biggest revenue driver.

Additionally, the company is observing a trend where manufacturing is returning from Asia to local markets, a shift that began before the pandemic and has been accelerated by it. This trend is visible in regions like Africa, North America and Europe, where companies are establishing local production to mitigate supply chain issues and reduce reliance on distant markets. This shift represents a significant opportunity for the company to expand its operations and grow its presence in these regions.

Please forgive my indulgence on the topic of tyre testing, but the end result of a safe tyre is, the tyre is only safe IF the appropriate inflation pressure is used!

The physical road testing of a pneumatic tyre is the last part in a very long line of testing procedures used to manufacture the tyre. The actual manufacturing is not the end of the line as the tyre has to be competently mounted to a wheel and then appropriately inflated prior and during use.

If the tyre/wheel assembly is not balanced in mass and dimension, then the tyre is not going to perform as expected, nor will the tyre perform as expected if the inflation pressure is not appropriate to the load and speed the vehicle is going to be utilised at.

The humble pneumatic tyre is a composite assembly of many different materials, each having to work in harmony and unison with each other.

The different materials used to manufacture the tyre have already undergone substantial testing as individual products to assure the sought-after properties and qualities are exactly what is required to produce a tyre that is not only safe but performs as expected.

Many years ago, on a major construction project in Asia with one of my clients, the tyre company I was an engineer with suffered many catastrophic tread separation failures. This was a time critical project so having haul trucks out of service was a serious impediment to achieving the extensive earthworks required. A long story short, I was given to understand that there was a change in the supplier of the carbon black used in this particular tyre tread specification. The fresh manufacturer’s product checked all of the (then) testing parameters, but when it came to actual live service, there was a deficiency somewhere. I was never privy to the actual product details, just the end result of seeing haul trucks with fuel and hydraulic tanks on the ground having been slapped off by tread packages parting from the tyre casing. Having up to 1,000 kg of tread rubber flapping out of control is not conducive to a safe operation.

The testing regime for the product used was seemingly insufficient to identify this issue pre-production, ending up with very costly results.

One can read in various publications of tyre testing where a group of journalists and motoring writers take vehicles fitted with various tyre producers’ products around a circuit in an attempt to quantify the performance, in lap times, but more importantly, in feel.  ‘Through the seat of your pants’ is a commonly used phrase.  As a young two-wheel motorcycle racer, I progressed from using treaded road tyres to a full racing slick. The feeling was totally different and, to be honest, I didn’t ever get the slick tread tyres to operate as they were designed.  After progressing to three-wheel bikes (sidecars), slicks became the ideal product.

In todays’ tyre production world, I suggest that the development on MotoGP motorcycles leads the way. Think of a MotoGP bike where cornering lean angles of up to 65 degrees, yes 65 degrees, are common place, all the time transmitting a power to weight ratio of more than 1:1, which is more than one horsepower per kilogramme of weight (including the rider!).  When combined with the technology developed in the giant OTR tyres used in mining, the development of tyre performance is progressing rapidly. The ability of a giant mining tyre to support a load in excess of 100 tonnes per tyre (think 50 average passenger cars, yes that’s per tyre) whilst travelling at 60 km/hr is an everyday event for a mining operation. These tyres on a drive position transmit thousands of horsepower to motivate the truck. These numbers are far in excess compared to your daily drive!

A passenger car tyre benefits greatly from all of this research and development leading to the actual physical testing of the tyre in the hands of the journalists pushing a car around a circuit.

Yet, all this testing can be undone by the end user’s reluctance to verify that the tyre’s operating pressure is appropriate for the duty cycle being undertaken. The adoption of real time tyre pressure monitoring (TPMS) has generated an increase in safety IF the driver actually uses the data.

Race pilots (drivers and riders) carefully study the operating tyre pressure detail as they well understand that just ½ a psi may make the difference between winning or finishing off the podium.

Alas, our industry has not really educated the daily driver to the critical importance of ensuring their tyres have the appropriate inflation pressures installed. Inflation, it seems, is only important to economists and price rises.

All the material testing, quality control in production and physical mounting of the tyre can be undone by the ignorance of the end user in not attending to the inflation pressures adequately. No matter how deep the science used, the quality control measures employed within production our product’s success remains at the whim of the end user as to whether they can be bothered to ensure the very item that provides their safe passage is indeed fit for purpose.

Regardless of the impressive advances in testing technology, the serious quantitative leaps in the use of computer aided design and manufacture, the improvements in material science yielding growth in all the useful features for a tyre combined in production benefitting the end result can be undone by end user apathy. As an industry, we have a programme of continuous improvement, but does the end user have the same? Do they care?

For all the testing programmes we, as an industry, have in place, the one lacking I feel is the understanding of the level of knowledge from the perspective of the driver. Do they understand the information that the physical tyre testing provides? In the case of a motoring enthusiast, very much yes, but they make up a small percentage of the population.

The advent of the Euro 7 standards will draw the performance of tyres into the everyday realm for the legislators and regulators. Again, how the daily drivers that use their vehicles for commuting actually care is an unknown, and I feel that the care factor is probably less than zero.

In speaking with learner drivers, I ask whether the driving instructors had mentioned tyres at all and was totally unsurprised when the answer came back as a no. I know I have said before that unless we can engage drivers into understanding and appreciating their tyres’ contribution to their personal safety whilst driving, then our industries progress will be stymied.

All the progress in material science, advanced vehicle standards, wonderful testing regimes can all be negated when the vehicle driver ignores the very basic of the tyres operating requirement – the appropriate operating inflation pressure. 

How we change the mindset of the end user is still testing my knowledge and patience; it is more than tiring to keep on hearing that people don’t even acknowledge the benefits they enjoy from the use of the product our industry produces.

Please educate the end user on the critical importance their tyres have in overall on-road safety. Look after your tyres, so when you call upon them to look after you, they will be appropriately equipped to do so.

Stay TyreSafe

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.

The U.S. Tire Manufacturers Association (USTMA) has elected three new members to its Board of Directors. The new members are Scott Damon from Bridgestone and Ryan Waldron and Brad Heim from The Goodyear Tire & Rubber Company.

In addition to his role as Bridgestone Corporation's Global Chief Digital Transformation Officer, Damon is the Group President of Bridgestone Americas and the Chief Executive Officer of Bridgestone West (Americas and EMEA). He holds an MBA from Frostburg State University and a Bachelor of Science in Mechanical Engineering from Carnegie Mellon University.

As the President of Goodyear's Americas division, Waldron oversees 28 production plants, 700 retail and commercial vehicle centres, and almost 30,000 employees in seven key nations. Waldron has a bachelor's degree in business administration from Miami University and an MBA from The Ohio State University.

Heim serves as Vice President, Product Development Americas, for Goodyear. Heim earned his bachelor’s degree in Mechanical Engineering from Case Western Reserve University and holds a master’s degree in Mechanical Engineering from the University of Akron.

Anne Forristall Luke, President and CEO, USTMA, said, “We are pleased to welcome Scott, Ryan and Brad to USTMA’s Board of Directors. Their expertise and innovative perspectives will play a pivotal role in accelerating USTMA’s critical mission of advancing innovation, safety and sustainability within the tyre industry, strengthening the association’s positioning to seize new opportunities, address emerging challenges and continue shaping a resilient forward-looking industry.”