What are the immediate impacts of COVID-19 on the Indian tyre industry?

Currently, the tyre industry is battling one of the worst crises. The demand for tyres has fallen drastically given consecutive lockdowns and restrictions on mobility. The auto industry is also in the grip of a slowdown. Moreover, the cash flow situation in the tyre industry is under severe stress because of the prolonged shutdown. The industry is poised to lose sales of around Rs 10000 crore for nearly 40-day lockdown and the time taken to resume normal operations. There is massive blockage of funds by way of inventories of raw materials and in the form of finished goods in the supply chain process.

The industry has resumed operations in a limited way. However, it may take another six months for the entire operations to stabilise since the industry is passing through huge cash flow problem following supply chains getting stuck.

What kind of support does the industry expect from the government in this tough time?

Support to the tyre industry both in the forms of fiscal stimulus and a policy push to address challenges being faced by the industry is vital to set the wheels of economy in motion.

To overcome this unprecedented situation, ATMA has submitted that tyre industry concerns are addressed on top priority. Partial reduction of customs duties has been sought for raw materials of the tyre industry as some of these critical raw materials are either not domestically manufactured or there exists a demand-supply gap locally. Also, a majority of raw-materials of the tyre industry attracts anti-dumping duties notwithstanding the domestic demand-supply deficit, thereby impinging adding to the cost for the domestic tyre industry. ATMA also seeks long outstanding correction of inverted duty structure as the customs duty on the critical raw material of tyres, viz. natural rubber is significantly higher, which is 25%, than the basic customs duty on the finished product, i.e. tyres, which is between 10% and 15%. In contrast, the effective or actual rate of duty is even lower, at times as low as ‘nil’ to 5%, under various trade agreements. These are some of the support measures we have asked for to ride through the current crisis.

Being the largest stakeholder, what kind of support tyre companies can give small players in the supply chain?

We believe we are in it together. The tyre industry has generously contributed in monetary and other terms in the country’s fight to contain the pandemic. The interest of the entire value chain is important to us. The tyre sector is a raw material intensive industry, and for it to be competitive, the entire supply chain must be competitive.

Much before the pandemic came to disrupt operations; we have been holding ATMA Partners Summit, a ‘by invitation only’ event wherein the raw material partners across the board are invited to exchange notes on overcoming concerns and making the most of emerging opportunities. In its width of participation, ATMA Partners’ Summit is perhaps unparalleled.

Talking about MRF, we have committed a sum of Rs 25 crore to PM Cares Fund to support various government measures in those States where MRF’s factories are located. Just before the lockdown got implemented, MRF purchased large quantities of natural rubber, even beyond our requirement, to avoid a fall in its price which would have hurt the planters. When the lockdown was announced, around 100 trucks were outside of our warehouses to deliver rubber when all our warehouses were full. So, the tyre industry is a responsible corporate citizen conscious of its role in the value chain.

Cost-cutting is inevitable that will also lead to curbing in investments in technologies. Do you think such circumstances will put us (Indian tyre companies) behind in the competition for the new mobility / CASE?

The pandemic is not India specific. It has caused an existential crisis for the entire world. Cost-cutting measures will be the norm worldwide. India is poised to bounce back faster, given the policies of the government with a sharp focus on Self-reliant India and the trust surplus that India has gained during the crisis.

The investment in R&D is there to stay. However, plant expansions could be delayed considerably due to uncertainty of demand coupled with limited liquidity.

Industries in China are ramping up production. Do you think that going forward Chinese tyre companies will able to increase the market share in India?

Yes, dumping of tyres from China is a looming threat. Though an Anti-Dumping Duty (ADD) and a Countervailing Duty (CVD) is in place on Truck and Bus Radial (TBR) tyre imports into India from China. Total tyre imports from China have increased at an alarming rate of 20% YoY during Apr-Jan, FY20. What is of bigger concern is that in recent years, tyre imports into India have increased significantly from Thailand, mainly since Anti Dumping Duty and CVD was imposed on Radial CV tyre imports from China. Likewise, tyre production originating from Vietnam, Indonesia and other ASEAN countries pose a significant threat to the tyre industry in India as a majority of such output and imports can be directly or indirectly traced to be of Chinese ownership or collaborations. Steep and significant increase in radial CV tyres from Thailand confirms this development. ATMA has sought immediate imposition of interim Anti-Dumping Duty (ADD) on such indiscriminate and dumped imports and awaits an early action by DGTR, Ministry of Commerce.

Do you think that we need to revive the outlook for the long-term and what will it be?

Nothing has caused the kind of uncertainty as Covid-19 has led to. Yes, the outlook needs to be revised, but by how much that depends a lot on the growth projected for the overall economy and the auto sector.

As of now, we believe it will take another six months for operations to normalise at tyre plants if there is no sudden spike in Covid-19 cases and lockdowns are not prolonged or implemented again. However, tyre plants have started operating in all earnestness, supply chain issues notwithstanding.

A recent survey done by German tier 1 supplier Continental of fleet operators across Germany, France, the United Kingdom and the United States of America has revealed that almost 72 percent of respondents recognise the need for substantial changes to meet current industry challenges.

The poll results based on the responses of 850 fleet managers, which pointed out that rising costs (76 percent), economic uncertainties due to crises (46 percent) and the demand to reduce CO2 emissions (40 percent) were the key challenges faced by the operators.

It finds that while there were some common issues globally such as a rising costs and economic pressures, certain challenges such as a transition to electric mobility adoption differed depending on the geographies. Fleet manager shortage also was amongst the issues highlighted by the respondents.

Interestingly, fleet managers in the United States (63 percent) were found to be more open to adopt new technologies, in contrast to their European counterparts (20 percent).

Clarisa Doval, Head of Digital Solutions at Continental Tires, said, "Survey results highlight that cost pressure is the greatest challenge for fleet operators. Low margins, rising costs, and stricter emissions standards are reducing investment capacity, while wage developments and labour shortages add further strain. Our digital tyre management solutions provide our customers with a valuable asset in this transition. With ContiConnect, fleets can operate more cost-effectively and sustainably, supporting their competitiveness."

"Intense competition in logistics, which is being further intensified by climate change and ongoing global crises, makes adaptability and resilience a decisive factor for success. At Continental, we create innovative solutions to enhance fleet efficiency, reduce costs, and promote sustainability. Tyres are a key factor in total operating expenses, and our digital tools for tire condition monitoring deliver substantial long-term savings," she added.

MarketsandMarkets has said in its latest report that the tyre recycling market is expected to grow from USD 7.44 billion in 2024 to USD 8.92 billion by 2029 at a CAGR of 3.7 percent.

The report titled ‘Tire Recycling Market by Product (Rubber, TDF, TDA, Carbon Black), Process (Mechanical Shredding, Ambient Grinding, Pyrolysis), Type (Service, Material), End-use Industry (Automotive, Construction, Manufacturing) and Region – Global Forecast to 2029’ attributes the growth in this market to increasing environmental awareness and the implementation of stringent government regulations in different countries in reducing waste and pollution in the environment. Key players in the tyre recycling market, according to the report, are Liberty Tire Recycling (US), GENAN HOLDING A/S (Denmark), ResourceCo (Australia), GRP LTD (India), Lehigh Technologies, Inc. (US), Entech Inc (US), Emanuel Tire LLC (US), BDS Tire Recycling (US), Contec (Poland) and CRM (US).

According to the report, the Asia Pacific region is expected to be the fastest growing market for tyre recycling during the forecast period because of rapid industrialisation, urbanisation and economic growth in the region. Apart from this, government regulations in the Asia Pacific region are also playing a big role in shaping the tyre recycling market.

The report explains that govt incentives and regulatory benefits created by policies around sustainability and carbon reduction are significantly boosting opportunities in this sector. The report cites the Extended Producer Responsibility or EPR programme, which makes it mandatory for the producers of tyres to collect and recycle the tyres at their end-of-life. Additionally, the availability of government incentives and grants for the tyre recycling plants plays a favourable role for the sector.

The report further highlights that construction is the fast-growing end-use industry segment in the market for recycling tyres, explaining that the demand is partly driven by the growing use of recycled tyre products in infrastructure and building projects. These tyre-derived products are used in road construction and as building foundations, insulation and roofing materials. The demand for shock-absorbent, low-maintenance and durable materials in public space and recreational facilities, as well as sports fields, also plays and important role, says the report.

A new survey by OnePoll for Apollo Tyres has revealed that all-season tyres are preferred by a majority of drivers across Europe.

The findings, which took into account 1,000 respondents in each market, point to a constant increase in the popularity of tyres designed to perform throughout the year, including in dry, wet and snow conditions. Spain took the lead among the European countries with 82 percent respondents voting in favour of all-season tyres, followed by France (78 percent), the Netherlands (74 percent), Poland (72 percent) and the UK (65 percent).

For the customers of Apollo Tyres, its Vredestein brand’s Quatrac portfolio offers a lineup of tyres designed for a range of vehicles in a wide choice of sizes. The lineup includes the Quatrac, the Quatrac Pro and Pro+ for muscle cars and SUVs and the Quatrac Pro EV all-season tyre specifically designed for electric vehicles (EVs). All Quatrac tyres come with the ‘Three-Peak Mountain Snowflake’ mark and are fit for year-round use.

Yves Pouliquen, Vice President – Commercial, Europe, Apollo Tyres, said, “All-season tyres are becoming increasingly popular among motorists who want the reassurance of being able to safely tackle fast-changing weather conditions, year-round. With over three decades of expertise in all-season products, drivers can trust the Vredestein brand.”

Vaculug Limited, a leading commercial tyre retreading specialist based in Grantham, UK, has reshuffled its senior management team with the appointment of three new roles. The reshuffle is done with an aim to enhance the organisational structure and drive sustainable growth while prioritising employee development.

As part of the reorganisation, Philip West, Vaculug's Commercial Director, will now be responsible for managing all sales and RTM activities in addition to operations, marketing and customer service. West has been in the business for more than 42 years, and his leadership and depth of expertise make him a great fit for this position.

In his new role as Sales Director, Craig Rudkin will oversee the team responsible for sales and national accounts. Rudkin began working for Vaculug in a position located in a factory and has been with the firm for more than 33 years. Jason Humphries is now the Director of IT and Logistics. Humphries has over 20 years of experience in operations, logistics and IT and has played a key role in putting strategic plans into action since joining Vaculug in 2001.