The tyre industry is one of the most important sectors of the Indian economy, contributing to the growth of the automotive, transportation, and manufacturing industries. The India tyre market size attained a volume of 179.16 million units in 2023. The market is projected to grow at a CAGR of 6.68% during 2024-2032 to reach a volume of 263.26 million units by 2032. In this blog post, we will provide a comprehensive overview of the India tyre market, covering its size and growth, key players, market segmentation, trends and drivers, challenges, sustainability initiatives, and future outlook.
Market Size and Growth
The India tyre market has witnessed a robust growth in the past few years, owing to the rising demand for vehicles, especially in the rural and semi-urban areas, the expansion of the road network, the increasing disposable income, and the changing consumer preferences. According to a report by Expert Market Research, the India tyre market size reached a volume of 179.16 million units in 2023, registering a CAGR of 7.34% during 2018-2023. The market is expected to maintain its growth momentum in the coming years, reaching a volume of 263.26 million units by 2032, growing at a CAGR of 6.68% during 2024-2032. The growth of the India tyre market can be attributed to several factors, such as:
- The increasing production and sales of vehicles in the country, especially in the passenger car and two-wheeler segments, which account for the majority of the tyre demand. According to the Society of Indian Automobile Manufacturers (SIAM), the domestic passenger vehicle sales increased by 2.8% to 2.7 million units in 2019-20, while the two-wheeler sales increased by 5.1% to 21.2 million units in the same period.
- The growth of the replacement market, which accounts for more than 60% of the tyre demand in the country. The replacement market is driven by the increasing vehicle parc, the rising average vehicle age, the frequent wear and tear of tyres due to poor road conditions, and the growing awareness among consumers about tyre safety and maintenance.
Key Players
The India tyre market is highly competitive and fragmented, with the presence of several domestic and international players. The major tyre manufacturers in India are:
- MRF Ltd. (NSE: MRF), which is the largest tyre manufacturer in the country, with a market share of 22% in 2020. The company offers a wide range of tyres for various segments, such as passenger cars, commercial vehicles, two-wheelers, three-wheelers, tractors, and off-the-road vehicles. The company has seven manufacturing plants in India and one in Trichy. The company also exports its tyres to over 65 countries across the world.
- Apollo Tyres Ltd. (NSE: APOLLOTYRE), which is the second-largest tyre manufacturer in the country, with a market share of 17% in 2020. The company offers tyres for passenger cars, commercial vehicles, two-wheelers, off-the-road vehicles, and industrial and agricultural applications. The company has four manufacturing plants in India and one each in the Netherlands and Hungary. The company also has a joint venture with Michelin in India and a subsidiary in South Africa.
Market Segmentation
The India tyre market can be segmented by tyre type and by application. By tyre type, the market can be divided into radial tyres and bias tyres. Radial tyres are the tyres that have the cords of the ply arranged at 90 degrees to the direction of travel, which provide better grip, stability, and fuel efficiency. Bias tyres are the tyres that have the cords of the ply arranged at an angle to the direction of travel, which provide better durability and load-carrying capacity. According to the Expert Market Research report, the radial tyre segment accounted for 51% of the market share in 2020, while the bias tyre segment accounted for 49% of the market share. The radial tyre segment is expected to grow at a faster rate than the bias tyre segment, owing to the increasing preference for radial tyres among the consumers and the vehicle manufacturers, especially in the passenger car and commercial vehicle segments.
Trends and Drivers
The India tyre market is influenced by various trends and drivers, which shape the dynamics and growth of the market. Some of the major trends and drivers are:
- The shift towards radial tyres, which offer better performance, durability, and fuel efficiency than bias tyres. The radial tyre penetration in the passenger car segment is almost 100%, while in the commercial vehicle segment, it is around 50%. The radial tyre penetration in the two-wheeler segment is also increasing, with the introduction of new models and variants. The government is also promoting the use of radial tyres, by imposing anti-dumping duties on the imported bias tyres and providing incentives for the domestic radial tyre manufacturers.
- The increasing demand for green tyres, which are eco-friendly and energy-efficient tyres that reduce the carbon footprint and fuel consumption of the vehicles. The green tyres are made of natural rubber, silica, and other renewable materials, which reduce the rolling resistance and improve the traction of the tyres. The green tyres also have a longer life span and lower maintenance cost than the conventional tyres. The demand for green tyres is driven by the growing environmental awareness among the consumers, the stringent emission norms by the government, and the technological innovations by the tyre manufacturers.
Challenges
The India tyre market also faces some challenges, which hamper the growth and profitability of the market. Some of the major challenges are:
- The raw material price fluctuations, which affect the cost and margin of the tyre manufacturers. The raw materials used for tyre manufacturing, such as natural rubber, synthetic rubber, carbon black, steel, and nylon, are subject to the volatility of the global and domestic markets, which are influenced by the demand and supply factors, the weather conditions, the exchange rates, and the geopolitical events. The raw material prices have a significant impact on the tyre prices, as they account for more than 70% of the total cost of production. The tyre manufacturers have to constantly adjust their prices, to cope with the raw material price fluctuations, which affects their competitiveness and profitability.
- The regulatory challenges, which pose a threat to the tyre industry. The tyre industry has to comply with various regulations and standards, such as the Bureau of Indian Standards (BIS), the Automotive Industry Standards (AIS), the Central Motor Vehicle Rules (CMVR), and the Tyre Labelling Regulations, which prescribe the quality, safety, and performance parameters of the tyres. The tyre industry also has to adhere to the emission norms and fuel efficiency norms, such as the Bharat Stage (BS) VI and the Corporate Average Fuel Efficiency (CAFE), which mandate the reduction of the carbon dioxide and nitrogen oxide emissions and the improvement of the fuel economy of the vehicles. The tyre industry has to invest in research and development, technology upgradation, and capacity expansion, to meet the regulatory requirements, which increases their cost and complexity.
Sustainability Initiatives
The India tyre industry is also taking various initiatives to promote sustainability and environmental responsibility, in line with the global and national goals. Some of the sustainability initiatives are:
- The use of natural rubber, which is a renewable and biodegradable material, for tyre manufacturing. The natural rubber is derived from the latex of the rubber tree, which is grown in the tropical regions of the country, such as Kerala, Tamil Nadu, and Karnataka. The natural rubber has various advantages, such as high elasticity, strength, and resilience, which enhance the performance and durability of the tyres. The natural rubber also reduces the rolling resistance and fuel consumption of the tyres, which lower the carbon emissions and environmental impact. The tyre manufacturers are also supporting the natural rubber cultivation, by providing technical assistance, quality seeds, and financial incentives to the rubber growers.
- The recycling and reuse of the waste tyres, which reduce the environmental pollution and resource depletion. The waste tyres are generated from the end-of-life tyres, the tyre retreading, and the tyre manufacturing process, which pose a threat to the environment and human health, as they are non-biodegradable and inflammable. The waste tyres can be recycled and reused for various purposes, such as rubber crumb, rubber powder, rubber granules, rubber mats, rubber tiles, and rubber fuel. The tyre manufacturers are also collaborating with the government, the NGOs, and the private sector, to establish waste tyre collection and recycling centers, to promote the circular economy and waste management.
Future Outlook
The India tyre market has a bright future, as it is expected to grow at a healthy rate in the coming years, driven by the increasing demand for tyres, the technological innovations, and the government support. The market also has some growth opportunities, such as:
- The expansion of the rural and semi-urban markets, which have a huge potential for tyre consumption, due to the low penetration of vehicles, the rising income levels, and the improving road infrastructure. The tyre manufacturers can tap into these markets, by offering affordable and durable tyres, customized for the local conditions and preferences.
- The diversification of the product portfolio, which can cater to the niche and emerging segments, such as electric vehicles, hybrid vehicles, and autonomous vehicles, which have a high demand for advanced and smart tyres, that can communicate with the vehicle systems and the road conditions, and provide optimal performance and safety.
