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Now, be ready to pay up to 5% more for tyres

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It’s the second price hike in three months; dealers feel the increase is untimely

T E Narasimhan  |  Chennai  April 14, 2017 Last Updated at 15:04 IST

Tyre majors have decided to increase prices by three to five per cent on the back of increasing raw material costs. This is the second time in the past three months are increasing the price.


The move may not be well received by dealerships, which have been facing challenges.


While, emails sent to MRF, and did not elicit any response, tyre major Apollo Tyres, and dealers of other tyre have confirmed the price hike.


Satish Sharma, president (Asia Pacific, Middle East and Africa), Ltd, said that during the fourth quarter (January to March), the company has increased the price by five per cent, which has been realised. Also,from the end of April, the company has decided to increase the price further by around three per cent.


With these cumulative hikes, prices for now stand 9-10 per cent higher in most segments.


Furthermore, spokesperson said, “ has implemented a price hike of four-five per cent in phases since January 2017. We are witnessing a significant increase in raw material prices and these price increases are taken to mitigate the impact on our bottomline.”


“Post demonetisation, the market had slowed down for 3-4 months, especially in the passenger segments. We have already seen a recovery in market sentiments and footfall. Also, given that the price increases have been small, we expect the same to be absorbed easily with no impact on demand,” he added.


Dealers of other said that prices would go up by three-five per cent. This comes after tyre — both domestic and foreign — increased their prices by two-five per cent between the end of January and beginning of February.


T Loonchand Chordia, who represents a multinational tyre brand and has been in this business for over seven decades now, said that this was not the right time for an increase in prices as sales across the country had already been impacted by demonetisation. He argued that do not reduce their prices when raw material prices come down, while they immediately increase the prices whenever these input costs go up.


However, Sharma justified the price hike, saying that raw materials prices had increased by nearly 20 per cent, which was impacting the margins of the “To neutralise the impact, we need to increase the price at least 15-18 per cent,” Sharma said. 


Sharma is also the chairman of Automotive Tyre Manufacturers’ Association (ATMA), which represent 11 large tyre in India, accounting for over 90 per cent of tyre production.


Rubber prices rose to Rs 160 per Kg in December 2016 from Rs 92 per kg in February 2016, though it has softened now to around Rs 146-147 per Kg. However, still maintain that the current prices are putting pressure on their margins.


“Whenever the price (raw material’s) drops, the has passed on those benefits also. In the past 24-28 months, the price dropped to around 15-18 per cent,” said Sharma.


Nitesh Sharma of said that the price hike was positive for the tyre and its pricing power, adding that it would lead to a rerating of the sector. With 10 per cent cumulative price increase, the margins would be close to normalising from the first quarter of financial year 2017-18.


The other positive side of this could be that it may slowdown Chinese imports, which have been posing a major challenge for the “Chinese sellers must increase at least 20-30 per cent, which may impact their Indian business considering the dealers or consumers will not be ready to absorb the increased prices of these Chinese products,” said Sharma.

Now, be ready to pay up to 5% more for tyres

It’s the second price hike in three months; dealers feel the increase is untimely

It’s the second price hike in three months; dealers feel the increase is untimely

Tyre majors have decided to increase prices by three to five per cent on the back of increasing raw material costs. This is the second time in the past three months are increasing the price.


The move may not be well received by dealerships, which have been facing challenges.


While, emails sent to MRF, and did not elicit any response, tyre major Apollo Tyres, and dealers of other tyre have confirmed the price hike.


Satish Sharma, president (Asia Pacific, Middle East and Africa), Ltd, said that during the fourth quarter (January to March), the company has increased the price by five per cent, which has been realised. Also,from the end of April, the company has decided to increase the price further by around three per cent.


With these cumulative hikes, prices for now stand 9-10 per cent higher in most segments.


Furthermore, spokesperson said, “ has implemented a price hike of four-five per cent in phases since January 2017. We are witnessing a significant increase in raw material prices and these price increases are taken to mitigate the impact on our bottomline.”


“Post demonetisation, the market had slowed down for 3-4 months, especially in the passenger segments. We have already seen a recovery in market sentiments and footfall. Also, given that the price increases have been small, we expect the same to be absorbed easily with no impact on demand,” he added.


Dealers of other said that prices would go up by three-five per cent. This comes after tyre — both domestic and foreign — increased their prices by two-five per cent between the end of January and beginning of February.


T Loonchand Chordia, who represents a multinational tyre brand and has been in this business for over seven decades now, said that this was not the right time for an increase in prices as sales across the country had already been impacted by demonetisation. He argued that do not reduce their prices when raw material prices come down, while they immediately increase the prices whenever these input costs go up.


However, Sharma justified the price hike, saying that raw materials prices had increased by nearly 20 per cent, which was impacting the margins of the “To neutralise the impact, we need to increase the price at least 15-18 per cent,” Sharma said. 


Sharma is also the chairman of Automotive Tyre Manufacturers’ Association (ATMA), which represent 11 large tyre in India, accounting for over 90 per cent of tyre production.


Rubber prices rose to Rs 160 per Kg in December 2016 from Rs 92 per kg in February 2016, though it has softened now to around Rs 146-147 per Kg. However, still maintain that the current prices are putting pressure on their margins.


“Whenever the price (raw material’s) drops, the has passed on those benefits also. In the past 24-28 months, the price dropped to around 15-18 per cent,” said Sharma.


Nitesh Sharma of said that the price hike was positive for the tyre and its pricing power, adding that it would lead to a rerating of the sector. With 10 per cent cumulative price increase, the margins would be close to normalising from the first quarter of financial year 2017-18.


The other positive side of this could be that it may slowdown Chinese imports, which have been posing a major challenge for the “Chinese sellers must increase at least 20-30 per cent, which may impact their Indian business considering the dealers or consumers will not be ready to absorb the increased prices of these Chinese products,” said Sharma.

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T E Narasimhan

Business Standard

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