Tyre firms upbeat about demand for replacements

Tyre makers are upbeat about the demand stemming from the replacement of tyres in the second quarter and reckon that original equipment (OE) sector will take more time to recover. Tyre companies have been operating some of their units with limited number of workers for over a week. “The work is mostly to clear the inventory before the lockdown was declared and to produce agricultural vehicle tyres,” said Rajiv Budhraja, director general of Automotive Tyre Manufacturers’ Association (Atma).Apollo Tyres has resumed partial operations in three of its four plants in India. CEAT Tyre has begun operation in five of its six units, except in Mumbai. The situation in Maharashtra is not conducive for opening of the plants, it is said. A large number of tyre units are located in the western and southern parts of the country. But the tyre units are currently running at around 30% capacity as the demand is still weak. "The first quarter in 2020 has been a washout and in the second quarter, the replacement tyre demand is showing signs of revival," Budhraja said. The OE segment had been performing badly before the lockdown and Covid-19 has further worsened the situation, he added.The replacement tyre demand is mostly from the truck tyres that brings bulk of the revenue for the sector. The OE segment contributes to around 50% of passenger cars and two wheelers but it has a share of 20% in the truck and bus tyre category."Now the demand is largely for farm and mining vehicles and truck tyres. Once the lockdown is lifted, we are expecting the replacement demand of passenger cars and two wheelers to go up," said Anup Mangaserri, senior vice-president, sales, CEAT Tyres, adding that the production capacity can be scaled up to 50% in the current situation.

from Economic Times https://ift.tt/2VSSoUn