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Old 28th August 2010, 20:47   #1
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Exclamation Ongoing Tyre crisis in the country

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Originally Posted by GTO View Post
That's terrible news! I honestly don't see the sense in this move. India has a strong OEM tyre base and I doubt sourcing tyres from Russia would work out much cheaper. Either ways, Indian or Russian rubber....BHPians would do well in upgrading the tyres right from the showroom.
Ground reality is that there is a severe tyre supply shortage.
Very severe unlike any period in the history of the country.
The most affected are car manufacturers.
I've been told by several factory workers of Hyundai, Ford, Ashok Leyland personally that they are struggling to source tyres inspite of having several vendors.
Infact, this Ashok Leyland engineer tells me that chassis' have been leaving the production line with 1 tyre (I still don't know how)

Owing to this demand, the tyre cartel have been increasing prices every 1-3 months for the past 18 months or so by 3% every time. Make a rough calculation and you'll realise how much tyre prices have gone up by.

With the automobile market booming, there has been a massive market growth for consumables.
While we've all been racking our brains about fuel, we've forgotten about the next two common consumables - Tyres and Battery.

PS: This was supposed to be a reply in the Vento thread.
But, I thought the Indian consumers should know about whats happening on the inside as well.
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Old 28th August 2010, 20:52   #2
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Shortage of natural rubber seems to be one of the main contributing factors to this. The current rubber prices in India is higher than international price and government had planned to import rubber. However due to political pressure from Kerala Government, this seems to be getting delayed.
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Old 28th August 2010, 20:55   #3
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A good solution would be to purchase shares of tyre companies.

Appolo was trading in the teens 18 months back; it is now above 70. MRF was 2K odd; now at 7K plus. Have not tracked others - like JK or Dunlop. Dunlop is trading at astronomical P/E ratios.

At least, you will feel better about it.

Sorry about the sarcasm; but I guess we can do very little - the tyre lobby has plenty of clout; they would not permit export of natural rubber when prices are low - will obtain duty free imports when prices are high; have stalled legal import of non-Indian manufactured tyres; and yes, have cartelised the industry. Even couple of decades back, when KeSRTC used to float tenders for supply of replacement tyres, the tyre cos used to quote prices 1.2 to 1.8 times the prices in open market.
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Old 28th August 2010, 20:58   #4
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Now can this be the cause of vento coming with russian tires?
Also - is there any problem with imported tires?
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Old 28th August 2010, 21:01   #5
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Originally Posted by blackasta View Post
Now can this be the cause of vento coming with russian tires?
Also - is there any problem with imported tires?
1.Of course.
2.Depends on the brand and how cheap the car makers are sourcing them for.
Skoda Fabia used to come shod with Matador tyres (A czech brand)
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Old 28th August 2010, 21:10   #6
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I dont think Russian tyres are an issue. Most of the premium tyre brand like Michelin, Conti etc are any way imported. VW might have got some good deal cut with the Russians which could not be matched by MRFs or Apollos.

There are some issues with the demand-supply gap of natural rubber these days. This mainly happened because of a glut of rubber production in Kerala some years back causing the rubber prices to plummet. This made many rubber planters in Kerala to move to alternate crops such as Vanilla. Now with the booming auto industry, rubber demand has gone through the roof and the reduced supply has created a corresponding boom in the price. Many of the current rubber planters are now resorting to hoarding to push up the prices further. Continued monsoon season in Kerala also affects the tapping of rubber from trees and thereby supply. This pushed the tyre lobby to pressure government to resort to importing rubber from SE Asia.
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Old 28th August 2010, 23:06   #7
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@nitrous, the whole reason we have a tyre crisis is guys like you who change tyres just because they are a few years old.

@BSD (man, typing your name is a pain), would be good to also invest in a few acres of rubber plantations. The rubber guys in Mallu-land are doing brisk business, irrespective of the tyre-crisis.
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Old 28th August 2010, 23:36   #8
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Aha! the Rusi tires on the Vento are making more sense now.

Sad news for car owners because, like we learnt in economics, prices...once they go up, do not like to come down.
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Old 29th August 2010, 00:08   #9
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See the main problem is right now the there is a huge demand for tyres in the country.
But unfortunately domestic rubber output has not been able to keep up with demand,thus causing a demand-supply mismatch,and jaking up prices
So what the tyre makers had proposed to the government was to reduce the import duty for natural rubber to about 7.5% from 20%.
However the central government has shot it down,fearing the dumping of cheap rubber from abroad which will hit the rubber growers in our country.So tyre makes had no option but to hike prices.
As a result of which Indian car manufacturers are increasingly looking overseas to source OEM tyres to keep their car prices in check
This is why we will see VW cars shod with Russian rubber!!
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Old 29th August 2010, 00:29   #10
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Im not so worried about the performance of those russian tyres. As i am told to understand, Nizhnekamskshina is a big brand in russia and it is also connected to pirelli.

However, what ticks me off is that those tyres will not fetch any value if someone chose to trade them in the local market for a tyre upgrade...

Last edited by acidkill : 29th August 2010 at 00:31.
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Old 29th August 2010, 04:24   #11
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Quote:
Originally Posted by acidkill View Post
As i am told to understand, Nizhnekamskshina is a big brand in russia and it is also connected to pirelli.

However, what ticks me off is that those tyres will not fetch any value if someone chose to trade them in the local market for a tyre upgrade...
OT: A personal policy of mine, if you can't pronounce the name, don't buy it . Jeez, this also resembles "Nietzsche".
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Old 29th August 2010, 08:39   #12
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Now why are they no recycling the tyre's if there is such a demand for it.

I remember paying 10500 for set of 5 new michelins in 2007 for my indica,now the same is costing 20000,though the price is little high as it is 14inch for swift now.

Still its costlier,there a difference of only 250 per tyre between tubeless and tube ones
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Old 29th August 2010, 12:01   #13
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Rubber trees do not grow in Russia! So they must import natural rubber from South East Asia. If they can do it so can we. The tyre shortage has more to do with Government Policy than with availability of rubber.

And remember, that each tyre variation and size and tread pattern requires a separate mould. Hence if a particular combination of size, type, tread is required in small quantities, it may not make sense to the tyre manufacturer purchase the moulds.

There is a similar case in the off-road tyres where practically no one makes all sizes. Each factory limits it self to a few sizes only.
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Old 29th August 2010, 12:53   #14
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Well, being from the rubber industry, here are my 2 cents.

Natural Rubber 2-3 years ago cost Rs. 70 per kg. Currently its at about 180 per kg.
Synthetic has also seen an increase of 25% or so.

The current pricing structure is a result of cartels and bad policys.

The Indian Growers produce less rubber than indian demand currently. However all rubber imports are taxed @ 20%. The IRGA (Indian Rubber Growers Association) is not going the let the government lower the duty, otherwise the prices of natural rubber will crash by the same % almost immediately.

The tyre manufacturers are no less. They keep pressurizing the govt to reduce the duty on rubber, however, they have had duties put in place for all tyre imports from china. They are infact petitioning the govt to increase the duty to 20%.

Also, I would like to point out that the actual natural rubber % in tyres is not over 50% anyway. The rest 50% is synthetic rubber, carbon, oil etc.

p.s. joshguy, a tyre cannot be recycled to make into another tyre again...

Last edited by AbhiJ : 29th August 2010 at 12:55.
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Old 29th August 2010, 19:29   #15
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abhij - what is international current price of natural rubber?
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