The All India Tyre Dealers Federation (AITDF) has drawn the attention of the Central Government to the shortage of two-wheeler and three-wheeler tyres in the replacement market. It has also drawn the governments attention to the exorbitant and arbitrary pricing by domestic tyre manufacturers.While the production and sales of commercial vehicles and passenger cars have dwindled in the last two years, those of two-wheelers and three-wheelers have been growing in double digit on a month-on-month basis by the OEMs.With public transport system not improving commensurate with the mobility requirement of citizens, the demand for two-wheelers has been exploding for the last several years. The replacement demand of tyres for these vehicles has also been rising.
On the one hand, the domestic tyre manufacturers, enjoying oligopolistic control over the market, have been jacking up tyre prices disproportionate to increase in the input cost and, in fact, in the past year and half, the raw material prices have steeply come down with particular reference to natural rubber price, which has dropped gradually from the peak price of Rs 240 per kg to Rs 140 per kg but tyre prices have not been rolled back, said SP Singh, convener of AITDF. If the tyre prices of various categories are tracked, the maximum price increase has been inflicted in case of two-wheeler and three-wheeler tyres and tubes.According to him, the tyre shortage in the replacement market arises from this pricing skew. On the one hand, the tyre prices have been astronomically high, the demand of these tyres to the OEMs and exports have been given top priority by the domestic tyre majors, but retail replacement market has been squeezed with hapless millions of scooter and motor cycle owners paying through their nose, said the AITDF report.
The important tyre makers in the market are Ceat Tyres, MRF Tyres, TVS Srichakra and Dunlop brand tyres along with smaller players like Metro Tyres, Ralson Tyres and Michelin Tyres.Several months ago, Dunlop India's factory in Karnataka was closed down due to mismanagement by the promoters and this has escalated the shortage of tyres of two-wheelers and three-wheelers in the market, said Singh.For instance, while the basic national price of these tyres are overinflated by 20%-25% due to monopolistic pricing, in last four months, the prices of these tyres in the market have virtually sky- rocketed by another 14%-25%, he said.These tyres are mostly fitted in these two-wheelers and three-wheelers produced by Hero MotorCop, Hondo Motor Cycle & Scooters, Bajaj Auto, Vespa India, Suzuki, TVS and Yamaha.