There is a call for reduction in automobile tyre prices on the back of a significant fall in prices of raw material such as natural rubber and synthetic rubber.
All-India Tyre Dealers’ Federation (AITDF) has alleged that despite drop in raw material prices, tyre industry has been reluctant to pass on the benefits to customers.
They state that prices of natural rubber and synthetic rubber, both together accounting for 60 per cent of the total cost of raw materials used for tyre production, have dropped significantly. Also, price of crude is also falling as crude derivatives make up 25-30 per cent of tyre production costs.
Natural rubber price has been declining over the past one year due to excess output from rubber-producing nations such as Malaysia, Thailand, and Indonesia. “Price of natural rubber has dropped from Rs.240 a kg to Rs.127 a kg., while price of synthetic rubber has dropped from Rs.218 a kg to Rs.165 a kg. Hence, there is fit case for cut in tyre prices by the tyre firms,” said S. P. Singh, Convener, AITDF.
“Natural Rubber prices have declined steadily in the last one year with persistent sluggish demand from automotive sector and rising supplies (due to cheaper imports).
However, so far the pass-on of benefits in the form of price reductions or discounts have been limited by tyre makers (barring a few), due to the inflationary pressures on other input costs such as nylon tyre fabric chords and carbon black, rise in other costs like manpower, fuel and advertisements, and higher inventory holding costs with some OEMs carrying over relatively high-cost rubber,” said Subrata Ray, group Vice-President – Corporate Ratings, Icra said.
“Over the last 2-3 quarters, the tyre makers have seen improvement in their operating margins due to lower rubber prices and favourable product mix. In the wake of subdued demand conditions and better operating margins, the price hikes were marginal although the same has been offset by some price cuts through discounting,” he added.
Efforts to get the views of tyre makers such as Apollo, MRF and J K Tyre did not fructify.
– The Hindu
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