Cheaper rubber pushes tyre companies like MRF, CEAT and Apollo to slash prices upto 4%

MUMBAI: A fter holding on to “pricing discipline” for almost a year, Indian tyre makers appear to be relenting finally.

Last month – for the first time in over one-and-half years – tyre companies cut prices across segments by as much as 4%. A majority of companies have cut prices in the bias (nylon) tyre segment; the extent of cuts has also been higher in this space.

They have been resisting to price cuts despite the price of natural rubber, their main raw material, falling to half over the past year.

“As major input costs like rubber and crude oil prices have declined, there was mounting pressure from fleet operators to bring down the prices of our products. This played a pivotal role in recent price correction,” said Arnab Banerjee, executive director-operations, at CEAT.

According to industry executives, tyre companies such as MRF, CEAT and Apollo Tyres have all introduced price cuts.

MRF has reduced prices for its commercial tyres by 1-2%, while Apollo Tyres has cut them by 2-3% across categories. JK Tyres has reduced prices by 1-2% in the truck and tractor segment and the lead tyre manufacturer, CEAT, cut prices twice, by as much as 1-1.5%, mainly in the truck segment.

“Our prices have been re-calibrated downwards in small dosages on several occasions, in tune with the changing raw material prices and competitive nature of the market where we operate,” said Satish Sharma, president at Apollo Tyres.

“It may be noted that, when raw material prices increase, the entire increase is not passed on to the customers. The same principle applies when raw material softens, as we are not selling commodities but brands.”

Over the past year, the price of natural rubber has halved to Rs 120 per kg.

– India Times