Tyre cos reduces price for a second time in a month

Tyre makers have reduced prices by up to Rs 1,500 for trucks and buses and up to Rs 500 on tyres for passenger vehicles, on account of softening raw material prices. This is the second price cut by tyre firms in as many months. Companies had in December reduced prices by 4% on reduction in Cenvat by the central government. The second price cut by all major manufacturers - Apollo, JK Tyre, MRF, Birla and Ceat translates into further 3-5% drop in price for the consumer. Prices of major raw materials like natural rubber, crude oil, synthetic rubber, carbon black, nylon tyre cord and rubber chemicals have come down sharply in the past few months making a way for reduction in prices. "We have reduced prices of truck tyres by Rs 400 in January in view of lowering of rubber prices. This is further to the price cut last month and is expected to boost demand," JK Tyres & Industries, president Arun K Bajoria said. The prices of natural rubber has now dropped to Rs 70 per kg from a unprecedented high of Rs 140 per kg in the first half of 2008. At the same time crude oil price is now hovering around $43 a barrel from a all time high of $147 a barrel in June-July 2008. Apollo Tyres Ltd , Chief, India Operations Satish Sharma, said, "The demand situation continues to remain extremely challenging. Off-take from manufacturers' remains weak. However, we hope that a reduction in prices will see some resurgence in the aftermarket." The domestic manufacturers have also reduced prices facing stiff competition from Chinese tyres, which are sold 10-15% cheaper than Indian made tyres. In the past few years tyre imports from China has increased manifold. As per data compiled by Automotive Tyre Manufacturers' Association (ATMA) import of truck & bus tyres has increased from 80,000 tyres in 2002-03 to over 14 lakh tyres in 2007-08. ATMA chairman Raghupati Singhania said, "Rising cheap Chinese tyre imports, despite an anti dumping duty, is now eating into the domestic replacement demand. The Indian tyre industry is saddled with inventory and production cuts."