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Steady Recovery Seen In Tyre Industry, Long-Term Outlook Favourable : Goodyear
India has one of the lowest rates of farm mechanisation despite having a high dependence on the agriculture sector, making it a high potential market for the growth of the tractor industry
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A steady recovery is seen in the tyre industry in India after the impact of the COVID-19 pandemic and the long-term outlook is expected to be favourable, according to Goodyear India Ltd.
With the consumer tyre industry slowly but steadily shifting towards the premium and SUV segments, primarily led by growth in SUVs, the company said the trend is 'expected to create opportunities for the business to grow profitably'.
'While the pandemic has currently created headwinds, your company remains positive on the mid/long-term outlook of the car tyre industry,' Goodyear India Chairman and Managing Director Sandeep Mahajan wrote in his address to shareholders in the company's annual report for 2020-21.
The growing middle class, low car penetration and trend for personal mobility with the backdrop of the pandemic, is expected to drive car sales in the future, thereby reflecting a positive momentum in the aftermarket segment, he added.
Goodyear India in its latest annual report said, 'The consumer tyre industry is slowly but steadily seeing a shift in demand to the premium and SUV segments primarily led by growth in SUVs, which is expected to create opportunities for the business to grow profitably.' While the industry has faced headwinds in 2020 due to the impact of the COVID-19 pandemic, 'there is a steady recovery seen and the long-term outlook is also expected to be favourable', it added.
Moreover, the company said government policy and interventions towards import restrictions has favourably impacted domestic tyre manufacturing.
For the tractor tyre segment, Goodyear India said the industry is again witnessing headwinds due to the second wave of the COVID-19 pandemic which has created short term disruption in the business.
'However, we are optimistic that the mid to long term industry outlook remains positive. India continues to be the largest tractor market globally with all major Original Equipment Manufacturers (OEMs) participating in this category,' it added.
India has one of the lowest rates of farm mechanisation despite having a high dependence on the agriculture sector, making it a high potential market for the growth of the tractor industry, the company said.
Citing CRISIL data, it said, 'For the farm tyre industry, the mid to long-term (3-5 years) growth outlook is expected at 6 per cent-8 per cent. Lower tractor penetration and the increasing trend towards mechanisation due to paucity of manual migrant labour, will help drive the overall demand.' Besides, a strong focus by the government to enhance rural income through enhanced minimum support price (MSP) and policy reforms will also complement the growth in demand, the company said.