Thriving Potential: Tyre Companies in India for 2025

Investing without research is like playing stud poker and never looking at the cards
Peter Lynch

Introduction

The wheels of rubber tyres started rolling with the invention of the vulcanization process. Pneumatic tyre was invented in 1888 by Scots veterinarian John Boyd Dunlop. Even though Robert William Thompson patented the concept of pneumatic tyre, it never went into commercial production. Dunlop had invented pneumatic tyre for his son’s bicycle.

The tyre industry, an essential segment of the automotive market, operates under a unique set of economic influences and competitive pressures. The profitability of tyre companies is heavily contingent upon commodity prices, with Crude Oil and Natural Rubber being the two primary raw materials used in tyre manufacturing. Additionally, the intense competition within the industry, particularly in price-sensitive markets like India, further influences the financial performance of these companies. This article delves into the critical factors affecting the profitability of tyre companies, examining both the domestic and global competitive landscapes. This article is an analysis of tyre companies in India.

Commodities and Their Impact on Profitability

Crude Oil and Its Derivatives

Tyre manufacturing relies significantly on Crude Oil, which serves as the raw material for Synthetic Rubber and Carbon Black, both essential components of tyres. Synthetic Rubber, derived from petrochemical processes, offers superior performance characteristics, including enhanced durability and resistance to wear and tear. Carbon Black, produced by the incomplete combustion of Crude Oil or natural gas, is crucial for reinforcing the rubber and providing the necessary strength to withstand the rigors of road use.

The volatility of Crude Oil prices directly impacts the cost structure of tyre companies. Fluctuations in oil prices can cause variations in production costs, subsequently affecting profitability. When oil prices rise, the costs of Synthetic Rubber and Carbon Black increase, leading to higher production expenses. Conversely, falling oil prices can lower these costs, potentially improving profit margins. Consequently, tyre companies must constantly monitor global oil markets and employ strategic measures to mitigate the effects of price volatility.

Natural Rubber

Natural Rubber, sourced from rubber tree plantations predominantly found in Southeast Asia, is another critical commodity for the tyre industry. It boasts exceptional elasticity, resilience, and heat resistance, making it indispensable for certain types of tyres, especially those used in heavy-duty applications like trucks and buses. Similar to Crude Oil, the price of Natural Rubber is subject to market fluctuations driven by factors such as weather conditions, geopolitical events, and global demand-supply dynamics.

The reliance on Natural Rubber exposes tyre companies to the risks associated with agricultural commodity markets. For instance, adverse weather conditions like excessive rainfall or droughts can disrupt rubber production, leading to supply shortages and price spikes. Additionally, geopolitical developments and trade policies can influence the availability and cost of Natural Rubber. Tyre manufacturers must navigate these uncertainties through robust supply chain management and strategic raw material sourcing.

Competitive Pressures and Market Dynamics

Domestic Competition in Price-Sensitive Markets

In highly price-sensitive markets like India, tyre companies face fierce competition, leading to frequent price wars. The Indian market, characterized by its vast consumer base and diverse vehicle population, demands tyres at competitive prices. Consequently, tyre manufacturers often engage in aggressive pricing strategies to capture market share, squeezing profit margins. The competitive intensity is further heightened by the presence of numerous local and regional players, each vying for dominance.

Global Players and Their Influence

Apart from the listed domestic tyre companies, the market landscape is also shaped by prominent unlisted global players such as Michelin (France), Bridgestone (Japan), Continental (Germany), Pirelli (Italy), and Yokohama (Japan). These international giants are renowned for their innovation, quality, and technological advancements. Their extensive resources and global reach allow them to invest heavily in R&D, resulting in cutting-edge products that set industry benchmarks.

The entry and expansion of these global players into various markets, including India, intensify the competitive environment. Their well-established brand reputation and superior product offerings attract consumers, challenging domestic companies to elevate their standards. However, the presence of global players also fosters healthy competition and drives overall industry growth, benefiting consumers through improved product quality and technological advancements.

The Global Tyre Industry

Globally, the tyre market is mainly bifurcated into two segment: bias and radial. The radial tyres are the most preferred ones in the world. Based on the vehicle type, the tyre market can be categorized as passenger, commercial, industrial, agricultural and Off-the-road (OTR). The largest consumer market is in the Asia-Pacific region, followed by North America and Europe.

According to a report by EMR CLAIGHT, the global tyre market was valued at $354.89 billion (approx.)¹ in 2024. The market is expected to grow at a CAGR of 6.30% to touch $653.77 billion by 2034.

Another report by IMARC group estimated the global tyre market at $172.98 billion as of 2024. The report projects that the global tyre market will grow at a CAGR of 4.7% to reach $270.66 billion by 2033.²

As disposable income is increasing across the world and automobile penetration is growing, the consumption of tyres is also expected to grow, both in terms of volume and revenue. Tyre companies are pumping big money into innovation. Global tyre leaders are extensively increasing their investment on research and development (R&D) activities to improve the design and rubber quality. One such innovation is the non-pneumatic tyre (NPT) which does not deflate under any circumstance.

Natural Rubber prices are near their peak. Global Natural Rubber production has been falling short of consumption in the last few years and it is slated to continue this year too.³ According to the Association of Natural Rubber Producing Countries (ANRPC), the production of Natural Rubber is expected to grow by 0.9% in 2025, but the demand is expected to grow at a higher rate of 1.8%.

China is the largest producer of tyres in the world. As the adoption of EV is increasing the the country, China is continuing to see a sustained demand for tyres.

The Tyre Sector in India

India is one of the largest producers of tyres in the world. The estimated number of tyres produced in 2024 was more than 210 million. The Indian tyre market reached a volume of 190.54 million units in 2024.⁴ The Indian tyre market is estimated to grow at a CAGR of 6.60% to reach 361.04 million units by 2034. The market is not just growing in terms of tyres for passenger and commercial vehicles, but it is picking up in terms of tyres for agricultural, industrial, and OTR vehicles.

Another report by Research and Markets estimates that the Indian market is set to grow at a CAGR of 2.9% to touch 253.9 million units by 2032.⁵

The tyre industry, after getting hit by COVID, has recovered to reach production levels that are much higher than the pre-COVID numbers. The number of tyre companies operating in India is 28. They have 62 plants across India. ⁶

India exported tyres worth ₹23,000 crore in FY24. ⁷

Most of the Indian tyre companies operate under very low margins. All the listed tyre companies, except Balkrishna Industries, reported Net Margin of less than 5% in Q3FY25. Only Balkrishna Industries maintained EBITDA margin of more than 20% in December-24 quarter.

The impact of high cost of Natural Rubber in Q3FY25 was so much on TVS Srichakra that the company had to incur a loss of ₹6 crore in the quarter.

To offset the uncertainties due to global supply chain, a few tyre companies have invested on backward integration. For example, Balkrishna Industries (BKT) has setup its own Carbon Black facility to reduce dependence on external suppliers. BKT is setting up a 30,000 MTP carbon black plant in Bhuj, Gujarat. Additionally, as a safeguard the Indian tyre industry, the government of India levies import duty of 25% or ₹30 whichever is higher. Tyre companies are also using reclaimed rubber.

The Global Players in India

There are several global giants who are already present in India. These global giants are also investing to set up new facilities or expanding their existing capacities. A recent report from an Economic Times article highlighted the plans of global tyre leaders Michelin, Bridgestone, and Goodyear to invest approximately ₹3,000 crore in India. Yokohama is expected to be the primary investor, with intentions to establish a manufacturing plant in Haryana.⁸

According to the Crisil report, Indian tyre companies are projected to surpass a revenue of $22 billion by 2032, more than doubling their 2022 figures. Moreover, the report forecasts an increase in the tyre industry’s contribution to the manufacturing GDP from 2.2% to 3.2% by 2032, with research and development spending expected to double to reach $151 million.⁹

References

1. Global Tyre Market Size, Share and Growth Analysis Report – Forecast Trends and Outlook (2025-2034), EMR CLAIGHT report ↩︎
2. Global Tire Market to Grow at 4.70% During 2025-2033, Impelled by Advent of Airless or Non-Pneumatic Tires, IMARC Group report ↩︎
3. Global rubber shortfall looms in 2025 on stagnant output, association says, Reuters report ↩︎
4. India Tyre Market Growth Analysis – Forecast Trends and Outlook (2025-2034), EMR CLAIGHT report on the Indian tyre market ↩︎
5. India Tyre Industry Report 2024 – ResearchAndMarkets.com ↩︎
6. An Overview of the Indian Tyre Market, Automotive Tyre Manufacturers Association report ↩︎
7. Tyre exports from India recorded at Rs 23,073 cr in FY24, A report by Economics Times ↩︎
8. Global tyre makers accelerate make-in-India plans, buoyed by govt’s PLI scheme, A report on proposed investments in the tyre sector ↩︎
9. Tyre industry on a roll, driving towards doubling in size, A report on the Indian tyre industry from Crisil ↩︎