THE TYRE MANUFACTURING INDUSTRY

PRESENTED BY:

NAME ROLL NO.

Dattu Ade 1

Reena Alva 4

Vicky Barot 6

Abhijit Bhongle 8

Bhushan Bhoye 9

INTRODUCTION

• Faces huge competition, cost and price pressure.

• The zooming auto industry has driven the growth.

• The number of vehicles is swelling.

• The truck and bus market is the largest segment in terms of value.

• Economic expansion and road development has made a contribution.

eg. The golden quadrilateral and the NSEW Corridor project.

• Though the volumes have increased the profitability has gone down due to the increase in raw material cost.

Five forces model

A 2 tier Industry

• Tier 1 players

Present in all three segment -

1)Replacement market

2)Original equipment manufacture(OEMs)

3)Export

• Tier 2 player

Key Players

Major Sales Segment

Intensity of Rivalry : High

The tyre industry in India is fairly concentrated, with the top 5 companies accounting for more than 80% of the total production of tyres.

BARGAINING POWER OF SUPPLIERS

- High

• Number of Suppliers – Low

• Availability/ acceptability of raw material substitutes – Low

• Switching costs – High

• Threat of forward integration – High

• Tyre industry not the key customer

Demand for Tyres

48.7%

42.8%

0.3%8.2%

Sales Segments(Volume)

Relacement Market

OEM's

Government

Export

Bargaining Power of Buyers

• OEM’s High

• In Replacement Market Moderate

• Switching Cost Low

• Threats of Backward Integration Low

THREAT OF POTENTIAL ENTRANTS

LOW, due to HIGH ENTRY BARRIERS

ENTRY BARRIERS

• Highly capital intensive industry

Rs4bn for radial tyre plant with a capacity of 1.5mn tyres

Rs1.5-2bn for a crossply tyre plant of a capacity to manufacture 1.5mn tyres

• High raw material costs

• Shortage of raw material

• Force of rivalry

• High risk

THREAT OF SUBSTITUTES

Low, but increasing

• Import of tyres

• ISI mark made compulsory

Porter’s Model

Entry High returns

Barrier High risks

High

Low High Low Exit

Barrier