With the rise in natural rubber and raw materials prices, tyre prices are also expected to increase. Tyre makers are contemplating implementing price hikes on their product offerings.

Tyre makers recently undertook a price increase in the range of 2 to 5 per cent on select tyre models while price increases in select categories were also taken in Q1 FY25.

‘’With raw material costs at an all-time high, particularly natural rubber prices, we see continued upward pressure on tyre prices. We had anticipated an increase in these costs this quarter, prompting us to adjust our pricing strategy. Consequently, we’ve implemented a price increase in the tune of 1 to 3 per cent. Going ahead, if raw materials costs increase then we will relook at pricing,” said Harinder Singh, MD and CEO, Yokohama India.

According to Crisil, the domestic prices of natural rubber closed August at Rs 238 per kg on average which is beyond the trend in the last decade. The tight supply of natural rubber globally has cast a long shadow on the industry even as the steady expansion of the automobile industry and other major consuming industries keeps demand healthy, the report noted..

“While the previous spikes were triggered by isolated events such as farmer protests over low profits in 2016 or the pandemic-induced labour crisis in 2020, the current price rise is rooted in fundamentals, i.e., demand and supply dynamics. In

2011, the natural rubber market had sufficient supply to cater to global demand. Between fiscals 2011 and 2023, however, global production grew 35 per cent, while demand expanded 40 per cent, resulting in a supply crunch and, thereby, higher prices,” said Pushan Sharma, Director-Research, Market Intelligence and Analytics, Crisil.

Businessline had earlier reported that apart from the increase in raw material prices, tyre makers are also facing high costs in freight movement due to the Red Sea crisis.

“As an aftermath of the pandemic, the industry witnessed a shortfall of raw materials, carbon black and natural rubber. This affected the balance in the supply-demand chain and triggered a rise in raw material prices, thus increasing product prices.

Furthermore, while the industry was recovering from the pandemic, the ongoing volatile situations in different parts of the world added to the existing challenges pertaining to the raw materials shortage. This, in turn, is impacting the supply chain and will continue to impact in the coming months. Currently, while the costs of raw materials have increased, all our plants have been able to fulfil the requirements, and are operating as per usual capacity,” said Samir Gupta, Managing Director, Continental Tires India, and Head of Central Region - BA Tires APAC.

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