Auto Cos May Import Tyres to Meet Shortfall.

NEW DELHI: For customers looking at early car deliveries in 2011 may have to wait a little longer, as manufacturers facing severe tyre shortages in local market are now hunting in China, Thailand, Korea and Malaysia to meet their new production targets. Car companies are looking at importing tyres to make up for the shortages that are affecting their 2011 production plans.

Already facing component shortages that led to lower production for most car companies in 2010, major carmakers like Maruti Suzuki India , Tata Motors and Hyundai Motors are planning import of tyre, anticipating a 25% increase in production in 2011 from the 28.14 lakh cars produced in 2010 calendar year.

Indian carmakers claim that tyre shortages in the domestic market have forced them to venture overseas, as the local manufacturers couldn’t meet their required demand.

“Inconsistent supply of tyre has hampered production for the major part of 2010. Keeping in view the higher production targets of 2011, we have planned tyre purchase overseas markets for meeting our long-term commitments, as we aim a 14-lakh units production in next fiscal ,” said a senior executive of Maruti Suzuki, who preferred not to go on record.

Shortages for tyres come as carmakers are already at loggerheads with component suppliers with shortages of several critical parts affecting production. Carmakers say that sufficient component supply would have helped them to produce 20% more cars in 2010. Lower production has led to long waiting period of up to 4-5 months on many popular cars like the Maruti Swift, Volkswagen Polo, Toyota Innova.

Taking contingency measures, the Indian car industry that consumed over 10 million tyres in 2010 feels that supplies of tyres in the domestic market could fell short by around 10% of their demand and wants to fill their gap by imports. There are many factors which have affected auto production in India. While components were in short supply as demand peaked in the past few months, we do not anticipate an immediate solution in the shortterm and availability of tyres is a matter of concern,” said Pawan Goenka, president, Society of Indian Automotive Manufacturers , who also head automaker Mahindra & Mahindra Ltd.

The decision of carmakers comes after major truck and bus manufacturers like Tata Motors and Ashok Leyland are already importing tyres from China and Thailand to offset shortages in the domestic market. While shortages has been a long-drawn issue, the abnormal increase in prices of raw material prices in 2010 created several production problem to the Indian tyre sector. The increase in natural rubber prices that currently peaked to . 207/kg has forced domestic tyre companies to divert more supplies to used market that fetch higher margins.

Typically most tyre companies supply 60-65 % production to carmakers and the rest is targeted to after market, but in 2010 on the back of spiralling production cost, most tyre players restricted supplies to carmakers to 50% of their production. Automotive Tyre Manufacturers’ Association says that supplies is a commercial decision and despite facing tougher times, Indian tyre industry is increasing production capacities that would facilitate high availability in coming months.

“Keeping in view the buoyant market, several tyre companies are investing into new capacities that would cater to the increased demand . While current production is also adequate for the domestic automakers, importing tyres from overseas markets could also be a commercial decision, as some of the imported tyres are cheaper than the Indian ones,” ATMA director general Rajeev Budhiraja said.

Source : economictimes.indiatimes.com