An acute shortage of radial tyres for trucks and buses affected production across the commercial vehicle (CV) industry last month.
With CV makers gradually moving on to newer generation vehicles, the demand for radial tyres (against bias tyre used in older vehicles) has steadily gone up but tyre makers have been unable to keep up. Matters came to a head in January when industry sources tell us that production at Tata Motors’
Jamshedpur plant was held up due to radial tyre shortage.
Tata Motors’ CV production would have been 6-19% higher had the tyre production been normal, the sources said.
A Tata Motors spokesperson confirmed that there was “shortage of tyres for medium and heavy CVs in January”, but declined to share details of exactly how this impacted production of trucks and buses.
Despite several attempts, the Ashok Leyland spokesperson remained unreachable. A senior company official acknowledged that there have been “shortages in general.”
Industry sources said that newer vehicle platforms - World Truck from Tata Motors, new Volvo trucks and Actros range from Mercedes Benz besides the new buses from Mercedes and Volvo - all of these have a layout and construction suited only to radial tyres.
And the extent of demand-supply gap can be gauged from this: According to industry data, Tata Motors needs 75,000 tyres of a particular size each month at present but domestic industry can supply only 7,150 - leading to a whopping 90% shortfall.
As of now, MRF is committed to supply 2,500 units and JK Tyres another 4,650 units to the country’s largest CV maker.
It is true that OEMs can import radials to bridge any supply shortfall from the domestic industry but here again there is a stumbling block: radial tyre imports have been put under licensing and also need mandatory BIS certification. This makes even import volumes inadequate for CV makers to run their plants at full capacity.
The shortage of radials comes just when the CV industry, particularly the medium & heavy commercial vehicle (M&HCV) segment, is recovering from abject lows in 2009. M&HCV sales were up threefold to 25,998 units last month against only 8,727 units in January 2009.
Within the tyre industry itself, two opposing lobbies are at work. One (spearheaded by the Automotive Tyre Manufacturers Association or ATMA) in favour of imposing stiff anti-dumping duty on radial tyre imports from China in order to grant the domestic tyre makers a level playing field. The second lobby is opposed to this move, citing domestic capacity shortages.
The Director General of ATMA, Rajiv Budhraja, dismissed any capacity shortage for radial tyres in the domestic industry. Pointing towards several factors behind any demand-supply mismatch, he said, “The latest deadline of March 31 for supplies of low floor buses under JNNURM is putting pressure on tyre supplies. Also, impending new emission norms have pushed vehicle OEMs to prepone procurement for BS IV vehicles,” he said. Budhraja also accused OEMs of making “an issue out of supply constraints because they want anti-dumping duty to be opposed. Were we not meeting radial tyre demand in 2007, when the CV industry was at its peak?”
If this demand-supply mismatch continues for longer, CV production could be severely impacted in the coming months.
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