Retreaders do well as rubber, tyre prices fly

Commercial vehicle (CV) owners are finding tyre retreading a feasible option, owing to the increasing tyre prices. Rajiv Budharaja, director general of Automotive Tyres Manufacturers Association, said:

“Currently, rubber prices are historically high, due to which the tyre manufacturers are increasing output costs. As a result, the CV owners and transporters are opting for options like tyre retreading that gives them a cost benefit of almost 50-60% as compared to buying a new tyre.”

The price of rubber has almost doubled in the past one year, and tyre manufacturers have hiked prices 2-3 times this year.

Despite this, the companies are unable to pass on the prices due to strong competition. Rubber is currently trading at Rs205 per kg.

Meanwhile, in the last six months, the demand for tyre retreading has risen 8-10% on month-on-month basis.

“The total turnover of this industry is Rs4,500 crore on an annual basis and 16,000 tonnes on a monthly basis. We are observing a major shift in demand for retread tyres,” said A S Mehta, marketing director, JK Tyre.

According to Gopal Singh of Tyresoles, a Karnataka-based tyre retreading company, “June onwards, we have seen almost 36% increase in demand. We manufacture 13,000 tyres in a month. We plan to increase production owing to higher demand. In December, we expect demand to go up by 10-20%.”

The industry is divided into organised and unorganised players.

Currently, among tyre manufacturers, MRF Tyres, Apollo Tyres and JK Tyre are into the retreading business. Owning to the potential, companies like Ceat and Bridgestone have also announced interest in the same.

JK Tyre currently has a manufacturing facility in Rajasthan for retreading and is planning to expand capacity by next year.

It also plans to increase the number of franchisees from current 60 to 200 by next year.

In tyre retreading, a new tread is applied over the body of the worn tyre, giving it a fresh lease of life at a cost that is less than half the price of a new tyre.

The process increases the life of a tyre by 40-70%, depending on the usage.

Better road conditions and an increasing number of 14-, 18- and 22-wheel trucks have increased the demand for retreading tyres.

Generally, buses and light CVs that carry short-distance haul go for retreading in order to save cost. With overloading being substantially curbed, trucks have also started going for this process.

There are two types of retreading — the conventional process and the pre-cured process.The pre-cured process is more advance and provides better performance and quality.

It is currently the preferred option, while the conventional method is phasing out.

(Source: http://www.dnaindia.com/money/report_retreaders-do-well-as-rubber-tyre-prices-fly_1475684)