Ceat to Increase Tire Exports in the Coming Five Years
Indian multinational tire manufacturing company, CEAT Ltd. is expected to increase its exports to target markets in Southeast Asia, United States, and Europe in the next few years to improve its profitability. The company also aims to increase its domestic market share in the commercial and passenger car segments. The rise in prices of raw materials like rubber, decrease in demand due to the second wave of COVID-19 and manufacturers’ limited capacity to pass on the increased cost of manufacturing may hit hard the company in short term.
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The company’s target is to increase exports by about three times over the next five years. The company is targeting the right markets by developing the products which are market specific. The company has identified different product lines which they will be focusing in different regions according to the demand in the region. It will be focusing on passenger car radial tires, bus and truck radial tires and off the road tires in Europe, off the road tires in the US and two-wheeler tires in southeast Asia. To drive the market in these regions, they would be selling tires through a local distributor.
The company has been aiming to sustain its position as a market leader in the two-wheeler segment which is currently at 28%-30%. It is targeting to increase the market share in the truck and bus segment from 8% currently to 13%-15% and aims to increase its dominance in the passenger car segment from the existing market share of 13%-15% to 20%. The tire manufacturer companies have reported increase in their financials in the third and fourth quarter due to increase in production of vehicles and economic activity. The economic activity was derailed during the recent second wave of COVID-19 due to regional lockdowns.
Recent times has been challenging due to demand weakness due to COVID-19 and sharp raw material cost inflation. The scenario of current demand would be passed on over the next 2-3 quarters and will gradually return as the pandemic ends. The income of the company has seen an increase in the Q4 of FY2021 which is Rs 2282 Crore as compared to Q3 of FY2021 which is Rs 2222 Crore due to rebound in economic activities in the Q4 of FY2021.