Continental is betting big on the growth in India. With infrastructure development activities rising in the country, radialisation is also on the rise. Rajeev Kumar Agarwal, Director Sales and Marketing, Continental India, shares his perspectives with Garima Pant about the growth of radialisation in the country. Excerpts of the interview.
What are the trends towards application-based tyres in the OTR segment, especially in the radials?
First, the demand from OEMs is a very big driver. OEMs have taken notice of the latest developments and have started fitting radials more and more into original equipment and have also modified their vehicles to the extent that radials are more suited to them. That is a good move because once these vehicles come into the market they will drive the radialisation further. The biggest trend is that the fuel-saving ability of radial tyres is being noticed by the consumers, and the government is taking notice of this trend. The government has also noticed the rolling resistance in the tyre, which is another step forward in the radialisation, because increasing rolling resistance saves fuel.
What is the demand-supply scenario for radials?
Currently, there is enough supply. In the last 2-3 years, most of the companies have started stepping up their production and there have been good investments made by both domestic and international players. Our capacity has come only in the last one month. Michelin, Bridgestone and other companies have stepped up their production capacities. Total availability of radial tyres in the country is supporting the demand.
What is the supply at the moment and what is the target?
Continental has installed a 220,000 tonne capacity plant, and within 1-2 months, the company will be ready with the production. Some activities such as ramping up and other testing facilities are still pending and will be completed soon. We keep on working and we have another phase on the drawing board. As we see the acceptance of our tyres in the market, we would definitely add capacities.
To what extent has the prevailing slowdown impacted the market for OTR and radials?
From OE point of view, the vehicle production has drastically come down in the last two years. However, there is little hope of improvement. So to that extent OEs have consumed much less tyres. That has impacted the tyre manufacturers. The market was supposed to grow, which has not happened, however the market has not gone down either. There is no negative growth in the aftermarket.
What is the range of tyres your company offers in OTR and radials?
When it comes to medium and heavy commercial vehicles, currently, we are focusing on the largest consumer size in the country, which is 1000R20 where we possess a steer tyre, a drive tyre, and an all wheel tyre. Shortly we will be introducing construction tyre.
Is cost still a deterrent to the growth of radial tyres?
I won't comment on this. Radial tyres are definitely priced higher than other tyres but the kind of benefit these tyres give to the consumers is far more than the cost difference. A consumer of radial tyre will get a mileage of almost 50-100 per cent more than a bias tyre. Another advantage is fuel saving, which translates into huge cost saving in the operating cost. The failure of radial tyre is very less and the overall life is also good when compared to other tyres. All these advantages outweigh the price difference, which is not much.
Brief us on the future potential for radials. What is the market share?
The future of radials is very good and radialisation will increase going forward. In 2013, we had estimated 22 per cent growth, but it has come out to be 23 per cent for radials in the medium and heavy commercial vehicle segment. This will increase to 28-29 per cent in 2014. By 2019, we feel that it can be anything between 40-50 per cent. However this will depend on the road conditions in the rural hinterlands, because on the main highways, radialisation is high.
I would not like to comment on our market share at the moment, but we will definitely be a significant player in the radial segment because Continental has a good strength in terms of technology, manufacturing facility and brand image of radial tyres globally, which will obviously translate into India.