Auto slowdown hits tyre industry, YoY sales down average 8 per cent

The yearlong auto industry sufferings are very much evident from their stock price falls over the last one year. The slowdown in auto majors has also affected component manufacturers, including tyre manufacturers.

Tyre companies reported an average fall of 8 per cent in the top line when compared on the YoY basis for recently concluded Q2FY20. Among the top 7 tyre manufacturers (by market cap), only MRF came up with positive revenue growth for the quarter, that too, of just 1.57 per cent. The heavy vehicle tyre manufacturer, Balkrishna Industries, reported a 14 per cent decline in volumes for the quarter in review. The company also cut down its yearly volume guidance to 12 per cent degrowth for FY20.

The extent of fall was visible even with the two-wheeler tyre dominant market players, such as Apollo, Ceat, and Goodyear, reported an average volume degrowth of 12 per cent on YoY basis for the second quarter. These companies reported a decline of 6.35 per cent, 4.55 per cent, and 7.20 per cent, respectively.

The carbon black industry is an important part of tyre manufacturing. The slowdown in tyre sales triggered the decline of carbon black players as well. India’s major carbon black player, Phillips Carbon Black, reported a revenue decline of 2 per cent for the second quarter on a YoY basis. The stock has eroded investor wealth as much as 43 per cent over the last one year.