The Auto-Tyre Industry Link

Imagine an entire manufacturing industry, tyres, whose fortunes split cleanly into two genuinely different demand streams, Original Equipment Manufacturer, OEM, tyres sold directly to automakers for fitting onto brand-new vehicles, and replacement tyres sold through the aftermarket to owners of vehicles already on the road needing worn tyres replaced, each following genuinely different demand cycles worth understanding separately.

OEM tyre demand tracks new vehicle sales volume directly and immediately, covered throughout this page and under Two-Wheelers elsewhere on this site, meaning a slowdown in car or two-wheeler sales shows up in tyre manufacturers' OEM order books almost immediately, while replacement tyre demand tracks the size and age of India's existing vehicle fleet instead, a considerably larger, steadier base that changes only gradually year to year regardless of new vehicle sales fluctuations.

This split gives tyre manufacturers a genuinely useful demand-smoothing effect that pure automakers don't enjoy, even during a new vehicle sales slowdown, the replacement tyre market continues generating steady revenue from India's enormous existing vehicle base, insulating tyre company earnings somewhat from the sharper cyclical swings automakers themselves experience.

Tyre manufacturing also connects directly to the raw material and component ecosystem covered elsewhere on this site, natural and synthetic rubber, along with carbon black and steel cord reinforcement, represent tyres' core material inputs, meaning tyre manufacturer profitability depends on managing exactly the kind of raw material cost volatility that shapes margins across numerous other Indian manufacturing industries covered throughout this site, from cement's fuel costs to two-wheeler component makers' input pricing.