CEAT Ltd, eyeing India’s rising passenger vehicle sales, anticipates increased demand in the replacement market, says CEO Arnab Banerjee.
Tyre manufacturer CEAT Ltd aims to capitalize on the surge in sales of passenger vehicles in India, which will subsequently drive demand in the replacement market, as per the company’s Managing Director & CEO, Arnab Banerjee.
Additionally, the company is preparing to venture into the passenger vehicles (PV) and truck and bus radial (TBR) tyre market in the US during the first quarter of the upcoming fiscal year, with a focus on bolstering its international business as a key growth driver.
“Four million cars translate into immediate replacement demand within the next two to three years. It signifies a promising trajectory. The Original Equipment Manufacturer (OEM) segment is also indicating positive signs for the replacement market,” Banerjee stated to PTI.
He was addressing a query regarding the impact of India’s PV sales growth on tyre manufacturers. In 2023, PV sales in India reached a record high of 41.08 lakh units, marking an 8.3% increase from the previous year, primarily fueled by SUVs, which constituted nearly half of the total dispatches from manufacturers to dealers.
Furthermore, Banerjee emphasized, “What’s particularly encouraging is our incremental share in the replacement market, albeit gradual. Even a marginal gain in market share within a quarter is significant progress. Our goal is to attain market leadership in PCUV (passenger cars and utility vehicles), especially in a burgeoning segment.” He also highlighted the positive implications of electrification and premiumization trends for tyre manufacturers.
”Half of the cars (PVs sold) are SUVs. The tyres are larger in size with higher margins. They are margin accretive. We are quite bullish on passenger vehicle tyres. We are investing heavily in R&D and in marketing as well. Yes the (PV) market growth is good news for the tyre industry in general and for CEAT in particular,” Banerjee said.
The PVs tyre segment can be a growth engine for the company in the next two to three years as compared to truck-bus radials and two-wheelers in the domestic market, he said, adding the segment will also be a growth engine in the international market as well. ”We are very small in the international market. Although our scale is quite big, in the context of the market size we are small. So the scope for growth is high,” he said.
On international expansion plans, Banerjee said, ”We are launching in the US in Q1 (of next fiscal). So it will be a big play in the overall topline growth of CEAT in times to come. The US launch will be PCUV and TBR. We are already present in the agri radial there. So, there will be three categories which will be there in the US soon.” When asked for the outlook for the remaining part of the ongoing fiscal, he said, ”We expect the replacement market to be better in February and definitely in March. January is a low month because of winter.
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