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Mint
20-07-2025
- Business
- Mint
Replacement demand to drive tyre sector revenues by 7-8% this fiscal: Crisil
New Delhi [India], July 20 (ANI): India's tyre sector is set to see steady revenue growth of 7-8 per cent this fiscal, driven by replacement demand that accounts for half of annual sales, even as offtake by original equipment manufacturers (OEMs) will likely be subdued and exports steady, said Crisil Ratings in a report. The report added that the rising premiumisation is expected to give a slight leg-up to realisations. However, escalating trade tensions and the risk of dumping by Chinese producers diverting inventories because of US tariffs could pose challenges. Operating profitability is likely to remain steady at 13-13.5 per cent, supported by stable input costs and healthy capacity utilisation. This, along with strong accruals, lean balance sheets and calibrated capital spending, should help sustain the sector's stable credit outlook, the report added. The Indian domestic demand remains the mainstay, propelling 75 per cent of total volume with exports making up the rest. Anuj Sethi, Senior Director, Crisil Ratings, said, "Volume growth is seen at 5-6 per cent this fiscal, mirroring last fiscal. The replacement segment (accounting for 50 per cent of volume) is set to grow 6-7 per cent on the back of a large vehicle base, strong freight movement and rural recovery. OEM volume (25 per cent) will likely rise 3-4 per cent, supported by steady two-wheeler and tractor sales, and modest growth in passenger vehicles and commercial vehicles. Export volume (25 per cent) is expected to grow 4-5 per cent, supported by demand from Europe, Africa and Latin America."The report further added that the export momentum, however, comes with risks. The US, accounting for 17 per cent of India's tyre export volume last fiscal, and 4-5 per cent of overall industry volume, has imposed reciprocal tariffs on several Indian goods, potentially eroding price competitiveness. And steep US tariffs limit China's access to that market, raising the risk of excess supply being divertedinto price-sensitive markets such as India. To curb cheap imports, India imposes anti-dumping and countervailing duties, including a 17.57 per cent levy, on large truck and bus radial tires from China. However, a broader influx of low-cost tyres across other segments could pressure domestic realisations without timely safeguards. Besides, stiff competition in the replacement market will keep operating profitability rangebound at 13.0-13.5 per cent this fiscal. With nearly half of the raw material imported, the sector is exposed to global prices and fluctuations in foreign exchange rates. Poonam Upadhyay, Director, Crisil Ratings, said, "India's tyre sector, grappling with margin pressure, could see price competition intensify if US tariffs push low-cost Chinese products being dumped. Competitive intensity is already capping realisations in the replacement segment, so the risk of prolonged under-recovery of input cost remains high. To counter, manufacturers are likely to maintain capital expenditure (capex) at ~ ₹ 6,000 crore this fiscal, focused on high-utilisation passenger car radials and two-wheeler capacities, along with automation and backward integration to improve cost efficiency and protect profitability." In fiscal 2025, natural rubber prices surged 8-10 per cent owing to supply disruptions andas prices of crude-linked inputs such as synthetic rubber and carbon black rose 10-12 per cent. This led to margin erosion by 300 basis points, given the limited cost pass-through in the OEM and replacement segments, the report added. (ANI)
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Business Standard
18-07-2025
- Automotive
- Business Standard
Tyre industry to grow 7-8% in FY26, driven by replacement demand: Crisil
India's Rs 1 trillion tyre industry is expected to post a steady revenue growth of 7–8 per cent in FY26, driven largely by robust replacement demand, which accounts for nearly 50 per cent of the sector's annual sales, according to Crisil Ratings. Rising premiumisation trends are also expected to aid realisations marginally, even as original equipment manufacturer (OEM) offtake remains subdued and global trade headwinds cloud the outlook. Crisil forecasts volume growth at 5–6 per cent, similar to the last fiscal. The replacement segment is expected to grow 6–7 per cent on the back of a large vehicle base, rural recovery, and strong freight movement. OEM volumes, which contribute roughly 25 per cent, are projected to rise 3–4 per cent, buoyed by steady sales in two-wheelers and tractors, with modest gains from passenger and commercial vehicles. Exports, also contributing 25 per cent of volumes, are likely to grow 4–5 per cent, supported by demand from Europe, Africa, and Latin America. Tyre maker Ceat sees signs of optimism. 'We expect raw material prices to decline by 1–2 per cent in Q2 over Q1, largely due to softening crude oil and international rubber prices,' said Kumar Subbiah, CFO and Executive Director of Ceat. 'If demand stays stable, this could positively impact our margins. The trend looks encouraging, and we are hopeful of margin recovery.' Crisil also pointed out that operating profitability is expected to remain stable at 13–13.5 per cent, supported by steady input costs and high capacity utilisation. Input cost pressure has been easing, offering some relief to manufacturers. Natural rubber prices had surged 8–10 per cent in FY25, alongside increases in crude-linked inputs like synthetic rubber and carbon black, eroding margins by nearly 300 basis points. However, the industry faces external risks. The US, which made up 17 per cent of India's tyre export volume last fiscal (and 4–5 per cent of total industry volume), has imposed reciprocal tariffs on Indian goods, potentially hurting competitiveness. Moreover, steep US tariffs on Chinese goods could push Chinese producers to dump excess inventory in price-sensitive markets like India. Although India has a 17.57 per cent anti-dumping duty on large truck and bus radials from China, other segments remain vulnerable. 'Price competition could intensify if low-cost Chinese tyres flood the Indian market,' warned Poonam Upadhyay, Director at Crisil Ratings. 'This is particularly worrying for the already competitive replacement segment.' Despite ongoing cost pressures, the sector's financial resilience remains strong, aided by conservative balance sheets and prudent capital spending. Capex is expected to remain steady at around Rs 6,000 crore, focused on high-utilisation segments such as passenger car radials and two-wheeler tyres, automation, and backward integration. The top six tyre makers, who account for 85 per cent of industry revenue, are expected to maintain a healthy financial profile, with interest coverage improving to 8.0 times and debt-to-Ebitda ratio easing to 1.0 from 1.3 last year.
Time of India
13-07-2025
- Automotive
- Time of India
India's second-hand car market: Poised to cross 6 million sales; over twice as fast as new cars
India's used car market is on track to cross 6 million units in sales this fiscal, fuelled by value-conscious buyers, increasing digital adoption and improved access to finance, according to a report by Crisil Ratings. The surge has pushed the used-to-new car sales ratio to 1.4, up from below 1 five years ago, with volumes growing at more than twice the pace of new car sales. After a modest 5% growth between fiscals 2017 and 2024, used car volumes rose by a robust 8% last year, and Crisil expects growth to touch up to 10% this fiscal. T he market value of these vehicles is pegged at around Rs 4 lakh crore, nearly matching that of new car sales. While organised players in the sector continue to incur high operating costs, mainly due to refurbishment, logistics and financing, the segment is in expansion mode and yet to turn profitable. But Crisil expects strong revenue growth to drive breakeven at the operating level this fiscal or the next. In the meantime, the credit health of companies will rely heavily on timely fund-raising and sufficient liquidity to support expansion. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Beachfront Living in Mumbai at Sunteck Beach Residences Sunteck Realty Learn More Undo Anuj Sethi, Senior Director, Crisil Ratings, said, "The improvement in the used-to-new car sales ratio to 1.4x from under 1.0x five years ago signals a structural shift, driven by rising consumer confidence and digital adoption. The supply too remains strong with average age of used cars steadily dropping and is expected to reach around 3.7 years, reflecting quicker upgrade cycles and growing preference for utility vehicles, mirroring new car trends. " The report noted that India still lags behind mature markets, where the used-to-new car ratio stands higher, 2.5 times in the US, 4.0 in the UK, 2.6 in Germany and 3.0 in France, suggesting there is ample room for growth. Used car sales also held firm during the pandemic and global semiconductor shortages that hit new car production. With fresh delays now caused by rare earth magnet shortages, buyers are turning to pre-owned vehicles for faster availability. The post-pandemic rise in new car sales has also expanded the range of available used vehicles, a boon for first-time buyers. In addition, lender-platform tie-ups and AI-led underwriting have eased access to vehicle finance, further supporting the shift. While the sector has grown rapidly, profitability remains a challenge for organised players. Poonam Upadhyay, Director, Crisil Ratings, said, "High cost of customer acquisition, logistics and refurbishment continues to weigh on the operating margin, which remains thin or negative for many players. However, the shift towards integrated service offerings including inspection, refurbishment, financing, insurance, and doorstep delivery, along with tighter cost control, should help narrow the losses down gradually. If the current momentum on cost agility sustains, most players are likely to achieve an operating breakeven over the next 12-18 months." According to Crisil, most players have enough cash reserves from earlier fundraising rounds to meet operational and capital expenditure of Rs 800–1,000 crore this fiscal, with a focus on expanding inspection hubs and strengthening tech infrastructure. Since fiscal 2019, organised players have raised more than Rs 14,000 crore through equity. But in the past two years, the emphasis has shifted towards improving profitability and operational efficiency, leading to more selective fundraising. Bank credit remains constrained due to ongoing cash burn, but Crisil expects a pickup, especially for inventory-led businesses with tangible collateral. Looking ahead, the report said the used car market is likely to remain structurally stable, but availability of quality inventory will be a key factor to watch. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
India Gazette
13-07-2025
- Automotive
- India Gazette
India's used-car volume to grow 8-10% in 2025-26, over twice as fast as new cars: Crisil
New Delhi [India], July 13 (ANI): The sales volume of used cars in India is expected to cross 6 million units this fiscal driven by value-conscious demand, rising digital adoption and better access to finance, the credit rating agency Crisil Rating said in a report. This has lifted the used-to-new ratio in car sales to 1.4 from less than 1 five years ago, with the volume growing more than twice as fast. After a tepid 5 per cent volume growth seen between fiscal 2017-24, used vehicle sales grew at a strong 8 per cent last fiscal and is poised to grow up to 10 per cent this fiscal too, said the credit rating firm. The market value of these used cars is estimated to be around Rs 4 lakh crore, nearly matching that of new car sales. The organised players in the segment have been incurring high operational cost towards refurbishment, logistics and financing as the sector is in an expansion mode, resulting in continued cash losses. However, strong revenue growth is expected to drive breakeven at the operating profit level over this and the next fiscal. Until then, credit profiles of players will largely depend on timely fund-raising and sustenance of adequate liquidity to support growth. Anuj Sethi, Senior Director, Crisil Ratings said, 'The improvement in the used-to-new car sales ratio to 1.4x from under 1.0x five years ago signals a structural shift, driven by rising consumer confidence and digital adoption. The supply too remains strong with average age of used cars steadily dropping and is expected to reach around 3.7 years, reflecting quicker upgrade cycles and growing preference for utility vehicles, mirroring new car trends.' The report further added that there is significant headroom for growth as India's used-to-new car sales ratio of 1.4 times still lags mature markets such as the US (2.5 times), UK (4.0 times), Germany (2.6 times) and France (3.0 times). The segment, which saw volume remain stable even during the pandemic and semiconductor shortage that disrupted new car production is expected to remain resilient as prolonged rare earth magnet shortages delay new car deliveries, prompting buyers to opt for pre-owned cars and gain quicker access. Besides, first-time buyers have a wider range of used car models to choose from, supported by healthy new car sales in the post-pandemic period. To top, improving access to vehicle finance, through lender-platform partnerships and underwriting, driven by artificial intelligence, is likely to support this shift. Strong growth has led to expansion of organised players in the used car segment even as profitability remains a challenge. Poonam Upadhyay, Director, Crisil Ratings, said, 'High cost of customer acquisition, logistics and refurbishment continues to weigh on the operating margin, which remains thin or negative for many players. However, the shift towards integrated service offerings including inspection, refurbishment, financing, insurance, and doorstep delivery, along with tighter cost control, should help narrow the losses down gradually. If the current momentum on cost agility sustains, most players are likely to achieve an operating breakeven over the next 12-18 months.' The report stated that most players have sufficient cash reserves from earlier funding rounds to meet their operational expenses and capex of Rs 800-1,000 crore this fiscal, focused on scaling inspection hubs and strengthening technology infrastructure. Organised players have collectively raised over Rs 14,000 crore via equity since fiscal 2019, though over the past two fiscals they have shifted focus to enhancing profitability and efficiency and have been selective in fund-raising. Bank credit, which remains constrained by the ongoing cash burn, should pick up, especially for inventory-led players with tangible collateral, as per the report. Looking ahead, the used car market is expected to remain structurally steady, but availability of quality inventory will bear watching, the Crisil Ratings said. (ANI)
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Business Standard
11-07-2025
- Automotive
- Business Standard
Used-car sales to expand 8-10% in FY26, outpace new vehicles: Crisil
The used-car market in India is expected to expand 8–10 per cent in FY26, more than double the projected growth for new car sales. The total used-car volume is likely to surpass 6 million units this fiscal, according to Crisil Ratings, driven by affordability concerns, growing digital platforms, and improved access to financing. The used-to-new car sales ratio has increased to 1.4 from less than 1 five years ago. The market value of used cars is estimated to be around ₹4 trillion, nearly matching that of new car sales. Crisil's analysis of six organised used-car companies — including CarDekho, Cars24, CarTrade, Spinny, Mahindra First Choice, and OLX-backed platforms — shows that revenue growth is expected to help players break even at the operating level in the next 12–18 months. Until then, liquidity and timely fund-raising will be critical, especially as most companies are still incurring cash losses due to high operating costs tied to logistics, refurbishment, and customer acquisition. Used-vehicle sales grew 8 per cent in FY25, rebounding from the slow 5 per cent annual growth between FY17 and FY24. This growth trajectory is expected to continue into FY26. However, India still trails global markets in used-to-new ratios, with the United States at 2.5, the United Kingdom at 4.0, and Germany at 2.6. 'The rising used-to-new car ratio suggests a shift in buyer behaviour, driven by digital platforms, faster upgrade cycles, and a growing preference for utility vehicles,' said Anuj Sethi, Senior Director at Crisil Ratings. The average age of used vehicles sold is declining and expected to fall to 3.7 years, down from 5.3 years in FY17. The segment also benefited from disruptions in new car deliveries caused by global semiconductor and rare-earth magnet shortages. Pre-owned vehicles have become an alternative for buyers seeking immediate ownership, while first-time buyers are finding more options in the used segment thanks to strong new vehicle sales in recent years. Despite topline growth, profitability remains elusive. 'High cost of customer acquisition, logistics and refurbishment continues to weigh on the operating margin, which remains thin or negative for many players,' said Poonam Upadhyay, Director at Crisil Ratings. She noted that integrated offerings — such as financing, insurance, doorstep delivery, and inspection services — may help reduce losses over time. Crisil data indicates that revenue for the six analysed players rose from ₹6,536 crore in FY22 to an estimated ₹16,500 crore in FY26. Despite losses, these companies maintain cash buffers from earlier fund-raises and are planning capital expenditure of ₹800–1,000 crore this fiscal, primarily to expand inspection hubs and improve technology. Since FY19, organised players have collectively raised over ₹14,000 crore in equity. Bank lending has remained tight for this sector due to continued cash burn but could revive — particularly for inventory-led platforms with physical collateral.
