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Michelin plans to increase tire prices by 4% (effective 1st July, 2011) to offset increasing raw material prices (mainly Natural Rubber).
This is in addition to a 4% price increase adopted by the tiremaker last month.
Press Article:
French tyre maker Michelin to hike tyre prices from tomorrow
French tyre maker Michelin has decided to hike prices of products by 4% effective from this Friday to offset surging rubber prices for the second time this year. The company had already raised the prices by 4%, last month, to pass on the rising cost of inputs, mainly natural rubber.
"It is difficult to absorb the increasing cost of inputs, particularly natural rubber. The prices have more than doubled since last year. Natural rubber constitutes more than 40% of the total input cost. Margins are already squeezed. We have to pass the some of the cost escalation to protect our margins," said B Kumar, national sales manager - TM, Michelin India Tyres.
In last two years, the prices of rubber have tripled from Rs 90 per kg to current Rs 215 per kg. The surge in prices has also pushed up the operating cost of tyre manufacturers to their total sales.
The innovator of radial tyres, Michelin entered India in 2005. But the penetration of radials in India is still below 15% compared to nylon segment. Michelin expects the segment to reach 50% of the total tyre market by 2020.
"In 2001, radialisation was just 1% of the tyre industry. But today, it has corned 14.5% market share. By 2020, we expect to the segment to reach 50% of the market," added Kumar.
The tyre industry in the country is reeling under rising costs of the input material. Tyre industry uses 70 per cent of natural rubber grown in India. The demand is increasing with booming automotive sector while and there is a steady decline in supplies. "In such conditions, price rise is imminent. Other companies too have taken similar steps," said an industry expert.
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This is in addition to a 4% price increase adopted by the tiremaker last month.
Press Article:
French tyre maker Michelin to hike tyre prices from tomorrow
French tyre maker Michelin has decided to hike prices of products by 4% effective from this Friday to offset surging rubber prices for the second time this year. The company had already raised the prices by 4%, last month, to pass on the rising cost of inputs, mainly natural rubber.
"It is difficult to absorb the increasing cost of inputs, particularly natural rubber. The prices have more than doubled since last year. Natural rubber constitutes more than 40% of the total input cost. Margins are already squeezed. We have to pass the some of the cost escalation to protect our margins," said B Kumar, national sales manager - TM, Michelin India Tyres.
In last two years, the prices of rubber have tripled from Rs 90 per kg to current Rs 215 per kg. The surge in prices has also pushed up the operating cost of tyre manufacturers to their total sales.
The innovator of radial tyres, Michelin entered India in 2005. But the penetration of radials in India is still below 15% compared to nylon segment. Michelin expects the segment to reach 50% of the total tyre market by 2020.
"In 2001, radialisation was just 1% of the tyre industry. But today, it has corned 14.5% market share. By 2020, we expect to the segment to reach 50% of the market," added Kumar.
The tyre industry in the country is reeling under rising costs of the input material. Tyre industry uses 70 per cent of natural rubber grown in India. The demand is increasing with booming automotive sector while and there is a steady decline in supplies. "In such conditions, price rise is imminent. Other companies too have taken similar steps," said an industry expert.
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