Indian auto sector woes pile up inventory at tire makers

ERJ staff report (BC)

Mumbai - With the Indian auto market in the grip of a severe slowdown, the tire industry is witnessing an inventory pile up of around 40 per cent over normal levels, reports Jharna Mazumdar of Financial Chronicle.

Production is said to have far outpaced demand from automotive original equipment manufacturers and consumers who are reluctant to go in for new purchases during of soft market conditions.

Rajiv Budhraja, director general of the Automotive Tire Manufacturers' Association (ATMA) told Financial Chronicle: “There is a pile-up of inventory in the tire segment due to subdued demand from carmakers, while export markets are also not encouraging as globally markets are down. In the last six months cheap Chinese imports have entered the Indian market, which is creating difficulty for manufacturers here.”

As a result the sector's forecast growth rate has been cut to 2-3 per cent for the 2012-2013 period.

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