Given the high demand for replacements, tyre sector has historically remained resilient to the vagaries of business cycles. 

Against the double-digit contraction in vehicle production, tyre demand shrunk less during FY2020-FY2021 and recovery was stronger in FY2022 with demand rising by 12.2% over 1.2% growth in vehicle production. 

However, vehicle production outpaced tyre demand growth in FY2023 supported by strong growth for CVs and PVs, while a high base impacted growth in tyre replacement volumes. Tyre demand growth improved to 10.5% in FY2024 on account of strong replacement demand; however, it moderated to 4.4% in FY2025 owing to moderation in PV and 2W replacement demand in Q4 FY2025.

Exhibit 1: Growth trend in vehicle production and tyre demand

Source: ATMA, SIAM, ICRA Research