By Priya Singh
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Updated On: 17-Jun-2024 06:00 PM
The company believes that tyre players are now more independent in terms of pricing power than in previous periods.
Key Highlights:
Ceat, a tyre manufacturer, intends to be the number two player in the passenger car radial (PCR) tyre category in the replacement segment over the next two years, citing improved pricing power, according to the company's annual investor conference. To generate expansion, the company continues to focus on the B2C area.
The company has introduced several tyres for luxury vehicles, and it now has approximately 95% SKU (stock keeping unit) penetration in the market.
Ceat does not plan to establish an exclusive product line for EVs in the future. However, it aims to capture the EV tyre segment by securing platform wins in two-wheelers, passenger vehicles, and commercial vehicles, while serving a variety of EV manufacturers, including Tata Motors, BYD, M&M, MG Motors, Kia Motors, PSA, and others in PVs and Tata Motors, Eicher Motors, Olectra, PMI, Mahindra, Switch Mobility, and others in CVs.
The Mumbai-based company, one of India's leading tyre producers in terms of sales, is now ranked third with a 17% market share, following only Bridgestone and Apollo Tyres.
The tyre manufacturer believes that tyre companies now have greater pricing power than they did in the past. As a result, branding is expected to become increasingly important, leading Ceat to prioritize it as a significant area for investment.
Highlighting its medium-term goal, the company's management highlighted plans to gain second place in the PCR tyre space by the end of FY25 and become a market leader during the next 2-3 years.
This will be driven by a greater emphasis on marketing, an expansion of the retail network (now 580 locations), and dealer assistance. Currently, it demands an 8-9% pricing premium over MRF, which has a 12-13% market share.
Ceat is also betting heavily on premiumization, expecting a top line of Rs 17,000 crore in three years. As the passenger vehicle (PV) market's demand for SUV and MPV cars grows, so does the demand for wider tyres with rim sizes ranging from 18 to 15 inches.
The firm believes that the increasing share of above-17-inch tyres in the PV segment, as well as its concentration on this category, will benefit its profitability.
Investment and Capacity Expansion
Ceat plans to invest Rs 1,000 crore in capacity expansion for FY25 and a similar amount for FY26. The company projects that this investment will add Rs 3,000-4,000 crore to its revenue without needing new greenfield projects. Current capacities are sufficient to meet the anticipated demand through FY26.
Export Growth
Ceat is also focusing on expanding its exports, which currently account for 19% of its revenue. The company aims to increase this to 25% by FY26 by entering new international markets, particularly in Europe, the US, Latin America, and the Middle East.
Ceat plans to launch truck radial tyres in the US by the mid-fiscal year and passenger radial tyres by the end of FY25.
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CMV360 Says
Ceat's plans to become the second-largest player in the PCR tyre market show its confidence in better pricing and strong branding. By focusing on high-quality tyres and increasing exports, Ceat is well-positioned to meet growing market demands and achieve steady growth.
The company's investments and expansion plans demonstrate its commitment to becoming a top player in the tyre industry.