Dec 01, 2016 12:10 PM IST | Source: CNBC-TV18

CV sales steady but drop in cars, 2-wheelers visible: JK Tyre

Vivek Kamra, President, JK Tyre said from an industry perspective they haven‘t seen an impact on tyre demand in commercial vehicle segment but only in passenger car and two-wheelers.

Checking the reality on the ground post demonetisation, CNBC-TV18 spoke to Vivek Kamra, President, JK Tyre said from an industry perspective they haven’t seen an impact on tyre demand in commercial vehicle segment but only in passenger car and two-wheelers.

Commercial vehicles cannot run with bad tyres, he said.

The impact on transporters has not been much because they are allowed to use old notes for fuel and movement but drivers have been resisting long-distance transporting.

In fact, commercial vehicle owners are not buying tyres on cash but are buying through regular relationship dealers.

So, replacement demand in commercial vehicles has not been hit, says Kamra.

Below is the verbatim transcript of Vivek Kamra’s interview to Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Sonia: You were telling me in our discussion earlier that car companies will not face the brunt in the month of November but they might actually see a bit of a hit in the month of December. What has your reaction been to the demonetisation impact up until now?

A: First, good news from Maruti Suzuki and that is exciting because the street was completely pessimistic on car sales, but obviously, their newer models are doing well.

The thing to consider here is that people who had made buying decisions in the beginning of the month have not changed them. It is during the month that you are seeing some changes in the way people are responding to or the time spend they have is changing towards trying to organise their lives a bit around the whole cash availability issue. However, from the original equipment manufacturer (OEM) perspective, because you plan your sales well in advance for a month, we are not seeing any drop or pick up from most of the OEMs. So, they have picked up tyres like they normally do as per plan.

It is only in the replacement sales, particularly in car tyres, small car tyres as well as in two-wheeler tyres that we are seeing a sharp drop because the stakes are not so high. In commercial vehicles, you have to. It is like filling gas; you cannot not change your tyre because it is risky to ride with a tyre which needs to be replaced, so safety first in that case as well as productivity for a commercial vehicle. You cannot afford not to change your tyre. So, we are not seeing a hit at all in commercial vehicles. I am talking from an industry perspective. JK Tyre, of course, we have just taken over a capacity, so our growth is substantial over last year. We are doing way above last year around 15-20 percent.

However, for the industry as a whole, I would see these as the key areas. Commercial vehicles, steady. Passenger car vehicles, replacement sales and two-wheeler replacement sales, slightly slower, people are just organising themselves. But you cannot postpone it beyond a point. It is unsafe. You have to change your tyres.

Latha: Just tell us how is demonetisation at your end. Give us all the anecdotal experience that you have. Small part makers, transportation, logistics, has anything gotten disrupted? If yes, what?

A: Like I said, our freight is okay. Truck availability has improved. There are certain sectors where demand has dropped because I am getting trucks easily to move my tyres in addition to fit my tyres; they are also moving my tyres. So, trucks are okay, they are on the road. Obviously, the policies adopted have allowed transporters to move. Transporters have gained marginally from the thinking because they were able to use their cash for gas as well as movement.

Yes, drivers have a problem on the road. So, there has been a resistance for long distance. We are finding some issues with truck placement, but otherwise, we are not seeing an impact on commercial vehicles, in fact we are seeing positive on our behalf because people are not buying tyres on cash and they are buying more tyres through our regular relationship dealers because cash is not available and some transporters and truckers are buying through better more, what we feel our relationship channels, our dealers, our network and therefore they have moved out from the low-priced cash buy of tyres. So, we are seeing some positive signs from our replacement demand particularly in commercial vehicles.

Car and two-wheelers obviously are bound to hit. Farm has been hit. So obviously, when you are doing a replacement, your mind-share is not so much in terms of should I change my tyre now. That will come back, as I said earlier. So, we are not seeing any impact on business. Our business is completely done through our partnerships. We are not seeing any payment issues as such. But yes, footfalls on shops have come down.

Follow us on
Available On