Why the commuter segment will continue to be the sweet spot for CEAT

CEAT Ltd has also rolled out its new premium range of two-wheeler steel radial tyres- Sportrad and Crossrad.

Tyre maker CEAT Ltd will continue to focus on entry-level motorcycles even as domestic and foreign competitors gradually shift focus to heavier and premium bikes, a top company official told Moneycontrol in an interview.

“We would not be moving away from the mass market to premium tyres because in the foreseeable future the commuter segment will always be the largest as far as demand is concerned,” said Arnab Banerjee, Managing Director and CEO of CEAT.

As per auto industry body Society of Indian Automobile Manufacturers (SIAM), domestic sales in the entry-level scooter segment (75cc-125cc), have dropped from 6.66 million units in 2018-19 to about 4.8 million units in 2022-23.  The entry level motorcycle category (75cc-110cc) sales also dipped to 5.23 million units from 8.49 million units in FY 2018-19, as per SIAM.

Banerjee attributed the decline in the entry-level two-wheeler segment to the “changing market dynamics” as he believes that there is a large section of buyers who are moving upwards to deluxe segment products (like Bajaj Pulsar, TVS Apache and so on).

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The customers in the commuter segment are upgrading and we will continue to cater to them. Customers are no longer in the 100cc bikes only and are upgrading to 125-150cc itself. So, with the premiumisation of bikes, the tyres are also getting premiumised,” said Banerjee.

CEAT, the flagship company of RPG Enterprises, was established in 1958 and produces more than 41 million tyres, catering to various segments like two and three wheelers, passenger and utility vehicles, commercial vehicles, and off-highway vehicles.

CEAT Ltd has also rolled out its new premium range of two-wheeler steel radial tyres- Sportrad and Crossrad. Tailor made for high-performance motorcycles, those tyres will be targeting both the aftermarket and original equipment manufacturer (OEM) segments. The new range of products will initially cater to homegrown premium motorcycles.

Without mentioning the names of the key OEMs, Banerjee hinted that most of the bike makers with a presence in the 250-500cc segments are planning to source its steel radials. Separately, well-informed sources have told Moneycontrol that Royal Enfield, Hero, Yamaha, Triumph Bajaj Auto. And others are in discussions with CEAT to source tyres.

“This segment is nascent and is about 3 percent of the entire two-wheeler (tyre) industry but is rapidly going to gain in saliency. We are the market leaders in two-wheeler (tyres). So, how we act and grow the segment depends on what we do as well. So, to that extent, this product launch is significant."

Apart from Internal Combustion Engine (ICE) Vehicles, CEAT is also aiming to expand aggressively in the EV tyre segment. Having already developed tyres for battery-run vehicles, it already commands a 40 percent market share in the electric two-wheeler market. CEAT clocked a topline of Rs 11,000 crore during the last fiscal (2022-23).