Automobile Aug, 01 2014

Inflating benefits in tyre business

Indian tyre industry is scaling new heights with the tyre production in the country expected to touch 191 million units by the end of FY 2016. With unprecedented growth in automobiles, India has emerged as one of the world’s most competitive tyre market

By Sandeep Rana, TFW Bureau
Senior Copy Editor
Inflating benefits in tyre business

Rising demand in passenger vehicles and two-wheeler segments coupled with availability of raw material (natural rubber) and ultramodern production facilities has put the country among the top markets of the world. Demand in automobile OEM ( Original Equipment Manufacturer) sector and replacement market has also contributed to the rise of the industry.

As per RNCOS, a Business Consulting Service, in its research report mentioned that the tyre production in India is expected to reach 191 million units by the end of FY 2016. The report further says manufacturers are expected to pump in huge money in the business, especially in radial tyre capacity expansion.

Organised sector rules the roost

Indian tyre industry is mostly dominated by the organised players while the unorganised sector is the leader in the bicycle tyre market. The country is expected to enter the top five vehicle producing nation’s league.

The domestic market is expected to account for 80 per cent of the total sales by 2020. Exports will account for the balance 20 per cent of the market by 2020, the study adds.

Booming automotive sector:

As per a market survey, the Indian automotive market is the second growing market after China and is the sixth largest in the world, thus, growth of tyre industry is bound to touch new heights.

The automotive industry is growing more than 19 per cent annually in India with rising living standard and population here. According to Centre for Monitoring India Economy (CMIE) and Automotive Tyre Manufacturers Association (ATMA), major players include MRF, JK Tyres, Apollo Tyres and CEAT Limited, account for 63 per cent of the organised tyre market.

On the rising growth of the sector, Anchit Chandra, Senior Manager, Retail Business, CEAT Limited, says, “CEAT commands an overall market share of 14 per cent in the tyre industry. The brand has endured decades of changes in the dynamic Indian market and has been able to create a space for itself due to products that are based on genuine consumer insights and research.”

Road to franchise

After dealership and distributorship models, tyre industry is also on its way to franchise. Almost all top tyre brands are offering franchise of their company. Regarding franchising, Chandra, says, “CEAT is the first tyre manufacturer in India to introduce a franchise model for tyre retail and service. Over the years CEAT franchisees have been at the forefront of delivering a holistic consumer experience to its customers. Franchising has allowed us to develop a service approach towards tyre retail, providing consumers with a smooth, carefree experience. This has been possible due to complete commitment to quality and service orientation of our franchisees. We offer franchise opportunities in the field of tyre sales and service under the brand CEAT Shoppe. With proper planning and focus a CEAT Shoppe franchisee breaks even in 18 months and is expected to yield a RoI of 24 per cent Y-o-Y.”

Adding to it, Rajneesh Batta, National Head, Franchise ChangeMyTyre.com, shares, “Indian tyre industry is aware of franchise flagship /single brand tyre stores. For the first time multi-brand tyre retail franchise opportunity is being offered. Tyre retail and that too multi-brand is already a success. The business has expanded over the years thanks to burgeoning population of vehicles in the country. Not sparingly it has not been easy to get dealerships for leading tyre brands. With our offering we take all the pain away. Not only are we offering best brands but also providing technical training to go along with it. Let me also point out that it’s not only tyres which will be retailed from Changemytyre Pitstop but also alloys, accessories, batteries and lubricants. Tyre outlets also earn handsomely from tyre servicing like wheel balancing, wheel alignment and tyre air service management. Our pitstops also offer these services and much more.”

While highlighting his company’s franchise option, Vikas Ghadage, MD and Founder of Tyre Secure International Pvt Ltd, tells Franchise India, “We have a very rewarding and best in industry opportunity for our franchisees. The USP of our franchise opportunity is the ability to start franchise store without any royalty fee and minimum investment. Our products are directly related to the number of tyres available in any city; hence, the potential is immense and almost endless. We offer exclusivity to our franchisees as per territories allocated in our policies.”

Support and training to franchisees

Training and support to the franchisees by the franchisors is the key to success for both. Thus, tyre brands are going beyond the basic training to attract the franchisees. “We help the prospective franchisee to decide on the site/location. We also have a complete training module before and after induction and continuous back-end support and a budget for ATL/BTL activities throughout the year. Besides, we offer the best RoI to our franchisee and our strategy to build up business is customer centric to enable pull from customers. We offer low investment and high returns business model to our franchisee along with complete training and back end support,” says Tyre Secure’s Founder.

While at CEAT, there are detailed SOPs (standard operating procedure) for all processes from pre-sales to customer maintenance. On these lines, Batta of ChangeMyTyre.com, says, “Extensive training is provided in sales and technical knowledge about tyres, upsizing, alloy wheels compatibility, tyre servicing and car detailing. In our model apart from kick off training we also provide regular training through online medium. Our training programme is divided into 26 modules and we are perhaps the only company in India to offer structured training programme in tyre retail. We have been so enthused with the response that we plan to launch "e-Changemytyre e-Certification programme in tyre business."

Franchise facts:

Brands

Area       

Investment

Breakeven

RoI

CEAT Limited

500 – 1200 sq ft 

Rs 13 to 20 lakh           

18 months                     

24 % 

Tyre Secure International Pvt Ltd

Minimum 200 sq ft

 Rs 1.5 lakh to 10 lakh       

Within 9 months        

In excess of 35%

ChangeMyTyre.com       

1000 sq feet                     

Rs 35 lakh                   

1.5 years

95 %

Related: “We are growing more than 150 % Y-O-Y”- Bhushan Karn

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