Merawala tyre

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Tuesday , April 22, 2008 at 2107 hrs such measures for a low engagement product like a car tyre, Priya Monga, business head, RC&M, admits, “Tyre manufacturers are adopting innovative strategies to generate brand awar-eness and retain their consumers.”

Even Basu concedes that because there are more margins in the passenger car segment, per unit sale, the propensity of choosing a brand through advertising and promotions of this nature is growing.

On the downside, the frequency of sale in this category is lower, except in the used car segment, as a car owner is more likely to change his car than change his tyre. “That’s what makes it a high value, low volume business in the passenger segment,” explains Ceat’s Basu.

The dynamic of the commercial sector are vastly different from the passenger market. “No amount of brand equity works here, as a majority of purchase decisions are influenced by the dealer on the trust factor,” explains Sharma.

Therefore, in order to further consolidate its 29% hold over this market, Apollo (tailed by JK at 22%) has come out with an easy finance scheme with GE Capital. JK has a similar scheme with Sunderam Finance.

“Since, tyres are the second largest component bought on credit (after the vehicle), we offer commission to retailers, half of whom are exclusive to us, to extend loans to fleet owners,” says Sharma. A truck tyre can cost as much as Rs 11,000-15,000, against the Rs 4,000-5,000 for a car tyre.

However these days, many tyre manufacturers are also getting into the retreading business. Retreading is a process of applying a new tread (the portion which meets the road surface) over a used tyre. It costs less than 50% of the price of a new tyre and gives an additional mileage of approximately 30,000–40,000 kms for truck trucks. Generally, retreading is done one to three in a tyre’s life cycle. A highly fragmented industry crowded by over 10,000 players, the major players in this business are Elgitread, MRF, Apollo and Indag.

“With the improvement in the Indian road conditions and professional management of fleets, tyre abuse has substantially declined. Getting into the retreading business as a 360-degree service offering has thus begun to make strategic sense for the manufacturer,” explains Bhatia.

Apollo for instance has come out with a product called Dura Tread.

Under a much hyped ‘tyre exchange scheme’ a fleet owner can get any brand of a tyre retreaded with