Tire Industry in Industry; PEST Analysis

PEST ANALYSIS OF TIRE INDUSTRY

Tire Market in India is growing strongly and their production increasing from every year. In
2005, there were 40 tire manufacturing companies working in India which was consisted of
major big brands in tire industry such as Good year, MRF, Falcon Tires and Bridge stones etc.
we apply pest analysis on this market to check at what extent political, economical, technological
and social factors are affecting this tire industry in India.

POLITICAL:

The government policy is much favored too local manufactures as said by the managing director
of Goodyear India in 2005 that the tire market in India was almost exclusively dominated by
local players and 90% of all tires on the Indian market were made and sold by the local Indian
companies so Big companies like Good year, Michelin etc are hardly visible in India

Tire Industry “Indianized”

Government is providing more leverage to the local market that the foreign tire
companies coming towards India. In 1926, when big giants in tire manufacturing like Dunlop,
American firestone, Goodyear and Italian Ceat had much capital started their production plant in
India than this had been a big treat for the local tire market. So Indian Government Immediately
took an action and made a policy that if any foreign tire manufacturing company wanted to start
their tire business in India than they had to act as locally and their names also seemed like locally
such as Dunlop changed into Dunlop India and from Goodyear to Goodyear India. This
“Indianized” process speeded up with the acquisition of most of the subsidiaries of foreign
companies that operated in India: Firestone was bought by Modis in the early 1980s and Ceat
and Dunlop were taken oven by RPG.

Agreements with other foreign companies:

There are many contracts and agreement of Indian companies with other foreigner companies
which are as follows:

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 Under the Bangkok agreement, car and two wheelers tires were imported from china and
South Korea at 10 percent custom duty. These imported tires had an average price 30
percent lower than tires sold by Indian companies. Some Indian companies like Apollo
and JK tires tried to collaborate with Chinese companies in order to jointly produce cross
ply tires.
 In 1984, there was a agreement between the Indian and Japanese companies to get the
model of Maruti 800 from Japanese company.
 Ford and Dacia Logan are soon to be manufacture under the agreement by the Indian
company with the foreign companies.

ECONOMICAL:

Growth of tire industry:

The tire industry is growing in India day by day. In 1926, first tires were made by British
company Dunlop. This gave rise to flourish of tire industry in India. When Cross ply tires were
first introduced than 65 % of tire sales in India were covered by cross ply tires. But with the
introduction of radial tire, radial tires represented 85% of car tire sales by volume. All the tire
manufacturing companies are increasing their shares because tire industry in India is grooming
with every year. In 2005, MRF, Apollo and JK tires had a tough competition and had a tough
competition between them.

Increases price of raw material:

The prices of natural rubber and petroleum, which are essential components for the
manufacturing of tires, becoming higher and higher which is badly effecting the tire
manufacturing industry.

TECHNOLOGY:

SOCIAL:

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