2W replacement tyre demand in rural market yet to see complete revival, festive season offers hope: CEAT MD & CEO

“The two-wheeler replacement market is growing year-on-year in strong single digits, which is much much different from quarter one. However, we are yet to see a complete revival in rural demand,” Banerjee told PTI.

On the challenges in the rural market, he said while monsoon has been good in several parts of the country it was patchy and most of East and North East India didn’t get good monsoon.

Usually in Q2 demand dips in Q2 because of monsoon but it has not happened, he said adding, “So the market is in a similar state. It has not accelerated yet.

Banerjee, however, said in the festive season during the third quarter it will be better.

“In the two-wheeler segment in the rural market during the festive season there is an uptick. So we are optimistic about quarter three demand, especially in October and November,” he added. CEAT expects to gain market share as it has been growing strongly in both motorcycle and scooter segments from end of the first quarter to the whole of the second quarter this fiscal, Banerjee said. Overall, he said,”Festive season outlook is looking good as of now. The passenger car market is going strong and a lot of competitive activity in the market will boost demand.

Usually, the first part of Q3 is good and then there is a winter effect in December, especially in northern and eastern India with demand going down till January before going up again in February.

As for CEAT, Banerjee said, “Our OEM volumes in passenger vehicles should recover in Q3 over Q2.

Yet, he said the raw material situation has to be studied with some degree of caution as it goes up faster then it could be a dampener to growth. Crude prices have gone up due to recent geopolitical disturbances and there is uncertainty about the crude-based derivatives.

“We are expecting about 3-4 per cent price hikes not immediately but gradually in the next two quarters,” he added.

On natural rubber prices, he said, “The inflationary trend in rubber is slightly lower than fossil fuel-based products.

While there is no big change in demand from China, Europe is in recession although it is growing in India, Banerjee said, adding the trend would need to be carefully watched.