JK Tyre to enter 2-wheeler segment; will outsource production

With domestic sales of two-wheelers on the rise, JK Tyre is planning to enter the two-wheeler segment. However, the company is not planning to start manufacturing two-wheeler tyres. Instead, it is planning to outsource production.

At present, JK Tyre manufactures tyres for four-wheelers, buses and trucks. Passenger vehicle sales have not crossed 2.66 million units since 2012-13 and sales of commercial vehicles have been falling at an alarming rate. In comparison, sales of two-wheelers have been rising and more than 16 million units were sold in 2014-15. Considering this, JK Tyre cannot afford to ignore this lucrative segment any more.

For two-wheeler tyres, JK Tyre is looking at domestic and international vendors to outsource production. The company plans to service the OEM and aftermarket segments.

With a sluggish market, JK Tyre does not want to make fresh investments in manufacturing facilities for now. The company will think of making new investments only if the market is favourable.

India has a free-trade agreement with South Asian countries under which, finished tyres can be import by paying 6-10% duty. In comparison, for the import of raw materials a 25% duty is levied.

Source: ET Auto