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India looks set to be the next big market for tire brands

December 18, 2014

GfK conducted a seven-month study of India’s tire retailers to find out more about the country’s market. So – what have we discovered?

Over 50,000 tire shops exists in India’s smaller cities and rural area; more than half of which are in rural

A younger population and increasing buying power, backed by higher consumer confidence surrounding the economy, are contributing to a positive outlook for India.

More than 10,000 shops sell commercial vehicle and passenger car tires in the country’s smaller cities and villages, as revealed by our retail study. These shops are expected to thrive, and this will have a positive impact on related sectors such as tires, components and accessories.

Smaller cities (with a population below 50,000) and villages contribute to a considerable 10% or more of the country’s passenger car and utility vehicle tire replacement volume.

Motorbikes and mopeds dominate

With high motorcycle ownership, it is no surprise that two-wheeler tires have the highest penetration and are sold by about 50,000 shops.

The diagram below shows the distribution of different tire types. Passenger car tires includes SUV and 4X4 tires while commercial vehicle tires includes small, light, medium and heavy commercial vehicles:

charts India blog post1

The regional picture

Our findings also show that for smaller cities and rural areas, the West region has the highest concentration of shops — 40% being located there.

The largest proportion of shops stocking passenger car tires and commercial vehicle tires is in the North region’s small cities and villages. Amongst the clusters of smaller towns in the country, Maharashtra state boasts the biggest market size as well as retailer concentration. In rural India, Uttar Pradesh is the major contributor to the sector.

charts India blog post2

Comparing countryside and city

Channel structure for tire retailing is more fragmented in smaller cities and rural regions where service centers, auto accessories shops and spare parts shops also play important roles. Contrary to the channel mix in big cities, where specialist tire shops account for a much larger share of replacement tire sales, other retail channels in rural areas have a relatively larger share of this type, making up around one-fifth of their total tire sales volume.

Our verdict

  • Our study revealed rapid retail evolution. Nearly 30% of the surveyed shops only started their tire retailing business in the last four years — a telling sign indicating the growing potential for this sector.
  • The revival of India’s economic activity is anticipated to propel robust growth in the automotive sector in the coming years.
  • Rural and smaller cities, with a vast overall population, show strong potential, and should be the next big target in terms of distribution networking for market players.

Get the study in full

Anant Jain is Account Director, Automotive at GfK in India. To gain the full insights and benefits from our detailed study of the Indian tire market, contact us.

For more about our offerings, visit our Automotive and Retail Sales Tracking pages.

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