Pandemic pumps up demand for tyre fleet management in India

With business down amid the pandemic, commercial fleet owners are looking at various solutions to stay relevant. A proper tyre management programme helps fleets to be efficiently run and costs optimised. When it comes to expenses related to vehicle maintenance, particularly commercial vehicle fleets, tyres usually account for around 15-20 percent of the total costs. Reason enough to have a proper tyre management programme in place if a fleet is to be efficiently run and costs optimised.

With the Covid-19 pandemic playing havoc with the fortunes of automobile companies, especially commercial vehicle operators in India (overall sales were down 21 percent in FY2021), beleaguered transporters are now looking at new solutions to stay afloat. Proper tyre management in CV fleets is one of them, which can address the ongoing issues of surging tyre prices, need for transparency in operations and enhanced fuel and operating efficiencies.

Mumbai-based Ceat has witnessed the segment increase by about 2.5 times during FY2021. With some of the country’s largest 150 fleet operators such as Varuna Integrated Logistics, CJ Darcl Logistics and Rivigo amongst its clients, the company is now hopeful of its revenues tripling in the next three years.

Talking to Autocar Professional, Pali Tripathi, Head, Sales Development and Fleet Solutions business at Ceat, claims that with the tyre cost-per-kilometre (CPKM) expenses in the range of 20-26 paisa, transporters can save up to 10-20 percent in the long run. This is a significant sum considering rising fuel (diesel is currently priced at Rs 95.44 a litre in Mumbai) and fleet maintenance costs. With a market size of anywhere between Rs 10,000-15,000 crore from the large and medium-sized fleet operators, Tripathi believes the opportunities are limitless for tyre management.

According to industry experts, the tyre outsourcing model (TOM) has been the most prominent service offered by tyre manufacturers to fleet owners in India for a decade. Interestingly, under this model, the fleet gets service coverage for all tyres on the wheels of the trucks, irrespective of the brand of tyre they are shod with. Overtime, this model matures with transporters adding more parameters into the services, depending on their needs and targets. Ceat, which introduced the TOM model in 2018, currently manages about 300,000 tyres under its fleet solutions program. It is targeting a million tyres under its management by 2024.

Now, a more advanced version in the form of the ‘pay-per-kilometre’ model is fast gaining traction. Ceat, through use of IoT and machine learning, has a set of 49 parameters with which it monitors fleets. Some of the major benefits accruing are reduced fuel bills by improvement in fuel efficiency, predictive maintenance leading reduction in breakdown and increased tyre life.

Seconding Tripathi, Srinivasu Allaphan, Director (Sales & Marketing), JK Tyre & Industries, claims the ongoing pandemic has acted as a catalyst for growth in the tyre fleet management segment. With over 500 fleets under its belt and servicing about 100,000 trucks, JK’s overall projected revenues from the TOM model during FY2022 is expected to be around Rs 400 crore.

The pay-per-kilometre category is expected to bring in revenues of Rs 75 crore this fiscal. JK, which also has over 60 truck wheel centres which provide truck maintenance services, however did not share its current revenue share from the tyre fleet management business.

Commenting on the rising trend of tyre fleet management, Srinivas Chitturi, CEO and co-founder, MTAP Technologies, claims that growth in the pay-per-use concept in the automotive tyre industry will surge further as technologies bring efficiencies and cost-effectiveness, which is now the core focus of every company in the ongoing difficult times. 

However, despite the apparent uptick in demand, tyre manufacturers may take a cautious approach towards the pay- per-use concept. The prime reason for this is the high capex requirement with each tyre costing between Rs 18,000-32,000, depending on its applications. With investors asking companies to be prudent in their decision making, it may take a while before the concept catches up in a big way in India.