Michelin Says India Tyre Manufacturing Is About Market Access, Not Lower Costs

Michelin’s decision to manufacture passenger car tyres in India is aimed at moving closer to a growing premium-vehicle market and adapting its products to local conditions, rather than securing an immediate cost advantage, a senior company executive said.

“The reason for us to produce it is not a cost reason,” Vitor Silva, president of Michelin’s Africa, India and Middle East region, said during a media interaction.

Production at the company’s new passenger car tyre line in Chennai will initially cost more than at some of its established overseas factories because Michelin must depreciate the fresh investment, Silva said. The company expects costs to become comparable with its plants in Asia and Eastern Europe as production scales up.

“At the beginning of a project, the tyre will always be a little bit more expensive because we have all the investments that we need to depreciate,” he said.

However, the higher initial manufacturing cost will not automatically translate into a higher retail price.

Michelin India Managing Director Shantanu Deshpande said the Primacy 5 has been priced according to its safety, comfort, life and efficiency proposition, rather than its country of manufacture.

“We are not going to increase or decrease the price of our Primacy 5 just because it is made in India or because it is being made in a new factory,” Deshpande said.

₹3,400 Crore Chennai Commitment

Michelin invested ₹686 crore, or €76 million, in its passenger car tyre line in September 2025. This was in addition to the more than ₹2,800 crore committed to its Chennai manufacturing project in 2009.

The French company began passenger car tyre production in India with the Primacy 5, a premium tyre developed for sedans and SUVs and compatible with internal combustion engine, hybrid and electric vehicles. The tyre will be available in sizes ranging from 16 to 22 inches, with prices starting at about ₹10,000, depending on the size.

The company’s Chennai plant has a combined capacity of around 54,000 tonnes for truck, bus and passenger car tyres. Michelin plans to add products such as the Pilot Sport 5, LTX Trail and others as the operation ramps up through the end of 2027.

Further capacity additions will be made in phases based on market demand.

Bigger Vehicles Drive Localisation

Michelin’s local production push comes as Indian buyers shift towards SUVs and larger vehicles, creating greater demand for premium tyres of 16 inches and above.

The company plans to manufacture passenger car tyres ranging from 16 to 22 inches in Chennai and has said it wants to build a leadership position in the 18-inch-and-above category.

According to the Society of Indian Automobile Manufacturers, utility vehicles accounted for about 68% of domestic passenger vehicle sales in the first quarter of FY27. Their sales increased 28.6% year on year, helping overall passenger vehicle sales rise 25.9% to 1.27 million units. 

Improved highways, longer leisure journeys and higher average speeds are also prompting customers to seek better braking, comfort and durability, Michelin said.

Adapted to Indian Roads

Michelin said the locally manufactured Primacy 5 follows the same core quality and performance standards as products made at its other plants.

However, the company has added material to strengthen the tyre against road hazards in India. The additional reinforcement, including more material in the sidewall, makes the Indian version slightly heavier. 

The tyre has also been fine-tuned for local temperature, humidity and road conditions. “One of the advantages of having a local-to-local approach is that you can fine-tune the product to local conditions,” Silva said.

Michelin said the Chennai plant uses the same basic compounds, machinery and quality processes followed by its facilities in other markets.

Replacement Market First

Michelin will initially focus on the passenger vehicle replacement market. It expects supplies to automakers to follow as production and volumes grow.

“We will start and focus on getting our share together in the replacement market,” Deshpande said. “As we grow and as we have opportunities, the OEM segment will also happen.”

The company had followed a similar strategy in truck and bus tyres, beginning with replacement demand before supplying vehicle manufacturers.

The domestic market will also remain the priority for passenger car tyre production. Exports could follow after the Chennai line scales up. “Our priority is the local market. And then from here we can export,” Silva said.

The Middle East and Africa would be the first export destinations under Michelin’s regional manufacturing strategy. The company already exports truck tyres produced in Chennai to North America, Europe, Africa and the Middle East.

For Michelin, the immediate benefit of making passenger car tyres in India lies in gaining closer access to customers, adapting products to local use and improving availability, not in achieving a quick reduction in manufacturing costs.