Continental Tyres India Replacement Tyre Demand Growth Outlook

Continental Tyres India expects stable mid-single-digit growth in replacement tyre demand over the next five years, driven by structural changes in the passenger vehicle market. Rising preference for sport utility vehicles and premium cars, along with improved consumer confidence following GST reforms, is supporting sustained demand momentum.
The company projects its core replacement tyre business to grow at a compound annual growth rate of 5–6% through 2030. At the same time, the 17-inch and above passenger vehicle tyre segment is forecast to expand at over 20% annually, reflecting the growing dominance of large-wheel SUVs and premium vehicles.
Replacement Market Continues to Anchor Business Strategy
Currently, replacement demand accounts for nearly the entire domestic business of Continental Tyres India. “Currently, 99% of our business comes from replacement demand. This business has been growing at a CAGR of 5–6%, and it is expected to continue to grow at that pace for the next five years,” said Samir Gupta, Managing Director of Continental Tyres India.
According to Gupta, increasing sales of utility vehicles and premium passenger cars are accelerating the premiumisation trend across the Indian tyre market. Larger wheel sizes are becoming more common, aligning with Continental’s technical strength in higher-end passenger vehicle tyres.
Strategic Shift Toward Passenger and Light-Truck Tyres
Continental Tyres India operates as part of Continental AG and has sharpened its focus on passenger-car radials, referred to internally as passenger and light-truck tyres. This strategic realignment, initiated in 2025, has already begun delivering stronger growth outcomes.
In June last year, the company announced an investment of Rs 100 crore at its Modipuram manufacturing facility in Meerut, Uttar Pradesh. The investment enabled the conversion of an existing truck and bus radial production line into a dedicated passenger car and SUV tyre line.
The company exited local truck and bus radial manufacturing after identifying high price sensitivity in the segment, which limited long-term profitability despite strong product performance.
Localisation of Larger Rim-Size Tyres Gains Priority
The newly commissioned passenger and light-truck line at Modipuram is designed to support higher volumes while expanding local production of larger rim-size tyres. “Several premium cars and SUVs today are coming with 20-, 21-, 22- and 23-inch tyres. It is important that we start serving the needs of those customers, and that is why we have decided to localise even those sizes at Modipuram,” Gupta said.
Production of larger rim-size tyres is becoming increasingly critical as premiumisation accelerates across the passenger vehicle parc. About one-third of vehicles on Indian roads currently use tyres sized 17 inches or above, a share that is expected to exceed 50% within five years.
Passenger Vehicle Market Trends Reinforce Demand
The broader passenger vehicle market is reinforcing this trend. In 2025, India recorded passenger vehicle wholesale dispatches of 44.9 lakh units, reflecting year-on-year growth of 5% despite a volatile first half marked by weak sentiment and financing challenges.
Demand recovered strongly from September onward, supported by GST 2.0 reforms, improved credit availability, and festive-season buying. Utility vehicles led the growth with dispatches of 29.5 lakh units, while passenger cars contributed 13.8 lakh units.
Global Pressures and Sustainability Focus
While domestic demand recovery is positive, Continental continues to navigate global challenges. “Geopolitical uncertainty remains high. Multiple conflicts, regulatory changes across markets, rising logistics and raw material costs, all create challenges for tyre manufacturers,” Gupta said.
Given the energy-intensive nature of tyre manufacturing, the company is focusing on improving energy efficiency, reducing operational waste, and increasing the use of renewable energy sources such as wind and solar power.
Sustainability initiatives also include greater use of recycled materials. “We started making polyester from recycled PET bottles. Recycling materials that are otherwise an environmental hazard and turning them into something useful is one of the steps we have taken,” Gupta said.
India Remains a Key Growth Market
Despite global headwinds, Continental views India as one of its most attractive growth markets. Strong economic expansion, infrastructure development, and government support for manufacturing continue to underpin automotive demand.
“India’s economy is growing at 7–8%, despite global headwinds. Infrastructure improvements and manufacturing support from the government have had a positive impact on automotive demand,” Gupta said.
Changing consumer behaviour toward premium vehicles and larger tyres remains central to Continental’s growth strategy. “We get the best opportunities out of challenges,” Gupta added. “We are finding ways to convert obstacles into avenues for growth.”
Replacement Versus OEM Positioning
Continental’s India operations remain firmly focused on the replacement market, which contributes around 99% of volumes. Engagement with vehicle manufacturers continues selectively, but the company does not intend to pursue mass OEM supply.
“We are in touch with OEMs and looking at opportunities, but we do not plan to be a mass OEM supplier. Our approach remains niche and premium when it comes to OEM relationships. We want to be chosen for performance, not price,” Gupta said.
Replacement tyres typically deliver higher margins compared with OEM supply, supported by a growing vehicle parc and longer replacement cycles associated with SUVs and premium passenger vehicles. This positioning continues to anchor Continental Tyres India’s long-term growth outlook.