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Maxxis signals India ambitions with first tire plant

Two-wheeler market expected to grow in double digits as rural incomes rise

Maxxis’ expansion is set to intensify competition with rivals Apollo Tyres, CEAT, J.K. Tyres and Continental in the Indian tire market.   © Reuters

NEW DELHI (NewsRise) -- Four years after it entered India, Taiwan's Maxxis launched its first tire manufacturing plant in the country, intensifying competition in the red-hot two-wheeler market.

Maxxis, a unit of Taipei-listed Cheng Shin Rubber Industry, will initially produce tires for scooters and motorcycles at the $400-million factory in Sanand, a fast-developing auto hub in the western Indian state of Gujarat.

The plant can produce up to 20,000 tires and 40,000 tubes per day, the company said in a statement Thursday.

Maxxis' expansion is set to intensify competition with rivals Apollo Tyres, CEAT, J.K. Tyres and Continental in the Indian market for two-wheeler tires. Maxxis said it aims to capture at least a 15% market share within the next five years.

India is one of the world's top two-wheeler markets. Motorcycle sales in the country grew 6% year-on-year in 2017 to 11.93 million units, according to data from the Society of Indian Automobile Manufacturers. Sales of scooters rose 14% to 6.4 million units during this period.

According to a report by credit ratings agency ICRA, India's tire market is set to grow 8%-10% this fiscal year, aided by the strong pickup in demand for automobiles and replacement of parts.

Plentiful rains over the past two years and New Delhi's growing focus on the rural sector are expected to boost farm wages in India, spurring demand for consumer goods such as automobiles in the hinterlands. SIAM, an industry lobby group, has forecast two-wheeler sales in India to grow 12% in 2018.

"We monitored the market for over two decades and then devised the strategy for entering India," said Cheng-Yao Liao, president of Maxxis Rubber India.

Maxxis opened an office in India in 2014 and has since been supplying imported tires to Indian companies such as Maruti Suzuki India, Honda Motorcycle & Scooter India, Mahindra & Mahindra and Tata Motors.

The Taiwanese company has 21 manufacturing plants worldwide and operates in many countries, including China, Thailand, the U.S., U.K., and Japan. Its products include tires for cars, two-wheelers, light trucks, buses and agricultural vehicles, among others.

Liao described the Sanand factory as a first step.

The Indian operations will play a vital role in the company's aim to become one of the top five tire companies globally by 2026, he added.

In addition to supplying companies in India, Maxxis plans to use the Sanand plant for exports, initially to South Asia and later to countries in Africa and the Middle East. The plant has 600 workers, and the company plans to grow that number to 2,000 in about five years, said Jia-Ciao Liou, a spokesperson for Maxxis India.

--Santanu Choudhury

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