According to the e-Vahan portal of the Ministry of Road Transport and Highways, as of February 2025, the total registered vehicles in India stood at 3,897.71 lakhs, or approximately 390 million vehicles, making the nation one of the world’s largest vehicle populations. Every new vehicle sold today, creates a multi-year replacement cycle for tyres down the road (no pun intended!) While the news usually focuses on monthly auto numbers and vehicles sold, there’s a lot happening one layer beneath, in the service and replacement segment. The growing installed user base will automatically lead to a growth in the tyre replacement base, which is already happening. And, most of the major tyre companies in India fall into the smallcap segment of the market.
The role of the replacement economy in tyre revenues
Tyre companies generate a majority of their revenue from the replacement market rather than OEM sales. Tyres need replacing for a number of reasons, including replacement demand in ageing vehicles, rising vehicle usage and increased personal mobility, and the growth in logistics and e-commerce.
So even if sales of vehicles dip, the demand for fresh tyres still remains. It’s simple logic: existing vehicles will continue to be used, freight and logistics movement doesn’t slow down, second-hand vehicles are still bought and sold, and vehicle owners still need to service their vehicles and replace old and worn-out tyres. So while vehicle sales may be cyclical, tyre replacement is a recurring expense.
As more vehicles make their way onto Indian roads, tyre demand remains resilient, because it is less about selling new vehicles and more about maintaining the ones already on the road. And several companies are increasing their capacity to meet this demand.
Tyre companies are boosting capacity
Currently, there is a large capex cycle underway in the tyre industry, a strong indicator of long-term demand visibility. Tyre manufacturing is a capital-intensive business with long gestation periods, and companies generally avoid large expansions unless they have confidence in sustained demand. Despite raw material volatility and global uncertainties, major tyre manufacturers including JK Tyre, Apollo Tyres and CEAT have announced sizable investments over the last few years, signalling confidence in long-term growth drivers, including replacement demand, premiumisation, exports and others.
JK Tyre: JK Tyre is one of India’s largest tyre companies and the largest manufacturer and market leader in Truck and Bus Radial (TBR) tyres. This is significant, because commercial vehicles generally consume and replace tyres much faster than passenger vehicles. The company recently announced one of its largest-ever investment programmes, with plans to invest around ₹4,900 crore till FY30 to expand manufacturing capacity by approximately 20-24%. JK tyres indicated that several plants are operating at utilisation levels exceeding 90%, which forced fresh investments. Other reasons for capex expansion include robust domestic replacement demand, continued growth in freight movement, increasing radialisation in truck and bus tyres and growing exports.
Apollo Tyres: Apollo is one of India’s largest tyre manufacturers and among the few Indian tyre companies with a significant global presence, operating across India and Europe through its premium brand, Vredestein. In February 2026, Apollo announced one of its largest investment programmes in recent years, with the board approving approximately ₹5,800 crore of investments to expand capacities at its Andhra Pradesh facility over FY27-FY29. A growth capex of around ₹2,000 crore is expected in FY27 alone and the management indicated annual capex of approximately ₹3,000-3,500 crore over the medium term. The aim is to boost passenger car radial capacity by 52% and truck and bus radial capacity by 82% by 2029. In a recent investor’s call, the management highlighted that capacity utilisation in India has risen to the high-80% range, with some categories approaching capacity constraints. Given their growth projections, the company would face constraints soon, so a capex increase was necessary. And replacement remains the largest channel for Apollo in India. Historically, replacement has contributed roughly 70%+ of standalone revenues, making Apollo less dependent on OEM cycles.
CEAT: CEAT is one of the largest tyre manufacturers in India and among the fastest-growing. The company is a market leader in India’s two-wheeler tyre segment, with growing exposure to premium SUVs, off-highway tyres and EV-focused products. In June 2025, CEAT announced annual capex plans of approximately ₹1,000-1,050 crore, while separately announcing investments of around ₹450 crore to expand its Chennai manufacturing facility. Earlier this year, the company approved an investment of approx ₹1,314 crore to expand PCUV (passenger car and utility vehicle) capacity by around 2.5 million units per year. This latest investment is expected to increase upstream capacity by approximately 80 tonnes per day and boost overall tyre production capacity to around 30,000 tyres per day. Replacement demand, along with SUV growth, premiumisation, rural demand and export growth are the major reasons for capacity expansion.
The willingness of tyre companies to commit thousands of crores towards capacity expansion despite cyclical concerns, suggests that management teams are preparing not just for new OEM demand, but for the larger replacement market created by India’s ever-expanding vehicle population.
While prominent small-cap tyre manufacturers like JK Tyre, Apollo, CEAT etc, tend to dominate the headlines there are also smaller listed companies that operate in a niche space like two wheelers, recycled rubber and retreading that also contribute to the tyre replacement economy. In Part 2, we’ll examine how and why these companies stand to benefit from this recent capex cycle.
Sources
electrical vehicles in rural and semi-urban areas
Tyre makers step on the accelerator with ₹10K-cr capex in FY27
“JK Tyre & Industries Limited Q4 & FY26 Earnings Conference Call”
Apollo Tyres Corporate Day June 2021
“CEAT Limited Q1 FY ’26 Results Conference Call” July 18, 2025