Shortage of Rubber Tyres

IN the fifties and earlier, as the Tariff Commission noted in its reports on the industry, tyre prices were under strong oligopolistic pressure, since there were only two manufacturers and three brands in existence. Firestone was then trading on a small owned capital and large borrowings. Dunlop wanted a return on its substantial ploughed back profits, which had been capitalised, but with the record of high dividends in the past, the classic argument of abstinence did not cut much ice. This situation changed significantly in the early sixties with the almost simultaneous entry of Goodyear (the third brand, produced till then actually by Dunlop), Ceat, Madras, Premier and Inchek. The new manufacturers did not have an easy time, thanks to established brand loyalties, sluggish growth of the tyre market, and the muddle resulting from import of cheap low-quality tyres from rupee payment sources. The tyre market has nevertheless expanded, and all units have been expanding output and earning large profits.