To cheer demand amid softening raw material costs, Apollo Tyres has decided to cut product prices by 3-5 percent across categories for the second time in two months.

In a declaration, the tyre manufacturer said that the price cut will come into effect immediately.

In December 2008, the company had slashed prices by 4 percent, passing on to clients a reduction in a manufacturing tax.

The prices of natural rubber and crude oil, used to make synthetic rubber, have been slumping continuously, permitting tyre makers to cut at a time when vehicle sales are sagging on financing worries and declining economic activity.

Apollo said, “The benefit of lower raw material prices is yet to be felt in the company's bottom line, since supplies have been taking place on earlier contracted rates.”

In the statement, India operations chief Satish Sharma said, “However we hope that a lower price point will see some resurgence in the aftermarket.”

At 2.40 p.m., shares in Apollo Tyres were trading 3.6 percent down at Rs 18.65 at the Bombay Stock Exchange (BSE).