Goodyear to Boost Chinese Investment

Goodyear Tire and Rubber Co is to increase investment at its plant in northeast China by more than 10 per cent between now and 2007. The move is designed to offset rising raw material costs, by increasing the production of premium products, according to the company’s Asia Pacific president, Pierre Cohade. Goodyear hopes to profit by sales of replacement tyres, which now account for about half of China’s tyre market and are growing “sizeably” as Chinese drivers buy new tyres, Mr Cohade told Reuters.

Goodyear will spend an additional $18 million on producing 200,000 RunOnFlat tyres annually at its Dalian plant. These will be the first run-flat tyres to be produced in China and will be both exported from and sold in the People’s Republic. The company is already spending $120 million to increase production at the Dalian plant to 5.3 million tyres a year by 2007.

Growth in China’s tyre market should be in “the low 20 per cent” range, Pierre Cohade said. Car sales, on the other hand, are widely expected to slow to about 10-15 per cent, this year. China’s tyre sales rose about 30 per cent in 2004 to 239 million units.

About half of China’s $6 billion tyre market is controlled by foreign companies, including Goodyear, Michelin and Bridgestone Corp, state media sources have estimated. Mr Cohade wouldn’t comment on Goodyear’s market share. Goodyear has said it will expand sourcing from China, including sourcing of off-take agreements.