YHI Shanghai Considering New OE Contracts; Further Motorsport Supply

YHI International produces some of the best known wheel brands (such as OZ, Enkei, Advanti, Breyton and Konig) in the business. However up till now, with the exception of some high profile motorsport supply deals such as with Formula One, virtually all of these have been destined for the European and global replacement markets. When Tyres & Accessories interviewed YHI Manufacturing (Singapore) PTE Ltd CEO, Thomas Lee at the company’s Shanghai wheel production at the end of 2009, the executive suggested that both original equipment supply and further motorsport activities could be in the offing for the manufacturer.

In the first half of 2009, the effects of the global recession meant YHI International Ltd experienced a continuation of the “slow” period that was evident during the fourth quarter of 2008. By the third quarter of the year sales were comparable with the same period in 2008. The further quarter of 2009 brought with it tentative signs of recovery, with company representatives telling T&A that early “signals of economic recovery appeared to be true.”

Nevertheless YHI has continued keeping in close touch with customers throughout the period. Now as most European economies (Greece is a notable exception) appear to be on the road to recovery, wheel customers are now said to be more comfortable keeping stock then they had been in the months before. As a result of the better performance at the end of the year, total sell-in volumes in 2009 were said to be just 2 – 3 per cent down compared with the year before. Not bad considering the volatility of global markets at the time. Looking forward, however, the potential introduction of anti-dumping duties levied against companies including YHI which produce wheels in China means the future is even less predictable (see separate article for further coverage). Perhaps that is why YHI is planning to increase marketing (specifically motorsport marketing) efforts and diversify into OE sales in the Chinese domestic market.

YHI doesn’t presently produce wheels destined for OE fitment contracts in China. However those manufacturers that did during 2009 are said to have experienced “a very good year.” Perhaps as a result of having witnessed this, YHI’s Shanghai, China plant is now exploring its options in this respect. The plans are still said to be in the very earliest stages, but the company is reportedly considering partnership with local OEM/Chinese company joint ventures. If these are to develop into further OE relationship with mainline OEMs Shanghai VW and Shanghai GM are thought to be potential front runners. “We are familiar with these factories,” Lee explained. And, of course, they are local too.

In addition to the early-stage OE plans, Lee told T&A that YHI is aiming to increase efforts “to differentiate us from other wheel makers” through further motorsports involvement in a high profile international series. The objective is really global exposure. So how much will plans to supply wheels to something like the WRC or WTCC cost? “It is not about investment, but rather return on investment. We believe brand building brings good, fair return on investment compared with not doing so,” Lee answered.

Wheelmaker to double Malaysia plant capacity

With some factories struggling in the tough economic climate, this raises the question of whether or not acquisitional growth will an option for YHI in 2010? In response Lee commented: “Some factories will inevitably face difficulties…We will have to consider these people and facilities.

Plans to double the company’s production at its existing Malaysia plant are already well underway. Work started in January 2010 and by July the company aims to have this next capacity operational. The first stage of the expansion plan is said to have come through investment of around US$6 million in new technology. YHI’s Malaysian plant currently produces between 32,000 and 33,000 wheels/month. This plant will focus on South Asian market, where it has reportedly been every successful in recent years: “We have a great team of designers and good distribution and distributors in Australia and New Zealand are very interested in have production there.”

On the subject of distributors, 2009 saw YHI appoint Yokohama HPT as the sole British distributor for Advanti replacement alloy wheels. At the time Yokohama HPT representatives pointed out that while the name Advanti may be a new one to the UK replacement wheel market, the company is already well known in one of the harshest motorsport environments, Formula One, where the Torro Rosso team uses the company’s products on its F1 cars. Referring to Yokohama HPT’s distributorship Thomas Lee commented: “Yokohama HPT were chosen because they have a good distribution network. Very good experience, stable so far…The relationship with Yokohama helps.”