Emerging markets, Tier 3 central to Michelin growth
At its most recent Investors Day, held at the company’s Cuneo site in Italy, Michelin confirmed its growth outlook for the coming decade. The French tyre major anticipates the global passenger car and light commercial vehicle tyre market reaching 1.5 billion units in 2015, a figure representing a 25 per cent growth on 2010 figures. Looking further ahead, an additional 20 per cent growth in the years between 2015 and 2020 is expected, with 1.8 billion tyres sold in this sector worldwide in 2020. Michelin notes that 70 per cent of this volume growth should occur in ‘new’ markets.
Growth of 35 per cent in the radial truck market is expected in the five years from 2010, giving a projected 2015 production of 140 million tyres. Between 2015 and 2020 this global growth is tipped to slow to 30 per cent, with 170 million units sold in 2020. Michelin anticipates that 60 per cent of this growth to 2020 will take place in new markets, and especially in China. This particular market is already the world’s largest truck and bus radial market in terms of units sold – with a radialisation rate of 75 per cent, the 41 million radial TBR tyres sold in China last year represent 35 per cent of the worldwide market volume-wise, but only 11 per cent of the market in value. Strong growth is expected to continue there; Michelin believes China’s market volume for TBR will increase 51.6 per cent between 2010 and 2016 to 64 million units.
Delving deeper into Michelin’s plans for these new markets, executive vice-president of Corporate Development Laurent Noual outlined that the tyre maker intends to expand in new markets along two selected axes, namely by investing in these regions and by building up a presence in the Tier 3, or budget, market. In the coming four years an additional 150 kilotonnes of production capacity will be added to Michelin plants around the world; 70 per cent of this will be in new markets, with greenfield projects accounting for most of this. As for developing a Tier 3 presence, Noual calls this a necessary move for global leadership. The global Tier 3 market, estimated to be 38 per cent of the total in 2010, is expected to grow 26 per cent in the years to 2020.
Concluding, Michelin managing general partner Jean-Dominique Senard said the company expected a “solid” outlook for the tyre market in the medium-term.
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