Triangle: no Russian tyre plant…for now

Triangle Tire representatives have denied online reports that the company is planning to invest in a Russian tyre production facility any time soon. Following online reports which surfaced in August, Tyres & Accessories contacted the company and its UK importer TYM International. According to TYM managing director Steve Eke, there were talks with Russian government officials along these lines last year, but at the start of 2013 the decision was taken not to follow these through any further.

Rumours of a Bashkortostan manufacturing site resurface and are denied

The official word is that there are no current plans to pursue this project. However, investing in the area does not appear to have been ruled out completely as the denial was tempered with the qualification that there are no plans to pursue this any further for “at least three years”. Of course this does not mean that the company will re-initiate talks at this point, but there is nothing to say that they will not at some point in the future.

What we do know is that the various news sources that reported Triangle Tire was planning on taking its international operations to the next level with the investment of some 250 million euros in a new tyre factory in the Western Russian Republic of Bashkortostan were not entirely wrong. The unconfirmed reports had suggest that the new plant will be built in one of two areas near Sterlitamak and that the government is offering Triangle a subsidy that will save the company as much as 10 years’ property tax. In addition one source said the Republic of Bashkortostan is expected to foot the bill for related public infrastructure costs in this scenario. However this was contested by other reports (Chinese news site cnsjzx.cn) which suggested that the People’s Republic of China will bear the costs of preparatory construction work such as pipelines and utilities. Either way Triangle hasn’t confirmed any of these details, leaving other sources to fill in the blanks.

Russian market firm Autostat Analytic Agency surmised that the rationale for the proposed move lay in the connection with Chinese OEMs situation in the vicinity. “Among potential clients [are], first of all, Chinese car producers, vehicles of which are produced in the territory of our country.”

And this is concordant with an official statement from the company dated 13 September 2013, which confirmed that Ding Yuhua visited the Republic of Bashkortostan, Nizhny Novgorod Oblast, Kaluga Oblast, Ara Slavic and Moscow in Russia between July and August 2012. The statement said that the aim of the talks was to gain “more knowledge of local tyre market, OE business and tyre manufacturing information.”

Rapid international growth

For its part cnsjzx.cn pointed to Triangle’s rapid recent growth as an indication of the sense behind the company making a hypothetical move towards Russia. According to the site, in 2011 Triangle’s export volume doubled. Furthermore the source said Triangle tyre sales in the Russian market grew 186 per cent year-on-year, while sales to “central Asia and other countries” grew 63 per cent. In addition, exports to Brazil are said to have risen 179 per cent year-on-year between 2011 and 2012 while sales to South America in general grew 83 per cent in the period.

According to market data produced by competing Russian tyre brand Cordiant, some 366,000 Triangle tyres were sold in the Russian market in 2011. This includes 119,000 passenger car tyres. However growth is said to have been very fast. By the end of the first quarter of 2012 they had already beaten this figure by some 50 per cent with unit sales totalling 180,000 tyres. This reportedly equates to a market share of 3.3 per cent in the truck tyre sector and 0.98 per cent in the passenger car market. At the same point in 2012, Triangle is said to have held a 1.07 per cent share of the Russian industrial tyre market.

With this combined export and OE background in mind you can imagine why Triangle may be interested in establishing a Russian factory at some point, if not now. And it certainly fits in with the tone of Triangle’s wider activities – as previously reported (see Tyres & Accessories June 2013), the firm bought a 10 per cent share of its UK importer TYM International earlier this year as well as similar agreements with Australia’s Consolidated Tyre Company and Russia’s SP LLC-Tyre Service Provider. Some observers see the moves as part of a longer term global expansion strategy being adopted by the Chinese tyre manufacturer. Indeed T&A understands that other international manufacturing plans have been mooted. But with Triangle having done business in Russia for 15 years before this point. It is anyone’s guess how long any potential plans may take to come to fruition, if at all.