Cooper Tire targeting ‘profitable growth’ in UK, Germany – and Eastern Europe

The United Kingdom is already the European market where Cooper Tire & Rubber is best-represented, however the tyre maker sees further potential to expand its market share. Speaking at the Bank of America Merrill Lynch 2014 Leveraged Finance Conference on 3 December, Cooper Tire & Rubber treasurer Tom Lause conveyed the company’s aim to grow in both developed and emerging European markets, and singled out the UK and Germany as areas of particular focus.

“Of our existing Western European positions, we’re focusing our growth efforts on profitable growth in the United Kingdom and Germany,” he stated. “Our starting position in the UK is strong – we’re one of the top five players, with a greater than eight per cent market share.” Lause’s comments were accompanied by figures sourced from LMC Automotive that give the size of the UK passenger car, light commercial vehicle and truck and bus tyre aftermarket as 33 million units in 2013. By 2017 this market is expected to reach 35 million units, an annual growth of one per cent. Lause did not disclose Cooper’s UK market share goal, however given the modest rate of expected overall market growth, it can be assumed that Cooper’s plans in Britain involve grabbing a chunk of market share from its competitors.

Lause noted that Germany, like the UK, is a slow-growth market. “But Germany represents 25 per cent of the total Western European tyre industry. So it’s a place where you’ve got to play,” he added. According to LMC Automotive figures, 58 million units were sold in the German passenger car, light commercial vehicle and truck and bus tyre aftermarket last year, and by 2017 this amount is forecasted to grow by three per cent a year to 64 million. Cooper Tire’s market presence in Germany is admittedly much lower than in the UK, however the company says it increased its market share there in 2013 and recorded strong growth in the W, Y and Z speed-rated passenger car and SUV tyre segments. Cooper Tire intends to leverage the success it has enjoyed with new products to increase awareness of the Cooper brand in Germany.

Serbia key to European growth

Cooper Tire & Rubber has now owned the former Trayal tyre factory in Kruševac, Serbia for approximately three years and has previously shared plans to increase production capacity at the plant to in excess of 2.25 million units per annum by the end of 2014, with the longer-term aim being to source between 80 and 90 per cent of products sold in the European market from within Europe. At the 3 December conference, Tom Lause described plans to leverage the Serbian facility as the most important single element of Cooper Tire’s goals for its house brands, and particularly the Cooper brand, within Europe.

“While this plant is relatively new, we feel the potential to expand and lever this lower-cost facility will help support our growth in a very competitive European market,” he said, adding: “In addition to growing in Western Europe, we also plan to further leverage our Serbian facility to establish relevant market share positions in attractive high-growth markets, such as Eastern Europe and Russia. Although there are political difficulties in the region that have affected our growth in the short-term, Eastern Europe and Russia are large and rapidly-growing tyre markets, and we anticipate having a stronger presence there, longer-term.”

Serbia is a name that’s been appearing with increasing regularity within the pages of financial dailies in recent years, and last month tyrepress.com delved into why Serbia is attractive to tyre industry investors. The Cooper Tire treasurer distilled the geographic, economic and political advantages discussed in the article ‘Serbia open for business’ into two key points of interest to the tyre maker: “In addition to being a low-cost country, Serbia has the very unique advantage of being duty free for shipping tyres both into the European Union and into Russia. I believe it’s only one of three countries in the world that have that status.”