EU sanctions: “significant impact” on Nokian Tyres’ European sales
Some 80% of all Nokian car tyres were produced in Russia last year (Photo: Nokian Tyres)
The latest EU sanctions against Russia will seriously affect Nokian Tyres and its business in Europe. In response to the announced measures, which prohibit the import of tyres from Russia to the EU, the export of certain raw materials from the EU to Russia, and limit transportation into and from Russia, the tyre maker states that these new sanctions “will have a significant impact on Nokian Tyres’ ability to manufacture tyres in Russia, and ability to sell tyres both in Russia and in the EU, specifically in Central Europe.”
These comments from Nokian Tyres apply to its passenger car tyre business. Approximately 80 per cent of its car tyre production took place in Russia last year, and around half the raw materials required for this production were imported into Russia. “Raw material availability and its logistics will have a significant impact on the company’s capability to continue production in Russia,” states Nokian Tyres. Russia also represented approximately 20 per cent of the company’s net sales in 2021.
“Nokian Tyres is expediting its plans to invest in new production capacity in Europe,” wrote Nokian on 11 April, confirming previously announced plans to establish a production facility within the region. “We continue to increase production capacity at our factories in Nokia, Finland and Dayton, US. According to our plan, in the future all tyres sold in the Nordic countries will be produced in Nokia, Finland, and all tyres sold in North America will be produced in Dayton, US and in Nokia, Finland.”
The Nokian Heavy Tyres business is not impacted by the ban on tyre imports from Russia to the EU, as all heavy tyre products are produced in Finland. Sales and distribution of heavy tyres to Russia has already ceased. Nokian Tyres emphasises that it “has never sold tyres to the Russian army” and that the Russian Federation “is not a customer of Nokian Tyres.”
The company concluded its statement of 11 April by writing that it has “no further information to provide on the subject at this point,” adding that it will announce “any material direct impacts as appropriate and in a timely manner.”
The sanction pertaining to tyres reads as follows:
“1. It shall be prohibited to purchase, import, or transfer, directly or indirectly, goods which generate significant revenues for Russia thereby enabling its actions destabilising the situation in Ukraine, as listed in Annex XXI into the Union if they originate in Russia or are exported from Russia.
2. It shall be prohibited to:
(a) provide technical assistance, brokering services or other services related to the goods and technology referred to in paragraph 1 and to the provision, manufacture, maintenance and use of those goods and technology, directly or indirectly in relation to the prohibition in paragraph 1.
(b) provide financing or financial assistance related to the goods and technology referred to in paragraph 1 for any purchase, import or transfer of those goods and technology, or for the provision of related technical assistance, brokering services or other services, directly or indirectly in relation to the prohibition in paragraph 1.
3. The prohibitions in paragraphs 1 and 2 shall not apply to the execution until 10 July 2022 of contracts concluded before 9 April 2022, or ancillary contracts necessary for the execution of such contracts.” (Official Journal of the European Union, April 8, 2022)
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