Linglong Serbia tyre trial production underway in 1H 2022

Linglong Tires has confirmed earlier reports that trial tyre production at the company’s Serbia tyre manufacturing plant will commence by the end of the first half of 2022. In other words, the first tyres will roll off the Chinese tyre manufacturer’s Serbian production line by the end of June. Mass production is the next stop. However, since the first date refers to trial production, Tyres & Accessories understands that it will take till around August for the factory to achieve more deliverable output volumes.

Linglong Tire chairman and president of Wang Feng shared the details at a Chinese-language “performance presentation” event in China on 11 May 2022. Linglong has now confirmed the English translation of those comments and further added that “Wang Feng explained in detail the original intention of the company to invest and build a production base in Serbia, as well as the advantages of the production base in Serbia”.

Firstly, investment in an intelligent manufacturing production base in Serbia means “the uniformity and stability of products can be well realized” and “the profitability of the company will be greatly improved.”

Secondly, Serbia was chosen because it is closer to customers both at the distribution and OE levels, with car factories run by Fiat and Renault in Europe cited as concrete examples. The goal is that, as Linglong’s European car factory OE supply share gradually improves, the geographical location of the Serbia tyre factory will significantly improve European car factory delivery time and, at the same time, “promote the construction and improvement of overseas marketing channel network and promotes the development of overseas OE businesses.” According to Michelin’s 2021 tyre sales data, the European market has an annual demand of more than 400 million units, making it the third largest market in the world after the United States.

Thirdly, Serbia has advantages in logistics and customs fees and Linglong’s tyre production project is located in a free trade zone, which will have tax and cash incentives. Furthermore, Serbia has signed free tread agreements (FTA) with countries such as Russia, EU, Turkey and more that have (at least until recently) imposed tariffs on Chinese-made tyres. Avoiding import tariffs has always been an explicit part of the Serbia’s factories raison d’etre, with Wang Feng stating: “Investing and building factories in the FTA can not only effectively avoid the risk of being imposed high tariffs, but also expand the market of surrounding countries with high tariffs and improve the competitiveness of the company [Linglong].”

Linglong Serbia’s intended annual tyre capacity is 12 million passenger car tyres as well as 1.6 million truck and bus tyres and 20,000 “speciality tyres”. Once Linglong’s multi-phase tyre production ramp-up programme is complete, the Serbia operation is expected to “achieve full capacity by the end of 2025.”