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Pirelli Seek Consolidation in Turkish Buyout

Pirelli has begun to negotiate the buying out of minority shareholders in its Turkish units Turk Pirelli Lastikleri – which supplies commercial and passenger car tyres – and Celikord, a steel cord manufacturer. The Italian tyre giant owns 69 per cent and 51 per cent of the companies respectively and is looking to consolidate in the growing, strategically-important Turkish market through full ownership. Pirelli has been present within the nation for 50 years.

Financial news sources report that Pirelli is yet to release a statement on the matter, or of any details of the performance of the firms subject to buyout bids.

18th July 2008/by Tyrepress Editors

Hankook Going up a Gear in Europe

During the recent Reifen Essen exhibition Tyres & Accessories met with Hankook vice president and Hankook Tire Europe GmbH chief operating officer, Seung Do Jin; along with European vice president sales and marketing, Hee Se Ahn. The meeting followed some particularly impressive full-year results that saw the company buck the trend (compared with similar businesses) and post a market leading profit margin of 8.1 per cent. It also followed a particularly impressive result in the recent Auto Motor und Sport tyre test. The result? Hankook is gearing up to announce some big wins in the European OE business, which signal the company’s intentions for future growth.

Asked what led to the company’s particularly impressive first quarter sales, Mr Jin explained that one reason is they came “as a result of becoming a marketing driven company.” European sales growth is particularly driven by sales in the UHP segment, he added, and according to Mr Jin, the leading car manufacturers based in Germany continue to drive these trends. So, with Hankook’s Dunaujvaros, Hungary production plant currently producing around 4.5 million passenger car tyres a year (15,000/day), the South Korean-based manufacturer is increasingly ready to go up a gear and carve out its place in the European OE business.

At this point it is worth pointing out Hankook’s recent success in securing some pretty high profile OE contracts with volume manufacturers such as Volkswagen. The word in Essen was that Hankook is very close to sealing an OE contract with Audi, a deal Hankook “is convinced” will be completed by the end of 2008. This would see the South Korean manufacturer supply both the A3 and A6 models in Germany and the A4 and A6 models in China. The contract would involve supplying 16, 17 and 18-inch tyres in “relatively small” quantities to begin with. Hankook is also said to be in discussions with BMW and Mercedes (who the company already supplies spare tyres to), not to mention Toyota.

European proving ground?

Coming back to Mr Jin’s earlier comment that Hankook’s positive results at least partly come down to its development into a more marketing aware company, rumour has it that Mercedes actually approached the South Korean company with reference to an OE deal on the S-Class, following Hankook’s impressive Auto Motor und Sport tyre test win.

With the market (and various proposed pieces of legislation) increasingly focussing on rolling resistance and fuel economy, research and development is as important as ever for Hankook. The company’s particular attention on market-focused R&D is demonstrated in its increased use of European testing facilities – including sites in Vienna, Austria and Barcelona, Spain. Mr Jin explained that Hankook has invested a “huge” amount of money in gaining the exclusive use of a new specially made handling circuit all-year round. Sooner or later this policy would result in “our own proving ground.” Mr Jin hinted.

Seung Do Jin, himself a former Hankook UK managing director, reserved particular praise for Hankook UK’s growth under the leadership of Richard Page, and the rapid development of Hankook’s market position in the UK truck tyre segment. Following the launch of four new truck tyres at April’s CV show (including one winter fitment); and two more in Essen, Hankook is experiencing something of a rapid ascendancy in this particular area. However, with more ‘economically competitive’ products being imported into the UK than ever, the obvious question is how does Hankook feel about an influx of products competing on price?

“At the moment I am not worried about the Chinese catching us up. There is already a technical knowledge gap. We invest 5 per cent per year in research and development, so we can learn faster than they can follow,” Mr Jin answered. So does this mean Hankook is likely to follow its construction of a passenger car tyre facility in Hungary with European truck and bus capacity?

According to Mr Jin it all depends on the market situation. However, he did point out that, despite the fact that production costs are up, there is still space on the Hungarian PCR production site. And therefore there is always the option of adding truck and bus tyre capacity “in a few years time.”

14th July 2008/by Tyrepress Editors

Michelin Romania 2007 Turnover up 10.8%

Michelin Romania has posted a 2007 turnover of 340 million euros, a 10.8 per cent increase over the sales of 306.8 million euros reported a year earlier. This growth rate is, however, lower than in previous years – at its peak Michelin Romania’s annual turnover surged by around 35 to 40 per cent.

24th June 2008/by Tyrepress Editors

High Import Duties Assure Continuation of Pakistan Tyre Smuggling

International News

Afghanistan has developed a reputation as a centre of heroin smuggling activity; it is less widely known for another illegal cross-border trade – the smuggling of tyres into neighbouring Pakistan. Yet the importation of these sought after items appears to be well worth the effort and expense endured by those in the business, as the average price difference between the cost of a tyre to a smugger and an importer is said to be in the range of Rs3,000 to Rs5,000 (£22.50 to £37.60). Of the Rs3,000 minimum price difference, smugglers expend about Rs1,000 covering transport and bribe costs, leaving a respectable profit at the end.

23rd June 2008/by Tyrepress Editors

New Facility Ensures Room for Growth at Inter-Sprint

The largest importer and exporter of passenger car tyres in Europe is Inter-Sprint. The Dutch company has approximately 250 permanent employees and growth in recent years had made the construction of a second premises in the town of Moerdijk necessary – the original site at Heinenoord, near Rotterdam, lacked sufficient space for adequate expansion. At the new site Inter-Sprint has the room it needs to develop a brand new 68,000 square metre facility, which it will do in phases. Significant extensions are planned for 2009.

Inter-Sprint is able to offer its customers a huge range of products that includes the major ‘A’ brands plus numerous private labels, including Milestone, Euro Tyfoon, Mastersteel, Roadhog and Meteor. The company also stocks a number of exclusive labels, amongst them the Viking brand of summer and winter pcr and lcv tyres, produced by Continental and exclusively distributed by Inter-Sprint in the Netherlands and several other European markets.

23rd June 2008/by Tyrepress Editors

Michelin Figures Reveal Varying Fortunes

Michelin reports healthy OE sales of radial truck tyres throughout Europe in May and for the 2008 year to date. Sales for the month were 11.2 per cent greater than those of a year earlier. Sales were significantly weaker in the replacement market, were a decline of 12.5 per cent on May 2007 was reported, and in both the OE and replacement segments of the European market. During the month unit sales for these dropped 4.9 and 4.3 per cent respectively. Sales of OE passenger car tyres for the period between January and the end of May, contrary to the month’s figures, were up 3.1 per cent, while the replacement sales dropped 1.9 per cent. Truck tyre OE sales increased 14.3 per cent in Europe between January and May, while sales in the replacement market was down 4.6 per cent on the five-month period of 2007.

23rd June 2008/by Tyrepress Editors

Gajah Tunggal Production, Prices to Increase

Price rises of 10 per cent have been announced by PT Gajah Tunggal Tbk, however a representative of the Indonesian company states plans to increase sales by as much as 20 per cent remain firm. “We are still targeting an increase in our sales revenue of between 15 to 20 per cent this year compared to 2007,” Catharina Widjaja, director of corporate communications, informed Reuters. This sales increase will follow a boost in production output; Widjaja reported daily production for car tyres is anticipated to rise by 5,000 units to 35,000 and motorcycle tyres from 45,0000 to 60,000 units by the end of the year.

On the issue of price rises, Widjaja said “Gajah Tunggal raised the price by around 5 per cent in Q1 of 2008 and another 5 per cent recently. GT will continue to monitor the impact of the rising prices of raw material.”

17th June 2008/by Tyrepress Editors

Taiwan Manufacturers Expanding Tyre Production in China

Taiwan`s three-largest tyre manufacturers, including Cheng Shin Rubber Industry Co., Hwa Fong Rubber Industry Co. and Kenda Rubber Industrial Co., are reported to be planning to increase investment in their facilities in mainland China.

Cheng Shin will invest between US$50 million and US$60 million to expand the production capacity of its Kunshan, Jiangsu province plant between now and the end of June 2009. Once completed, the expansion will see daily production capacity at the plant rise to 54,000 passenger car tyres from the present level of 45,000, making the facility the largest tyre plant in China. The company also noted it would invest between US$60 million and US$70 million to expand production capacity at its plant in Haiyen plant in Xiamen, Fujian Province. Daily output would be boosted from the current level of 4,000 passenger car and truck tyres up to 6,000. Expansion in production at these two facilities is anticipated to help Cheng Shin increase its annual sales by a total of NT$15 billion (US$496 million).

13th June 2008/by Tyrepress Editors

Yokohama Establishes Thailand Sales Office

Only weeks after announcing the start of operations at its new Yokohama Asia facility in Thailand, the Japanese tyremaker has announced the establishment in May of Yokohama Tire Sales (Thailand) Co., Ltd. This new tyre sales company, also based in Bangkok, will begin trading in July 2008 and has been fully capitalised by Yokohama Rubber at a cost of 200 million baht (£3 million).

Yokohama reports that sales of its branded tyres, particularly in the high performance passenger car tyre segment, are rapidly increasing. Previously Yokohama Rubber sold its tyres nationwide through local tyre distributors. The company says, however, it has become necessary to establish its own tyre sales company so as to further expand sales of passenger car tyres and also strengthen sales of truck/bus tyres and light truck tyres that are manufactured by Yokohama Tire Manufacturing (Thailand).

10th June 2008/by Tyrepress Editors

Sumitomo Increasing Capacity at China Facility

Plans are reportedly underway to increase capacity at the Sumitomo Rubber (Changshu) Co. Ltd tyre facility in China by 20 per cent. Capacity at the factory, opened four years ago, has already been expanded once, and this latest round will increase daily output by some 30,000 passenger car tyres and 3,500 truck and bus tyres. About £68 million will be invested in the project.

2nd June 2008/by Tyrepress Editors

Toyo to Build New Asia Facility, Increase Capacity in North America

A new manufacturing facility in Asia and increased capacity in North America have been announced by Toyo Tire & Rubber in order to reinforce its tyre business’s global supply system. This measure is being undertaken as part of its Medium-Term Business Plan 2008, a three-year business plan that will be in operation through to the year ending March 31, 2011.

Toyo believes that simply boosting production at existing plants is not sufficient to meet anticipated growth in global demand. Therefore the company has drawn up a shortlist of potential locations for a new tyre production plant in Asia, which will serve as an export centre for the global market. This facility is scheduled to be ready during the 2010 fiscal year and will be built at a total investment of around 24 billion yen (£115.6 million). Planned production will mainly concentrate on passenger car tyres and by March 2012 annual output at the site is expected to reach 4 million units.

30th May 2008/by Tyrepress Editors

Gujarat Chosen as Site for New Ceat Radial Plant

India’s Ceat Ltd has chosen the state of Gujarat for the location of its long anticipated greenfield radial facility. The RS 5 to 6 billion (£60 to 70 million) plant was first announced over a year ago and several locations throughout India were short listed as possible sites – the company reportedly selecting Gujarat for its infrastructure, proximity to a port and ‘work culture.’ In addition to the production of passenger car tyres, the facility will also be home to a pilot facility for the manufacture of 250,000 TBR tyres per annum.

27th May 2008/by Tyrepress Editors

Michelin China Announces Price Increases

Prices for passenger car tyres sold under the Michelin, Warrior and BF Goodrich brand names in China will rise between 3 and 7 per cent, says Michelin (China) Investment Co., Ltd. These increases, which will take effect in June, have been attributed to the strong rise of raw material costs.

12th May 2008/by Tyrepress Editors

Yokohama’s Brazil, Thailand Operations Get Under Way

Yokohama Rubber and Yokohama Europe have jointly established a company for the development of tyre sales and marketing in South America. The new subsidiary, Yokohama Rubber Latin America Comercio Ltda., was set up in April in Sao Paulo, Brazil, and began operations in May. Approximately 1.1 million Brazil reals (US$600,000 US) have been invested into the company.

The decision to establish a business base in Brazil was prompted by the company’s recent strong tyre sales within this region; tyre sales volume here has grown almost four-fold in the five years to 2007, says Yokohama. The company will place a particular emphasis on promoting its high performance passenger car tyres, and will conduct market research into the possibility of localising the Latin America tyre business.

12th May 2008/by Tyrepress Editors

A Larger Slice of the Cake – high performance tyre market data

Product News, UK News

During the 1990s the US television series ‘The X-Files’ popularised the catchphrase “the truth is out there.” But while the programme focused on little green men and other unexplained phenomena, it could have easily referred to the high performance tyre market. The truth about this market segment is, you see, somewhere out there. Yet it is difficult to place one’s hands with confidence upon a single, authoritative source of data that tells exactly how things are and where they are headed. What can really be said about the high performance tyre market?

12th May 2008/by Chris