Now one of the largest tyre-producing countries in the world, China has an indisputable influence on the direction of global tyre trade. The home of both fast-growing up-and-coming brands as well as a burgeoning domestic market, this tag chronicles China’s involvement with the tyre business.
China has appealed the World Trade Organization’s December 2010 ruling that upheld the three-year tiered added tariff placed on consumer tyres exported from China to the US. China insists the US violated international trade rules when it imposed the tariffs, a WTO spokesman said.
The world is becoming increasingly mobile and vehicle parcs in emerging markets are swelling through first-time car purchases. In many countries motorists travel on a road infrastructure not designed with such volumes of traffic or modern vehicle technology in mind, and for this reason products designed for Western Europe may not present the best solution there; affordable technical solutions that accommodate differing conditions are required. This certainly applies to tyres. Concurrent to the Michelin Challenge Bibendum 2011, an event described as the global summit for sustainable mobility, Michelin released a new product aimed primarily at emerging markets, the Energy XM2.
Authorities in the Northern Italian province of La Spezia have seized 50,000 counterfeit wheels, reportedly worth over 20 million euros. The local Guardia di Finanza seized the products deemed to be hazardous to the safety of motorists, having intercepted them on the way into the market from China. In addition to the wheels, police also seized 100,000 accessories featuring logos of car manufacturers and 400 moulds allegedly intended for the production of knock-off wheels in Italy. A number of firms based in north-central Italy implicated in importing the products from China have been reported.
Korean tyre manufacturer Nexen Tyres has announced the availability of its new high-performance summer tyre with what the company terms “smooth-run features”. Nexen believes the CP661 (TR) offers “noticeable energy savings” and “excellent handling on both wet and dry surfaces”. The range comprises twenty-five sizes from 13” to 17” with aspect ratios between 55 and 70 and is made at Nexen’s Korea and China production facilities. A CP661 tyre is currently fitted as OE on the KIA Soul and the KIA Forte model.
During the 2011 fiscal year, which in Japan began on April 1, 2010, net sales at Yokohama Rubber increased 11.4 per cent year-on-year to 519.7 billion yen (£3.9 billion); leading this sales growth were tyres and hose, sealant and adhesive products, and the company reports it “reinforced its sales momentum” through successfully implementing price increases that offset the effect of rising raw material costs and the appreciation of the yen. Operating income increased 37.5 per cent to 29.5 billion yen (£223.0 million) and net income grew 21.2 per cent to 13.9 billion yen (£105.1 million).
By 2015, Michelin aims to supply 100 per cent of its truck and bus tyre market in India from its plant currently under construction near Chennai. The facility, being built on a 300-acre site in Thervoy Kandigai, is scheduled to enter production next year with an initial annual capacity of 300,000 truck and bus tyres.
Last November, Hankook Tire signed a US$954 million investment agreement to build an 11.5 million tyre per annum factory in Liang Jiang Xin Qu, Southwest China. The plant is scheduled to start operation in August 2012 and build up to an output of 4,500 truck and bus radials and 30,000 passenger car radials per day by the end of 2015; on May 18, 2011, a groundbreaking ceremony was held for this third Hankook Tire factory in China. Senior company management including vice-chairman and CEO Seung Hwa Suh, CMO Hyun Shick Cho and Hankook Tire China COO Ki Yeul Huh joined some 180 government officials from Chongqing region for the ceremony at the factory site.
A new major player may be set to enter the global rubber industry: India’s Reliance Industries (RIL) intends to invest in building up a rubber business to meet growing demand in Asia. "We are developing a whole new rubber business,” company chairman Mukesh Ambani told India’s Economic Times. “We will make RIL one of the world's largest players in rubber as the whole tyre industry moves to Asia. The big trend is that if you look at next ten years, the projections for automobile growth is all China, India and Asia focused." In total, RIL plans to invest some US$10 to $12 billion in its chemical business to strengthen the company’s portfolio in a number of sectors.
A ceremony marking the official opening of Continental’s first tyre factory in China was held on May 18. Shipments from the passenger car tyre plant in Hefei, Anhui province are expected to become available in the Chinese market within the next few weeks, with versions of the ContiPremiumContact 2 and ContiComfortContact 5 tailored for the Chinese market amongst the first volume products to be manufactured in Hefei. The new plant was officially opened today by CEO Dr. Elmar Degenhart, Nikolai Setzer, Executive Board member responsible for the Passenger Car and Light Truck Tires division, plant manager Tobias Kerle and representatives of local authorities.
The newly-released annual report from YHI International states the Singapore-based wheel manufacturer and automotive components distributor is embarking on a “new exciting era.” Specifically, the company has begun a five-year expansion plan to grow its manufacturing and distribution segments and achieve sales of S$1 billion (£494 million) by the 2015 financial year.
Construction on Toyo Tire & Rubber’s new factory in Malaysia is expected to begin this year and production in 2013. Japanese media organisation Nikkei reports the tyre maker will invest around 20 billion yen (£153 million) in a six million passenger car tyre per annum plant that will primarily meet demand in China, India and other emerging Asian markets. According to Nikkei the new plant, which complements the newly-acquired three million tyre per year Silverstone plant, will make Malaysia Toyo’s main Asian centre of production outside of Japan. By 2015, will produce 12.5 million units in Asia each year, Nikkei adds.
At the Michelin Annual Shareholders’ Meeting on May 13, the French manufacturer reported its position strengthened in every geography during 2010 and particularly in mature markets. “Last year at this same time we were observing how the exceptional crisis of 2009 had had an impact on our business,” observed Michelin managing general partner Jean-Dominique Senard. “I think that this year we need to admit that the 2010 context is different and it was a buoyant situation. We had a much stronger market recovery than we could have envisioned at the time.”
On May 11, 2011 – a date that coincides with the official global launch of the World Health Organization and FIA Foundation’s ‘Decade of Action’ – Michelin Group managing partner Jean-Dominique Senard added his signature to the Global Road Safety Commitment to support the Decade of Action for Road Safety, 2011-2020, a United Nations supported and promoted initiative. By signing the declaration, Michelin says it has reaffirmed its commitment to pursuing and further expanding its initiatives to improve road safety.
Despite supposed crackdowns by Chinese authorities, the theft of patents, intellectual property and trade secrets remains a big business in China. And while the tyre industry has not been immune – Michelin among others have pursued legal action against Chinese tyre makers and tyre importers – vastly improved technology and knowledge among Chinese engineers and producers has made it much harder to prove some types of alleged theft.
The year has started well for Lanxess. After achieving what it calls its “best-ever quarterly result in the first quarter,” the German specialty chemical company says it is on track to achieve EBITA pre-exceptionals in excess of one billion euros in 2011; during the first quarter its EBITA pre-exceptionals rose 38 per cent year-on-year to 322 million euros, with double-digit growth recorded in all its segments and regions. The company’s sales increased 29 per cent year-on-year in the three months to March 31, 2011 due to higher volumes and price increases that helped offset rising raw material costs. EBITDA margin pre exceptionals rose to 15.5 per cent in the first quarter from 14.4 per cent a year earlier and net profit increased 60 per cent year-on-year to 166 million euros.
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