India
There are reports from the North American International Auto Show, (Detroit, Jan 14 – 27) that Volkswagen will decide this year whether to introduce a new budget brand aimed at developing markets.
If the company decides to go ahead, it would almost certainly start in China, where VW recorded a near-25 per cent increase in sales to a total of 2.15 million in 2012. But India and other new markets such as Mexico could also be targets for a low-cost VW brand.
Several media outlets plus supporting information from Tyres & Accessories’ own sources are reporting that at least two private equity firms are preparing considering bids for Warburg Pincus LLC's majority stake in Alliance Tire Group (ATG). The potential deal is said to be valued at around US$400 million.
Apollo Tyres Ltd has opened a global R&D centre in Enschede, the Netherlands as well as a global branding centre in London, UK. Opened just days apart, the two moves follow earlier commitments to put European activities in the driving seat for passenger car tyre development and, in company chairman Onkar S Kanwar’s words, to fuse the company’s three cultures into one team. Hints towards increased OE activity and the potential of a more international investor base are also evident.
Continental has opened the first fully-automated tyre testing facility in the world at Contidrom, near Hanover. In addition to the ability to perform braking tests without drivers, helping to test consistently for longer hours, Conti has built a 300x30m air conditioned hall to house the Automated Indoor Braking Analyzer (AIBA), reducing the influence of atmospheric conditions on test results. The manufacturer will also be able to control the friction coefficient, as the hall enables the company to switch the 75m surfaces used as a braking area, in addition to using a low temperature hall for testing on ice. The main hall is also fitted with a sprinkler system for wet testing. Conti estimates that the AIBA will perform around 100,000 braking procedures, on passenger car, van, and 4×4 summer and winter tyres, when fully operational.
Thailand, currently the world’s largest rubber producer with an output of 3 million tonnes/year, is seeking to attract investment from international tyre producers in an effort to promote its domestic market and simultaneously contain its rubber export volume. Deputy Agriculture Minister Yutthapong Charasathian invited tyre makers to come and construction manufacturing plants in the South East Asian country, saying the Thai government has already sounded out “leading tyre manufacturers in the US, China and Japan” to expand tyre manufacturing operations in the country.
“People in this world will always eat bread and rice,“ an agricultural tyre supplier said some years ago while participating in a panel of experts. However, it isn’t just the passenger car and truck tyre businesses that are vulnerable to negative conditions; the year following the Lehman collapse, 2009, showed that the agricultural tyre business was by no means recession proof. Investments in farming equipment and in tyres for these machines collapsed, however even back then it was clear that the market must bounce back at some stage as people will always need to eat. And that applies around the world, not just here. Because global populations are on the rise – we’ve already passed the seven billion mark – there is a corresponding increasing need for foodstuffs to be grown. Agriculture is a growth industry.
The influence of non-premium brand tyre manufacturers and of non-European produced tyres has markedly increased in the wider European agricultural tyre market. Something else that the data suggests is that a degree of desegmentation has occurred because all this has been set against a series of financial crises in Europe and its respective national markets. Not only are there opportunities for those entering the right niche at the right time, it would seem that there are opportunities for those entering the market at a different position to the historically dominant players.
The Indo-Asia News Service reports that sluggish market conditions have prompted India’s Birla Tyres to temporarily stop operations at its Orissa state factory. The plant will remain closed until 31 December, an anonymous senior plant official told IANS. He added that Birla has stocks of almost 100,000 tyres that it is unable to sell. The company has reportedly stopped production for at least one week in every month since May due to low demand.
In a ceremony held on the evening of 13 December, Apollo Tyres was conferred with Asia Responsible Entrepreneurship Awards (AREA) 2012 South Asia. The company received this award in the Health Promotion category for its HIV-AIDS initiative. Sunam Sarkar, chief financial officer, Apollo Tyres Ltd received the award from the Enterprise Asia Team.
Dunlop Aircraft Tyres’ joint venture facility in Jinjiang, China has secured a three-year deal to support China Eastern Airlines’ fleet of ten Embraer 145LI regional jets with new and retreaded tyres. The agreement will see the Shanghai-based airline receive new tyres made at Dunlop Aircraft Tyres’ factory in Birmingham; these will be distributed from and retreaded at the manufacturer’s joint venture company, Dunlop Taikoo (Jinjiang) Aircraft Tyres.
China’s Qingdao Mesnac Co., Ltd, the company said to be the world’s second largest supplier of tyre and rubber manufacturing equipment, has set up a new global sales and service network. Mesnac says rapid growth in China, Asia and internationally since the firm’s founding in 2000 made the establishment of the new Mesnac Global Sales and Marketing Company (SMC) necessary. Zheng Jiangjia, executive vice-president of Mesnac, has been appointed president of the new operation; Zheng will lead five regional sales and marketing teams, which will be located in China, Southeast Asia, India, Europe and North/Latin America.
The 11th International Mining and Machinery Exhibition (IMME) took place in Kolkata, India between 5 and 8 December. During the show Apollo Tyres launched the largest OTR tyre produced in the country, the XTRAX 40.00‐57.
The Hindu Business Line reports that faling rubber prices in India led to shares in India’s major tyre makers rising up to five per cent earlier this week. The newspaper stated on 5 December that Apollo Tyres, MRF, JK Tyre and Ceat were amongst those to gain, and MRF stock hit an all-time high of Rs 11,892 (£135.32) on the Bombay Stock Exchange.
Apollo Tyres intends to supply its Oragadam factory in India’s Tamil Nadu state with electricity produced in its own plant. The company plans to establish a 15 Megawatt coal-based thermal power plant at the site; the facility will consist of two 7.5 Megawatt units. In a statement, Apollo said the plant will improve overall efficiency and reduce pollution compared with separate power generation and process steam generation.
Apollo Tyres has disclosed further details about its global expansion plans. Speaking with news agency Press Trust of India, vice-chairman and managing director Neeraj Kanwar referred to projects amounting to $US1 million. This investment will take place over the next half decade.
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