India
A ceremony held on November 23 marked the official opening of the first facility producing Hayes Lemmerz passenger car steel wheels in Asia. The plant in Chakan, near the Indian city of Pune, is the product of an established joint-venture between the US based wheel producer and Indian automotive component manufacturer the Kalyani Group. Approximately US$15 million has been invested in the plant.
If you were playing a word association game with a tyre executive and said “emerging markets” the chances are they would say “China.” However, while China is top of the tree when it comes to tyre production in the so-called emerging markets – and indeed the world – the recent investments of global players (such as Bridgestone and Michelin) in India, coupled with the rapid growth of the market’s domestic producers should make you sit up and take notice of what is happening in the sub-continent.
While most of the world, perhaps excluding China, was languishing under the shadow of the recent recession, India’s economy is positively booming with gross domestic product (GDP) currently growing at between 8 and 9 per cent in a global economic scenario that sees some of the world’s so-called superpowers pleased to report growth of anything more than zero and avoid the dreaded double dip. What separates India from the only other economy in the world that operates on this scale (China), is the fact that it is simultaneously growing fast, home to roughly a billion people and is also as much consumer as much as an exporter. And what’s more the very words that Apollo Tyres chairman Onkar S Kanwar and vice-chairman Neeraj Kanwar both use to describe their own staff, can also be used to optimistically sum up the population – “young, dynamic and innovative.”
Tyres & Accessories recently travelled to India to learn more about arguably the most globalised – certainly the most Europeanised – Indian tyre manufacturer, Apollo Tyres. During our whistle-stop tour of the company’s executive, R&D and production operations across India, the company demonstrated that it is moving towards its goal of becoming a global player and entering the top 10 within the next five years at a rate of knots with the news that it has joined the list of globally approved suppliers to German car marque Volkswagen. Apollo also revealed how it recently launched giant OTR tyre production at its Limda factory, truck and car radial production at its modern Chennai Greenfield plant and gave details of the construction of a new R&T (research and technology) centre at the Chennai site.
Having brought its first Formula One tyre test to a satisfactory conclusion, Pirelli reports that its next private test will take place in Bahrain from 12 – 16 December. There will be another private test session in Europe during January, before all the teams reconvene at the beginning of February for the first official test.
Paul Hembery, Pirelli's motorsport director commented: "We've passed our first test with full marks. All the teams have done plenty of laps and everyone has worked very hard. We've focused on the development of the front tire and that has given us the most satisfaction. On Monday, we begin to analyze the data collected over the last two days"
During the first six months of its current financial year, India produced some 28 per cent more tyres than a year earlier. Data from national industry organisation the Automotive Tyre Manufacturers’ Association (produced using information supplied by its eight member companies, who account for around 90 per cent of the country’s tyre production) states that 9.53 million tyres rolled out of ATMA member factories in India between April 1 and September 30 this year; in the same months of 2009 just 7.44 million tyres were produced. According to ATMA, production increased across all tyre market segments, the largest expansion being seen in the motor scooter segment, where production grew 67 per cent year-on-year. Passenger car tyre production in India increased 41 per cent to 2.09 million, while light commercial vehicle and truck/bus tyre production grew two and five per cent respectively. A total of 1.27 million truck/bus tyres were produced in the April to September period.
Motorcycle and moped riders in India are receiving a reminder that “roads are filled with idiots” courtesy of a new safety-themed website launched by Ceat Ltd. The manufacturer has launched the memorably named www.beidiotsafe.com website to promote the grip benefits its range of two-wheel tyres can offer, yet the site’s refreshing directness means its appeal goes way beyond that of its intended audience. Visitors to the site are met by a 360-degree rotatable idiot diorama; after playing with this feature, sub-sections such as an idiot’s gallery, a ‘spot the idiot’ game and a link to where road users can share their tales of idiocy are just a click away.
Natural rubber prices have been the bane of tyre makers in India of late, and on November 12 the New Delhi based Financial Express reported that major tyre manufacturers in India are considering production cuts to minimise on losses arising from prices that have risen above Rs 200 (£2.77) a kilogram.
Upon announcing Apollo Tyres Ltd’s results for the second quarter and first half of the current Indian financial year, company chairman Onkar S Kanwar commented “it’s been a very difficult six months managing the unprecedented rise in natural rubber prices.” This is perhaps an understatement; Kanwar noted the company’s natural rubber costs have risen 70 per cent in the last year and 150 per cent in the space of two years – a significant amount, considering the commodity accounts for 60 per cent of Apollo’s raw material costs. “This has affected all aspects of our operation.” Kanwar added. “I do hope the Government will look at some measure to check speculation, as well as bring down the unreal duty structure we have.”
Apollo Tyres has demonstrated it is moving towards its goal of becoming a global player and entering the top 10 within the next five years with the news that it has joined the list of globally approved suppliers to German car marque Volkswagen. However the prestige associated with VW's global OE approval of Apollo's tyres is multiplied by the fact that the company has been selected to supply the replacement to VW's compact Fox model, known as the “Up”, which can be described as a European OE contract. This mini model is expected to be produced at the German carmaker's Brazil plant, where the Fox was previously constructed.
According to the Calcutta Telegraph, the Calcutta-based Ruia Group and Japanese tyre manufacturer Sumitomo are engaged in talks concerning the construction of a radial tyre factory in India. It is reported that the joint venture would cost around 500 crore rupees (US$113 million) and would either be a 50/50 project or with Sumitomo taking a majority holding.
Stoke-based Daily Tyres, a new mainland venture from Eamon Daly of Daly Tyres (Limerick), used the recent Brityrex show to publicise the enhanced availibility of the Westlake in the Midlands and North of England. The Westlake brand was featured on Eamon Daly’s rally racing car which was prominently on display in the main entrance to the tyre show.
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Having raised the prices of its US passenger and light truck tyres by 6.5 per cent, Cooper Tire has told analysts in a conference call that the manufacturer expects raw materials costs to rise into 2011, as suggested by reports in the Financial Times and on tyrepress.com yesterday. Increased demand from automotive suppliers, especially in China and India, alongside unhelpful weather conditions in the rubber tapping season in south-east Asia have driven natural rubber prices continually upward in 2010.
A new report by Global Industry Analysts suggests that the synthetic rubber market will climb to 13.4 metric tons by 2015, “particularly” on increased usage in the tyre and automotive industry. The consumption and production of synthetic rubber was significantly affected by the global economic recession, says a statement by GIA announcing its new publication: ‘Synthetic Rubber: A Global Strategic Business Report’.
Tire Review reports that specialty chemicals firm Lanxess predicts an increase in demand for synthetic rubber in India, a country the company said has a long history in the production and consumption of natural rubber. “Driven by the needs of rapid modernisation, India is currently undergoing a shift toward replacing natural with synthetic rubber in a variety of applications,” the company said.
Michelin has reported that its net sales for the first three quarters of 2010 shot up 19.4 per cent to 13 billion euros. According to the company, the growing figures reflect increased unit sales growth across all sectors and follow a particularly sustained recovery in unit sales of passenger car and light truck tyres. As a result of the good third quarter figures, Michelin reaffirmed is predictions that the company would achieve around 12 per cent growth in unit sales by the end of 2010, “close to 9 per cent operating margin before non-recurring items” and positive free cash flow for the year.
Referring to the company’s third quarter sales of 4.65 billion (which were up 24 per cent year-on-year), financial analysts praised the fact that the results were 6 per cent ahead of consensus estimates. However, writing in an investor’s note published 27 October, Morgan Stanley analysts wrote that this figure was largely down to better-than-expected foreign exchange rates. Sales growth is said to have equated to +15 per cent excluding foreign exchange effects during the quarter.
Sun Tyre & Wheel Systems, part of the $6 billion TVS Group of India, has completed the acquisition of Watts Lanka Private Limited, the firm’s solid industrial tyres manufacturing company in Colombo, Sri Lanka. No details of how much was paid for the company or of the extent of the new owner’s expansion plans have been released.
Announcing the news Sun Tyre & Wheel Systems said it is “dedicated to serving the world’s material handling industry with a wide range of tyre and wheel solutions covering most applications and operating environments.” Watts Lanka Private Limited (which will be renamed shortly) was a joint venture between Watts Tyres Limited of the UK and KVK Invest JSC of Bulgaria, principal shareholder in Balkancar Zarya PLC. One insider told Tyres & Accessories that, as the sale relates to a purchase prior to Watts’ recent buyout, this had been considered as an option for some time.
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