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Sibur Outsources Manufacturing to Marketing Wing

Sibur has announced that it will outsource its tyre manufacturing business to its marketing department, Russian newspaper, Kommersant, has reported. By this Autumn, the stocks of the four Sibur controlled tyre works will be transferred to Sibur Russian Tyres (SRT). At the moment SRT works exclusively in a sales and marketing role. Sibur is reported to have explained that the tyre business will be split off into a seperate structure because the company needs outside investment for development.

22nd March 2005/by Tyrepress Editors

Time for Goodyear to Set Foot in Russia?

Speculation that the Goodyear Tire & Rubber Co will enter the Russian tyre market with a big investment is starting to become more concrete. Reports by a Russian analyst explain that the American tyre giant has shown the “most interest” on the subject of a partial takeover of joint-stock company, Nizhnekamskshina.

9th March 2005/by Tyrepress Editors

Is there a Future for Passenger Car Tyre Retreading?

The European market doesn’t appear to hold a bright future for retreaded passenger car tyres. Just recently one of the biggest manufacturers of the tyres, Reiff Reifen + Autotechnik GmbH, withdrew from this segment. Nokian Tyres has also taken a similar decision: the Finnish tyre manufacturer has sold its passenger car retreading plant to a Swedish company even though its retreading business was recently brought together under the roof of a new “profit centre”.

1st March 2005/by Tyrepress Editors

Manufacturers Take On the Russian Market

International News, News

If the 8th Moscow Tires & Rubber show is anything to go by, the Russian tyre market looks set to continue its development as a growth market. While the show was marked by growing interest from exhibitors and visitors, the market itself has produced some generally optimistic data and has seen perceptions of the manufacturers’ market approaches improve. All this suggests that the Russian market will continue to develop into a very interesting tyre market, with a strong growth potential.

24th February 2005/by Arno

Changing Strategy in Siberia

A changing market environment and growing consumer demand in Russia has encouraged Matador to target the increasing opportunities offered by the market. The Slovakian tyre manufacturer is preparing for the future by initiating a new brand strategy and further investments into its Russian joint venture in Omsk. 2005 is an appropriate year for Matador to contemplate future development of its tyre business, as it will celebrate two important anniversaries during the coming months. In May the company will celebrate its 10th year at the Russian factory Omskshina, followed by its 100th anniversary in the autumn.

19th February 2005/by Tyrepress Editors

Nokian Again Report Record Figures

Last year Finnish manufacturer Nokian reported record figures. Now it has done it again. In the last twelve months the group’s turnover increased from 528.7 million euros to 602.2 million in 2004, while operating profit increased from 79.1 million euros to 108.1 million euros. At the same time the Vianor trade group represented about 37 per cent of the total turnover. Almost all of the company’s operating profit came from manufacturing and 80 per cent of this was generated by passenger car sales. Roughly 70 per cent of production is for export in the Nordic countries, Russia, CIS and North America. The management remains convinced that it will be able to outperform these record figures again in 2005.

11th February 2005/by Tyrepress Editors

Vianor Aims to Open 30 Russian Outlets

Nokian Tyres’ Vianor tyre chain has announced that it is aiming to open a total of 30, mainly franchised based outlets in Russia during 2005. The company says it will invest approximately 10 million euros in establishing the operation. The news follows the chain’s opening of outlets in Rostov and St Petersburg, and its acquisition of two tyre shops in Sweden. The company says the expansion of the Vianor chain will boost Nokian Tyres’ sales in Russia and give the company direct contacts with Russian consumers. “Tyre distribution is increasingly taken care of by the tyre shops and Nokian Tyres wants to be in the lead of this development,” said Kim Gran, president and CEO of Nokian Tyres.

In Sweden the chain has acquired two new shops Sjögrens Vulk AB and Degerfors Vulkcentral. All Vianor outlets share the same operational model and marketing concept. Vianor outlets sell mainly Nokian branded tyres, but also other well-known tyre brands. In addition, Vianor provides its customers with selected car related products and services, such as tyre hotels.

7th February 2005/by Tyrepress Editors

Amtel Aims to Expand into Europe

Following the news that Amtel was in “detailed discussions” with Vredestein Banden, Amtel president, Sudhir Gupta has confirmed that his company will buy Vredestein Banden and that it is planning initial public offerings (IPO) in London and Moscow in the next two years.

According to Dr Gupta, Amtel is planning a primary listing on the London Stock Exchange followed by a secondary listing on the Russian Stock Exchange. In a conversation with far eastern business publication, Business Times, Dr Gupta explained why the IPO would take place in London and not New York. “Europeans always understand Russia better than the Americans and most of the investment in Russia is European. That’s why we think London is a better place to list.” The secondary listing is also the result of ‘encouragement’ from the authorities for successful companies to list on the Russian Stock Exchange, and because “the stock exchange has good liquidity because of high oil prices.”

The listings are due to take place in one of two time frames; either October to November 2005 or April to May the year after, the Amtel president said.

Currently, Dr Gupta owns about 85 per cent of Amtel. An international investment fund managed by Templeton Asset Management Ltd, owns 5.65 per cent, while 10 per cent of Amtel’s shares were recently sold in a private placement for $34.2 million. These shares were bought by about 22 institutional investors in Europe, the US and Russia.

It is clear that a key part of Amtel’s expansion plans will involve venturing outside of Russian borders. One part of this is the company’s purchase of Vredestein Banden. By purchasing the Dutch company, Amtel appears to have been aiming to buy a ready-made foothold in the market. At the moment Vredestein sells 40 per cent its tyres in Europe’s biggest market (Germany) and has well organised distribution operations across Europe.
When the news of this transaction broke, Tyres & Accessories spoke to Vredestein CEO, Rob Oudshoorn. He described the venture as a win-win situation, saying, “one plus one equals three.” When the Vredestein boss visited Amtel’s factory in the summer, he said that he was surprised to see such modern equipment, maintaining that it was of a similar standard to Vredestein’s Enschede facility.

From his point of view, there is still a quality gap between imported products and those produced in Russia. Apart from believing that it can fill this gap, Vredestein sees Amtel’s size and influence as positive factors that will help it to reach further.
For Dr Gupta, there were other economic reasons for the transaction. “We had two options, either go ahead, spend money and time to build a global brand out of Amtel or go out and do some acquisition. So we agreed to buy this brand,” he told Business Times adding “we are looking to buy 100 per cent.” According to Amtel’s president, the sale is expected to be completed by middle of March 2005. When the two companies merge, they are expected to have a combined market value of $1 billion.

Dr Gupta is surprisingly pragmatic about doing business in Russia. This is surprising, because only a few years ago he survived an assassination attempt, something that would put most people off a country. According to the businessman, the men responsible for the murder attempt have been caught and will be prosecuted very soon. Despite his experience, Dr Gupta still believes Russia is a good place to do business, citing the country’s geographical position, the education of its people and its rich supply of natural resources as reasons to stay.

4th February 2005/by Tyrepress Editors

Sibur in Talks with Continental and Nokian

Sibur Russian Tyres is in talks with a Czech unit of German tyremaker Continental AG and with Finland’s Nokian Renkaat to cooperate in the tyre business, the Reuters news agency has reported. Sibur spokeswoman Anna Stepanova said Sibur’s possible partnership with the Continental unit might include production of tyres at a Sibur plant in Russia.

She also said Sibur was in talks with Nokian, which is already building a tyre plant of its own near St Petersburg. “There will be (partnership) with Nokian, but it’s unclear of what kind,” she said. Nokian declined to comment and Continental was not available for comment. A previous move by Nokian to cooperate with a Russian tyre manufacturer ended in a dispute with Russian partner Amtel over how to expand their cooperation. Production at the joint venture stopped last year, and it is now dissolved.

The Russian tyre company is part of petrochemical giant Sibur, which controls about half of Russia’s tyre industry. Sibur in turn is controlled by Russian gas monopoly Gazprom.

2nd February 2005/by Tyrepress Editors

Amtel Revenues up 18 per cent

Amtel Holdings Holland (AHH) has announced that company revenues grew to $451 million in 2004, up 18 per cent. “Amtel produced more than 14 million tyres in 2004, making it a record-breaking year,” Mr Gurin noted. The unaudited results were made public by AHH managing director, Alexei Gurin, during a press briefing at Russia’s biggest annual tyre exhibition – Tires & Rubber 2005.

2nd February 2005/by Tyrepress Editors

Vredestein to Take Amtel to North America?

Amtel’s acquisition of Vredestein Banden might result in the Russian brand’s introduction to the North American market, Marc Luyten, Vredestein Banden’s director of marketing and sales, according to a Modern Tire Dealer Report. Mr Luyten’s suggestion follows the news that Amtel will buy Vredestein and is planning initial public offerings on the London and Moscow stock exchanges.

31st January 2005/by Tyrepress Editors

Further Expansion At Amtel

Amtel’s latest 5500 tyres per day production line has gone into operation. The $50 million “Kirov-II” line will produce approximately 2 million tyres per year, raising annual production at the complex to 7 million units.

28th January 2005/by Tyrepress Editors

Market Prepares for Breakthrough

There has been much talk about the Chinese tyre market in recent months. Now, following the news of Amtel’s takeover of Vredestein, and the collapse of one of Continental’s joint ventures, the Russian market has been a hot topic. But what about India?

The Indian market may not be as large as Russia’s, but it certainly offers many challenges and opportunities to the companies working within it.

One such opportunity is radialisation. Currently radial products only make up a very small percentage of the Indian truck tyre segment, around two per cent. And, according to those involved, there is a large backlog in demand.

For instance, just recently Michelin entered into a joint venture with Apollo Tyres in order to produce radial truck and bus tyres destined for the domestic market. Pirelli and its partner, Ceat Ltd is also looking to fill the same gap in the market. No doubt other Indian manufacturers will follow suit in the future.

Another example, and in this case a big technological challenge, is the production of radial passenger car tyres. Even so, this sector is way ahead of the truck market with 85 per cent of the segment occupied by radial tyres. According to industry association ATMA this figure is likely to peak at 97 per cent in the coming years.

But one of the biggest factors influencing the Indian tyre market is the advance of motorisation. As this process gains momentum, more and more Indians want to and can afford to own passenger cars. In the last 10 years automobile production in India has quadrupled, last year alone it increased by an impressive 36 per cent.

Within the pages of this supplement on the emerging Indian market, TYRES & ACCESSORIES will give an overview of the major factors that are influencing the market and the big players that are trying to stake a claim in a market they believe should be theirs.

Subscribers to Tyres & Accessories can download the supplement in advance of publication. Please click the more button to download the file.

5th January 2005/by Tyrepress Editors

How Well Will the Russians Fare?

Manufacturers prepare for strong competition

The Russian tyre market has become more and more competitive. A market that “consumes” more than 1 million cars just 10 years after the collapse of its communist regime (2003: 1,046,000 cars) was never going to be neglected for long.
Russian manufacturers were formerly state-owned companies and because of this have a considerable amount of work to do to prepare for the Western competitors that will come to Russia with premium tyre imports, off take agreements and newly-built factories.

A bilingual supplement looks at the Russian market

5th January 2005/by Tyrepress Editors

Alcoa Acquires Samara and Belaya Kalitva Facilities from Rusal

Alcoa has announced that it has proceeded with its purchase of Rusal’s fabricating facilities in Samara and Belaya Kalitva in the Russian Federation. One of the two plants will be used for forged wheel production.The news following approval of the relevant Russian governmental organisation, the Federal Anti-Monopoly Service (FAS). This resulted in an FAS private ruling stipulating condition to ensure that Alcoa complies with its legal requirements and notification obligations. With the final government approvals in place, Alcoa and Rusal say they are taking the necessary steps to complete the transaction.

According to the companies, the terms of the transaction will be disclosed when the deal has been completed, which is expected at the end of January 2005. “The decision is an important step forward for both Alcoa and for Rusal,” said Alexander Bulygin, Rusal’s CEO. “For us, it means we can move ahead with our strategic focus on upstream and alloy production, and on expanding our raw materials access. We welcome Alcoa to Russia and anticipate continuing close relations in the future.”

The Samara facility is located about 500 miles southeast of Moscow. It features cast house, flat rolled products, extrusion, and forging capabilities and serves customers in a number of different markets, including transportation, packaging, and industrial products.

The Belaya Kalitva facility is located about 500 miles south of Moscow. The facility also features cast house, flat rolled products, extrusions, tubes, and forgings capabilities. The Belaya Kalitva facility has specialised plate rolling and finishing equipment that will complement and increase Alcoa’s present supply position. Alcoa claims that with its know how and management systems, the plant will not only be able to expand the product offerings for Russian customers but also will eventually be able to produce products for major customers in the west.

4th January 2005/by Tyrepress Editors