Across the Atlantic they are called tires, while over here we use a “Y” and say tyres. This tag provides the latest tyre business news emanating from the United States of America (USA), whichever way you spell it.
In his statement to senators in the USA, Bridgestone/Firestone chairman and chief executive Mr. Masatoshi Ono apologised to the families “who have lost loved ones in these terrible rollover accidents”. This was interpreted by some as an attempt to put some responsibility on to the vehicle, rather than the tyres alone. Ford’s chief executive, Jacques Nasser, is reported to have said later that the issue is to do with tyres and not vehicles.
The German automotive association (VDA), organiser of the 58th International Commercial Vehicles Exhibition, which took place in Frankfurt this year due to EXPO utilising facilities at Hanover, has announced record results for the event. 1,318 exhibitors from 42 countries filled the exhibition, including some 725 automotive parts suppliers, more than ever before. In all, 240,000 people attended the show, 85 % of them trade visitors. Bernd Gottschalk, president of the German automotive association stated, “The IAA grows in importance as a sales exhibition”. He believes that the whole climate at the exhibition was one of optimism and faith in the future of the business. This may be true, but it is only one side of the coin. Despite the pre-event high hopes there remained an apprehension that the recent economic boom might soon come to a sudden end. There are many indicators that the boom may be slowing down: Dramatic decline in sales in the USA, and an accelerating rationalisation amongst manufacturers making trade more intensive for both suppliers and the fleet business. This and high fuel prices and, last but by no means least, the distortion of competition as a result of differing transport regulations within the European Union. In the final analysis, the commercial vehicle business remains as full of contradictions today, as it ever has. Find out more in the November issue of NEUE REIFENZEITUNG.
US tyre manufacturer Goodyear has announced its confidence in the Latin American market during the year 2000. The company believes it will be able to increase its Ebit-margin significantly.
With three new tyres, named “4x4Contact”, “4x4SportContact” and “4x4WinterContact”, the German tyre manufacturer wants to establish its leading brand in the segment of sports utility vehicles (SUV). And this segment seems to be quite interesting: According to a Continental market analysis the number of 4×4 vehicles in Europe is expected to double by the year 2005 compared to 1995 and leading to a growing market for 4×4 tyres. Some reasons are that new fashionable/stylish compact SUVs which are faster, fuel efficient and easier to drive or larger SUVs offering a high load carrying space and/or seating capacity are stimulating the demand. As a result SUVs are increasingly becoming an alternative to standard cars. Therefore the focus of the three 4×4 tyres is for on-road use, but for the future Continental plans to launch all-terrain and off road tyres, too. Meanwhile the “4x4Contact” is the tyre for compact and medium range SUV, whereas the “4x4SportContact” has a more sporty image. Fast and high powered cars are the target for this tyre. The “4x4WinterContact” – as the name suggests – is the specialist for the colder time of the year. European production of the tyres was launched recently and later this year they will also be manufactured in USA.
Automechanika – the International Trade Fair for Car Workshop and Service Station Equipment, Automobile Spare Parts Accessories – has set a new exhibitor record: 3,909 exhibitors occupied all of the approx. 300,000 square metres of indoor and outdoor exhibition space to present their latest products and technical innovations. The almost three percent increase in exhibitor numbers was the result of growth in the number of German exhibitors. 67 percent of all exhibitors came from outside Germany. The top five exhibitor nations were Germany and Italy, followed by Taiwan, the USA and Great Britain. The exhibition ran from 6 to 10 September 2000 and Messe Frankfurt welcomed around 150,000 trade visitors from all over the world during the five days of the fair, where exhibitors took many orders and transacted a lot of business. In contrast to this positive attitude at the trade fair, the background situation of the market does not look that good: The car boom of previous years came to a sudden end this year. The EU-Commission in Brussels is thinking about ending the exclusive distributor networks of car retailers. Parallel to this the car manufacturers – especially Ford and Mercedes-Benz – are restructuring their distributor networks, which means that they are reducing the number of their retailers. The pressure on the suppliers exerted by the car producers continues to increase and as a result they are showing a stronger interest in the aftermarket business. Furthermore Goodyear/Dunlop’s daughter company Pneumant was the fist tyre producer for several years to have a booth at the Automechanika. However, it is doubtful that this is the first example of a growing trend, as the “Reifen” exhibition, central event of the European tyre world, was held just a few months ago and it is to be considered that – in contrast to the alloy wheel business – the target audience of the tyre manufacturers is most probably not those who attend the Automechanika. In NEUE REIFENZEITUNG 10/2000 we review the show.
In the US, J.D. Power and Associates conducted an OE tyre satisfaction survey among 31,000 buyers of new vehicles. Michelin came top in the car and minivan category for the third year running and won the light truck category (including pickups and SUVs) for the second consecutive time. Runners-up in the car segment were (in order) Continental, BFGoodrich and Dunlop. In the light truck category, Michelin was followed by Dunlop, BFGoodrich and Firestone. The survey took place before the Firestone tyre recall.
An item in our ‘News In Brief’ for 13th March suggested that tyre prices in the USA would soon rise. Since then, the Cooper Tire & Rubber Co. has announced price increases of between 2 and 5% for passenger and light truck tyres, effective mid-April. Increases in raw material costs were cited as the reason for the rise, which applies only to the US market.
In a telephone conference on 28th July, following an earlier profits warning and subsequent fall in Michelin shares of around 10%, the management tried to explain the reasons for the profits warning. June was a bad month but there is still hope that the company will achieve an EBIT comparable to that of the first half of 1999. Exact figures will not be available until September. The problems are in the USA, where it was not possible to obtain better prices for truck tyres. On the other hand, the increase in raw materials prices (rubber, oil, carbon black), forecast to be about 3%, will now, it seems, be more like 4 or 5%.
Cooper Tire says it is “outraged” at the implication in recent press reports that there may be an investigation into its tyres. The company says that it has not been contacted by the National Highway Traffic Safety Administration and there are no reasons for a recall. Furthermore, Cooper says it would be pleased to furnish the NHTSA with its records and data if required, and these data would confirm that the company’s tyres are safe.
A year ago, there were rumours that Yokohama was seeking an alliance with Michelin. TYRES & ACCESSORIES recently visited the company and, in addition to factory and R&D facility visits, interviewed the President of Yokohama Rubber Company, Mr. Yasuo Tominaga. Mr. Tominaga spoke of the company’s wide-ranging restructuring plan and whether a company the size of Yokohama can survive alone in a global market dominated by the big three manufacturers.
Hayes Lemmerz International, the world’s largest wheel manufacturer, plans to invest 23 million US dollars with the objective of quadrupling the annual capacity of the Mexican aluminium wheel factory in Chihuahua to 1.2 million units by the year 2001.
As a matter of practice, US unions choose one tyre maker as the basis for labour negotiations, targeting standard contracts for the coming year to apply to the other tyre companies also. This year they have decided to negotiate with Bridgestone/Firestone.
Bridgestone/Firestone has announced that it is to recall 62,000 tyres sold in the Venezuelan market at an estimated cost of US$ 6.4 m. The tyres have been linked with 60 deaths in the country. The consumer protection agency is recommending investigation into charges of possible criminal negligence against Ford and Bridgestone/Firestone, plus a number of civil law suits are planned.
The Wall Street Journal questioned whether Goodyear acted too slowly, or put cost before safety regarding the tyre problems in the USA. Samir Gibara, for Goodyear stated, “Our engineers determined that the tyres were not defective, so there was no recall”. The outcome of the case could have a serious effect on the way in which manufacturers introduce quality improvements to their ranges in future.
Pirelli has sold a first stake of its Cisco-shares for US$1.55 bn to institutional investors. When it sold its “Pirelli Optical Systems” for US$2.15 bn the company received Cisco-shares in lieu of payment.
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