Global market review of automotive tyres forecasts to 2017 2010

Global market review of automotive tyres – forecasts to 2017

2010 edition

Page i

© 2010 All content copyright Aroq Ltd. All rights reserved.

Global market review of automotive

tyres – forecasts to 2017

2010 edition

April 2010

By Matthew Beecham

Published by

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Page iv Contents


Contents

Single-user licence edition .......................................................................................................... ii

Copyright statement ............................................................................................................... ii Incredible ROI for your budget – single and multi-user licences ............................................. ii just-auto.com membership ..................................................................................................... iii

Contents ...................................................................................................................................... iv

List of figures .............................................................................................................................. vi

List of tables .............................................................................................................................. vii

Preface ........................................................................................................................................ ix

Research methodology ......................................................................................................... ix Report coverage ................................................................................................................... ix The author ............................................................................................................................. x

Chapter 1 Introduction ................................................................................................................ 1

Chapter 2 The market .................................................................................................................. 2

Market trends ......................................................................................................................... 2 Market players ....................................................................................................................... 4

Bridgestone ................................................................................................................... 5 Q&A with Bridgestone ............................................................................................. 5

Continental .................................................................................................................. 10 Q&A with Continental ............................................................................................ 10

Cooper Tire & Rubber .................................................................................................. 14 Q&A with Cooper Tire & Rubber ........................................................................... 15

Goodyear..................................................................................................................... 21 Q&A with Goodyear Dunlop UK ............................................................................ 22

Hankook Tire ............................................................................................................... 27 Kumho Tires ................................................................................................................ 27 Michelin ....................................................................................................................... 27 Pirelli ........................................................................................................................... 28

Toyo Tire & Rubber ..................................................................................................... 28 Sumitomo Rubber Industries ....................................................................................... 28 Yokohama Rubber ....................................................................................................... 29

Emerging markets ................................................................................................................ 32 Brazil ........................................................................................................................... 32

China ................................................................................................................................... 32 Hungary ....................................................................................................................... 34 India ............................................................................................................................ 34 Mexico ......................................................................................................................... 34 Romania ...................................................................................................................... 34 Russia ......................................................................................................................... 35

Page v Contents


Thailand ...................................................................................................................... 35 Turkey ......................................................................................................................... 36 Investments in Europe ................................................................................................. 36 Investments in North America ...................................................................................... 36 Investments in Asia...................................................................................................... 37

Market shares ...................................................................................................................... 37 World ........................................................................................................................... 37 European markets ....................................................................................................... 39 North American markets .............................................................................................. 40 Asian markets .............................................................................................................. 42

Market size .......................................................................................................................... 44 Market forecasts .................................................................................................................. 45

Chapter 3 Technical review ....................................................................................................... 53

Defining the elements .......................................................................................................... 53 Run-flat tyres ....................................................................................................................... 54 Tyre labelling ....................................................................................................................... 56 Tyre pressure monitoring systems (TPMS) .......................................................................... 56 Other innovations ................................................................................................................. 57

Chapter 4 Manufacturers ........................................................................................................... 58

Bridgestone ......................................................................................................................... 58 Continental .......................................................................................................................... 59 Cooper Tire & Rubber .......................................................................................................... 66 Goodyear ............................................................................................................................. 67

Hankook Tire ....................................................................................................................... 73 Kumho Tires ........................................................................................................................ 75 Michelin ............................................................................................................................... 77 Pirelli .................................................................................................................................... 79 Sumitomo Rubber Industries ................................................................................................ 80 Toyo Tire & Rubber Co Ltd .................................................................................................. 82 Yokohama Rubber ............................................................................................................... 82

Appendix: Glossary of terms .................................................................................................... 84

Page vi List of figures


List of figures

Figure 1: Manufacturer shares of global OE and aftermarket tyre market, 2009 (% of market value)

.............................................................................................................................. 38

Figure 2: European market shares for OE and replacement tyres for passenger cars and light

trucks, 2009 (% of volume) .................................................................................... 39

Figure 3: European market shares for OE and replacement tyres for medium- and heavy-duty

trucks, 2009 (% of volume) .................................................................................... 40

Figure 4: North America market shares for OE and replacement tyres for passenger cars and light

trucks, 2009 (% of volume) .................................................................................... 41

Figure 5: North American market shares for OE and replacement tyres for medium and heavy duty

trucks, 2009 (% of volume) .................................................................................... 41

Figure 6: South Korean OE tyre market shares, 2009 (% of volume) ........................................... 43

Figure 7: South Korean replacement tyre market shares, 2009 (% of volume) ............................. 43

Figure 8: World market for OE tyres for passenger cars and light truck applications by

geographical region, 2009 (% of volume) ............................................................... 44

Figure 9: World market for OE tyres for medium- and heavy-duty truck applications by

geographical region, 2009 (% of volume) ............................................................... 45

Figure 10: Continental AG’s passenger and light trucks tyres sales by region, 2007 and 2008 (% of

net sales) ............................................................................................................... 61

Figure 11: Continental AG’s commercial vehicle tyres sales by region, 2007 and 2008 (% of net

sales) ..................................................................................................................... 63

Page vii List of tables


List of tables

Table 1: Tyre size trends over six generations of VW Golf ............................................................. 4

Table 2: Bridgestone’s sales by geographical region, 2003-2008 (% of net sales) ....................... 29

Table 3: Goodyear’s tyre sales by operating segment, 2006-2008 (% of net sales) ...................... 29

Table 4: Michelin’s sales by geographical region, 2003-2008 (% of net sales) ............................. 30

Table 5: Cooper Tire & Rubber’s sales by geographical region, 2003-2008 (% of net sales) ........ 30

Table 6: Hankook Tire’s sales by geographical region, 2003-2008 (% of net sales) ..................... 30

Table 7: Kumho Tire’s sales by geographical region, 2003-2007 (% of net sales) ........................ 31

Table 8: Pirelli’s sales by geographical region, 2003-2008 (% of net sales) .................................. 31

Table 9: Toyo Tire & Rubber’s sales by geographical region, 2003-2009 (% of net sales) ............ 31

Table 10: Yokohama’s sales by geographical region, 2003-2009 (% of net sales) ....................... 32

Table 11: Manufacturer shares of global tyre market 1999-2009 (% of market value) .................. 38

Table 12: World light vehicle tyre sales by region, split by OE and replacement units, 2006-2017

(m units)................................................................................................................. 46

Table 13: European Union light vehicle tyre replacement units by market, 2006-2017 (m units) ... 48

Table 14: World medium- and heavy-duty truck tyre sales by region, split by OE and replacement

units, 2006-2017 (m units) ..................................................................................... 49

Table 15: World tyre sales (all applications) by region, split by OE and replacement units, 2006-

2017 (m units) ........................................................................................................ 51

Table 16: Bridgestone’s three generations of run-flat tyres, 1987-2010 ........................................ 55

Table 17: Bridgestone’s production and R&D operations worldwide, 2009 ................................... 59

Table 18: Goodyear’s tyre sales by operating segment, 2006-2008, (m tyres) ............................. 68

Table 19: Goodyear’s worldwide tyre sales, OE and replacement, 2003-2008 (m tyres) .............. 68

Table 20: Goodyear’s North American Tire sales, OE and replacement, 2003-2008 (m tyres) ..... 69

Table 21: Goodyear’s European Union Tire sales, OE and replacement, 2006-2008 (m tyres) .... 69

Table 22: Goodyear’s Latin American Tire sales, OE and replacement, 2003-2008 (m tyres) ...... 69

Page viii List of tables


Table 23: Goodyear’s Asia Pacific Tire sales, OE and replacement, 2003-2008 (m tyres) ............ 70

Table 24: Goodyear’s strategic business units, 2010 ................................................................... 70

Table 25: Goodyear’s tyre-related facilities worldwide, 2010 ........................................................ 71

Table 26: Hankook Tire’s consolidated sales and operating profit, fiscal years 2008, 2009 and

forecast for 2010, (KRW bn) .................................................................................. 75

Table 27: Michelin’s production sites worldwide, 2009 ................................................................. 77

Table 27 (continued): Michelin’s production sites worldwide, 2009 ............................................... 78

Table 27 (continued): Michelin’s production sites worldwide, 2009 ............................................... 79

Table 28: Pirelli tyre plants worldwide, 2010 ................................................................................ 79

Table 29: Sumitomo Rubber Industries’ net sales and operating income, 2006, 2007, 2008 and

nine months ended 30 September 2008 and 2009 (JPY m) ................................... 81

Table 30: The Yokohama Rubber Co Ltd’s tyre-related facilities in Japan, 2010 .......................... 83

Note: data in some tables may not sum due to rounding.

Page ix Preface


Preface

Research methodology

This report is intended to provide an overview of the road tyre industry,

providing top level market fitment, volume and value forecasts through 2017.

Our forecasts are not extrapolative but dependent on the underlying drivers of

supply and demand. Our forecasts are largely based on interviews with the

author’s extensive international network of industry contacts. This allows us to

consider and explain the meaning and implications of industry events, rather

than offer simple description based on incomplete data.

Our approach is divided into two distinct methodologies:

○ qualitative interviews – these are generally opinion-based, which aim

to build knowledge about future tyre market trends and company

strategies;

○ quantitative interviews – typically fact-based, focused on establishing

market values, shares, and volumes.

Our research typically concentrates on applications for light vehicles which

include all cars, light trucks and the various cross-over vehicle styles such as

sports utility vehicles and people carriers. These vehicles collectively account

for about 96% of the global vehicle build.

Our market forecasts are set out by region, i.e. European Union, Eastern

Europe and Russia, North America, Asia, Africa, South America, Middle East

and the Gulf, and the rest of the world. For the purposes of this report, the

European Union includes Austria, Belgium, Denmark, Finland, France,

Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain,

Switzerland, Sweden and the UK.

Report coverage

In this, the sixth edition of this report, just-auto reviews the key market drivers

for road tyres, and updates the market analysis. Following our market overview

in Chapter 1, just-auto’s product fitment forecasts in Chapter 2 predict in some

detail how the OE and replacement market for passenger car, light truck,

medium- and heavy-duty truck tyre market will evolve in the European Union;

Page x Preface


Eastern Europe and Russia; North America; Asia; Africa; South America;

Middle East and the Gulf; and the rest of the world from 2006 through to 2017.

This chapter includes exclusive Q&As with Bridgestone, Cooper Tire &

Rubber, Continental and Goodyear. An updated review of new product

developments is presented in Chapter 3, while Chapter 4 provides profiles of

the major manufacturers, namely Bridgestone, Continental, Cooper Tire &

Rubber, Goodyear, Hankook Tires, Kumho, Michelin, Pirelli, Sumitomo, Toyo

Tires, and Yokohama.

The author

Matthew Beecham has more than 18 years’ experience of researching, writing

and analysing market and technical trends in the global automotive

components industry. Since 2000, he has served as an associate editor for

just-auto. In addition to tyres, he authors a range of global auto components’

market research reviews, including batteries, braking systems, coatings,

clutches, cockpits, driver assistance systems, door modules, electric motors,

engine cooling systems, exhaust systems, front-end modules, fuel injection,

fuel tanks, glazing systems, ignitions, interiors, lighting, mirrors, roof systems,

shock absorbers, spark plugs, rotating electrics, tyre pressure monitoring

systems, wheels and wipers. Matthew’s freelance assignments have included

working for AT Kearney, Belron, Bridgehead International, McKinsey, Kuwait

Institute for Scientific Research, Motorsport Industry Association, Motor

Industry Research Association and the Economist Intelligence Unit. He has

also written for magazines including Car Graphic (Japan), JAMA (Japan) and

Automotive Engineer (UK). He was awarded a PhD in automotive technology

transfer from Cranfield University.

Chapter 2 The market


He continued: “Last year, a good 15m of these tyres – which are manufactured

in sizes between 17 inches and 23 inches – were sold to markets in Western

and Central Europe. We expect demand to rise to 20.4m tyres by 2012. This

represents a growth of more than 35% compared with 2007 levels.” The main

European markets for these UHP tyres are the UK, Germany, France, Italy,

and Spain. “The UK and Germany alone constitute almost half of sales in the

sector,” said Setzer. “However, seen as a percentage we are expecting sales

of high-performance tyres to increase even more in southern Europe than in

the UK and Germany.”

Hankook Tire also reports strong growth in UHP tyres. In its latest earnings

announcement, the company stated: “[Our] overall global sales of UHP marked

a 9.6% year-over-year increase. In particular, Hankook Tire’s UHP supplies to

global carmakers showed remarkable growth in the global market and in China

with 129% and 46% year-over-year increases, respectively.” Meanwhile,

Kumho Tire used the 2009 Frankfurt motor show to introduce its latest UHP

tyres.

Other factors impacting on tyre design include increased chassis development.

In addition, the larger number of car segments have led to an increase in the

complexity of the tyre market. Performance no longer just relates to speed

alone. The fact that comfort, noise levels, safety and traction have become

increasingly important means that so-called performance tyres are often fitted

to cars from the lower medium sector of the market. The W, Y, Z and 4x4

markets have been showing strong growth thanks to the trends in the

performance sector and a desire for alloy wheels. There has also been a

change with regard to tyre dimensions, partly because people like highly styled

wheels with low profile tyres.

To illustrate how tyre sizes have changed over the years as vehicles have

become heavier, Michelin draws upon the example of the Volkswagen Golf.



Table 1: Tyre size trends over six generations of VW Golf

VW Golf 1 VW Golf 2 VW Golf 3 VW Golf 4 VW Golf 5 VW Golf 6

Engine 1.1 L 1.3 L 1.4 L 1.6 L 1.6 L FSI 16 V 1.4 L TSI

Horse power

50 55 60 100 115 121

Empty vehicle (kg)

750 845 960 1,175 1,185 1,215

Tyre size 155/80SR13 175/70SR13 175/70TR13 155/80HR14 195/65HR15 205/55HR16

Source: Michelin

Although the tyre market has been growing – albeit at a modest rate year-on-

year – the industry has not been particularly profitable. It is essentially a

commodity industry and although it has high-tech products, the majority of its

products are vulnerable to price competition from low-cost manufacturers. An

obvious reaction has been the development of brands, but an examination of

the accounts of companies in the industry shows that there are some distinct

advantages in size. In many analyses, the big three manufacturers are

demonstrated to have a clear advantage over their smaller competitors and it

is this in-built disadvantage that has encouraged the mid-sized companies to

look for alternative courses. None have given up the tyre industry as they have

too much invested in it.

In summing-up the world market for tyres, Michelin states: “With emerging

countries experiencing vigorous growth, tyre market volume growth should be

fairly evenly distributed between mature and developing countries. In addition,

all tyre markets have a strong value growth potential due to increasing demand

for top-of-the-range vehicles (as road users look for more safety and comfort),

the need for the trucking industry to improve its returns and equipment

reliability. Beyond these volume and value growth trends, markets are on the

verge of profound changes driven by growing environmental concerns.”

Market players

The major competitors in the global tyre market include Goodyear, (based in

the US), Bridgestone (based in Japan) and Michelin (based in France). Other

significant market players include Continental, Cooper, Hankook, Kumho,

Pirelli, Toyo, Yokohama and various regional tyre manufacturers.



The basis of competition among tyre makers includes product design,

performance, price, reputation, warranty terms, customer service and

consumer convenience.

Bridgestone

Bridgestone produces tyres and tubes for passenger cars, trucks, buses,

construction and mining vehicles, industrial and agricultural machinery, aircraft,

motorcycles and scooters. Tyres account for 80% of Bridgestone’s sales.

Bridgestone also produces antivibration and noise-insulating materials,

polyurethane foam products, office equipment, industrial rubber products,

building materials, belts, hoses, marine products and other rubber parts. Tyres

account for 80% of Bridgestone Group sales worldwide. The company

operates facilities in Argentina, Australia, Belgium, Brazil, Canada, China,

Costa Rica, France, Indonesia, Italy, Japan, Mexico, New Zealand, Poland,

South Africa, Spain, Taiwan, Thailand, the UAE, the UK, the US and

Venezuela. In August 2009, Bridgestone opened its Kitakyushu plant in Japan.

This plant produces large and ultra-large off-road radial tyres for construction

and mining vehicles.

Q&A with Bridgestone

In January 2010, Matthew Beecham talked with Franco Annunziato, senior

vice president, technology, Bridgestone Europe.

just-auto: Now that legislation is coming in to make TPMS mandatory, the

motorist no longer has to pay extra. What is the future for this technology? Do

you think that indirect TPMS will become a standard feature of on future

electronic stability control systems?

Franco Annunziato: We fully support accurate TPMS, firstly as an important

safety factor, reducing the numbers of failures due to running at low pressure,

and secondly, because it can maintain the tyres’ optimum rolling resistance

when the pressure is correctly adjusted.

The indirect TPMS system relies on the ABS sensors which are fitted to almost

100% of all cars today. The electronics evaluate any difference in the speed of

rotation of one tyre versus the others so detecting a deflation.



A direct TPMS measures the internal pressure of the tyre with a sensor and

transmits this to a receiver in the vehicle. The electronics can then display and

follow the real internal pressure of the tyre.

The EU regulation will be a major driver to bring TPMS to all users; however it

is not yet certain which TPMS type will become mandatory.

j-a: As I understand it, TPMS technology is evolving to the point where one

scenario could be this: As soon as the TPMS tells you that your tyre needs

servicing, the nearest licensed service station will be automatically alerted

through your car’s GPS, giving you directions to a site where qualified

personnel will be awaiting your arrival. How far away are we from achieving

this?

FA: Most high-end vehicles have now a GPS system as standard equipment;

its navigation software often contains the locations of approved service

centres. Linking vehicle faults, such as low tyre pressure, and service centres

is the next logical step in such a system. Adding in the communication from car

to service centre is also becoming possible as manufacturers add internet

connectivity.

Such systems could therefore be implemented relatively soon if the car

manufacturer sees a requirement.

j-a: Run-flat tyres have also done a lot to improve vehicle safety yet come with

a high price tag. Do you see technological evolution bringing run-flat and self-

inflating tyres into the cheaper mainstream?

FA: SSR features a side-supported rubber aiming to support the load of the

vehicle when the tyre deflates.

Therefore, in principle the cost of a RFT will be higher than a regular tyre,

because of the side-supported rubber.

However SSR system means ‘spareless’ which could result in eliminating a full

spare tyre or temporary spare tyre or sealing kit. So we believe it could be

possible to equal or even improve the cost of a regular tyre when we consider

it as a complete system.



j-a: In addition to driver safety, the current focus is to find ways in which to

reduce CO2 emissions. As 25% of all CO2 emissions are generated by road

traffic and about 20-3% of a vehicle’s energy consumption can be attributed to

tyres alone, measures to improve rolling resistance remain a top priority. Could

you draw on an example of a recent tyre innovation which demonstrates how

your company has reduced rolling resistance?

FA: First, I would like to emphasise that although the figures you quote are

correct, the energy consumption attributed to tyres cannot be eliminated, and

will always be significant. Nevertheless, tyre companies continue to make

inroads to reducing the rolling resistance of tyres to contribute to reducing CO2

emissions.

All tyre companies are faced with the same challenge whereby tyre

performances are linked to each other. For example, it is possible to make a

tyre with far superior low rolling resistance than current tyres, but the penalty

would be that the wet braking performance of the same tyre would be

unacceptable, and even dangerous. That is why the European labelling

regulation includes both energy efficiency and wet braking performance on the

same label.

Our company has introduced nanoprotech technology in the tread rubber

compounds, which lowers the rolling resistance coefficient by reducing energy

loss in the top compound during rotation.

j-a: As we see it, most tyre manufacturers offer a low rolling resistance tyre in

their range yet few currently advertise the use of the silica-silane technology in

their commercial vehicle ranges. Why is that?

FA: The use of silica silane is a feature. Communication tends to focus on the

benefits rather than the features that actually bring those benefits.

j-a: In addition to low rolling resistance, low tyre/road noise are requirements

imposed on modern tyres for environmental and economic considerations.

Could you draw on an example of a recent tyre innovation which demonstrates

how your company has reduced rolling tyre noise, perhaps highlighting certain

new processes or developments?



FA: Reducing tyre road noise is a challenge for all tyre manufacturers. It has

been proven that road surfaces and the materials used to make them can

contribute more to the reduction of tyre road noise than the tyre itself. Also, the

quietest tyre possible to make is a slick, that is, a tyre with no tread pattern at

all. Slicks are not an option for normal cars as the lack of wet grip would be

unacceptable. It is the grooves of a tyre’s tread pattern that contribute to

creating external noise, but it is the same grooves that allow for water

evacuation and directional stability, and grip on wet surfaces. By optimising

tread design, it is possible to achieve the regulated noise limits, and this is

where most of the advances have been made with regards to tyre noise.

j-a: In what ways will information on the new EU tyre regulatory standards

provide a better service for the end-consumer?

FA: The end-consumer will be able to recognise the performances of each tyre

before they purchase it, thanks to a performance label that must be displayed

with the tyre, and on point-of-sale material. The label, inspired by the energy

efficiency label which is currently displayed on refrigerators and other white

goods, will show the wet grip grading of the tyre and the measured external

noise in dbA as well as the energy efficiency rating on a seven-grade scale.

Thanks to the label information, consumers can make their choice depending

on their own preference; maximum safety or maximum fuel economy.

j-a: In your view, what tyre regulatory information needs to be communicated

to the consumer?

FA: We consider safety to be of paramount importance. The only contact that

a tyre has with the road is through its tyre footprints. In the interests of road

safety, customers need to understand safety performances.

As end-users are increasingly seeking ways to reduce their impact on the

environment, the fuel efficiency of their vehicle has become the first criterion

when choosing their new car. Tyre performance also affects the fuel efficiency

of a vehicle. Therefore, communicating this value to consumers is very

important.

j-a: As I understand it, truck tyres are included in the requirement for tyre

labelling. Would you agree that, given the importance of truck tyres to the



economy of fleet transport, purchasers of truck tyres should receive greater

clarity through the use of labelling?

FA: We agree that fleet operators also need information on tyre performance.

However, our experience is that purchasers of truck tyres are usually well

informed professionals with real data available to them showing the economic

effect of their tyres on their operations. This data includes many additional

performances that are not considered in car tyre usage. For example, the

durability and life of the tyres, and their suitability for reuse as retreaded tyres,

thereby saving both money and environmental impact.

j-a: Ultimately, I guess if the information on the tyre sidewall was easier to

read, it could be a better method of communicating information instead of

sticky pictogram labels which could be dirty, incorrect or even missing at the

point-of-sale. Would you agree?

FA: The regulation foresees that the label information will be communicated by

several other methods such as on websites, and printed material available at

points of sale, so it is not at all confined to sticky labels. Incorporating the

information on tyre sidewalls has several disadvantages. It is often difficult to

read and understand sidewall printed information. The information is basically

only needed before the tyres are purchased, and has no meaningful role once

the tyre choice and purchase has been made. The actual physical tyres being

purchased are often not seen by the customer until after they have been fitted

to the car. They are chosen from catalogues, website information and the

advice of sales staff using sales brochures.

j-a: In the medium term, is RFID a better solution?

FA: Not for informing customers before they make their purchase decision.

RFID is good for identifying and tracking the performance of tyres once they

are in operation.

j-a: People talk of the intelligent tyre as vehicles change. With newer forms of

propulsion, in what ways will the tyre change and adapt to such technology?

FA: There have been, and still are, many research projects looking at various

ways to bring information from the tyre to the vehicle. As the tyre is the contact

point to the road, dynamic feedback in real time of tyre/surface interaction



could provide benefits to ESP, ABS and other systems reliant on knowledge of

the level of tyre grip. Unfortunately, integrating electronics inside such a harsh

environment, with high rotational and shock g forces, is not simple, especially

as adding weight has a negative impact on vehicle dynamics. Many in-vehicle

sensing systems can already estimate grip levels quite well, so cost/benefit is

not high to have an in-tyre solution.

For future vehicles, whether fossil-fuelled, electric or some hybrid form, the

need to maintain safety and optimise rolling resistance will be increasingly

important so TPMS should become a key vehicle component.

Continental

Continental AG designs and manufactures tyres for passenger car and

commercial vehicle applications. Through an alliance with Yokohama Rubber

Co, the partners rank as one of the world’s largest tyre manufacturers. The

company also develops brake systems, electronic chassis systems and

integrated starter-alternator technology. Its passenger and light truck tyres

business produces passenger car and light truck tyres at its factories in Spain,

Germany, France, Mexico, China and the US. Continental’s commercial

vehicle tyres business operates facilities located in Germany, Austria and the

US. Over the past few years, Continental has invested in new products in

order to consolidate and extend its market leadership in Europe. In spring

2010, the company plans to launch its so-called ContiSportContact 5 P tyre for

a sports car. This company will subsequently launch its ContiSportContact 5 in

spring 2011.

Q&A with Continental

In January 2010, Matthew Beecham talked with executives of Continental AG

about its tyre innovations.

just-auto: Run-flats have done a lot to improve vehicle safety yet come with a

high price tag. Do you see technological evolution bringing run-flat and self-


Continental: This depends not only on us as a manufacturer of tyres but on

the automobile industry itself. To get cheaper versions of tyres with extended

mobility technologies we need more cars produced with these technologies,

not just a handful of manufacturers of mid- and luxury-class vehicles. On the

other hand, we produce not only tyres with run-flat technologies like SSR [self



supporting run-flat] tyres but other run-flat technologies as well, like ContiSeal

or ContiComfortKit. So we have extended mobility systems over a broad range

for nearly any need and application.



traffic and about 20-30% of a vehicle’s energy consumption can be attributed

to tyres alone, measures to improve rolling resistance remain a top priority.


how your company has reduced rolling resistance?

Continental: We do not only look [at] rolling resistance but [at] the

combination with all safety-relevant improvements on tyres. Therefore we

would speak about our tyre for the blue technology cars from VW and other

companies that are equipped, for example, with the ContiPremiumContact 2.

This tyre combines safety and low rolling resistance at a high level. We can

produce this tyre because we know the car and its driver assistance systems,

such as ESC. With this knowledge, we can combine short braking distances –

even on wet roads – with a lower rolling resistance.

j-a: In addition to low rolling resistance, low tyre/road noise is a requirement





Continental: Based on the upcoming noise regulations, the tyre type we have

to focus on is the drive axle tyre. Rib tyres – which are usually used on front

and trailer axles – are already noise optimised because of their tread design

structure. Due to the special demand on traction, drive axle tyres have to

follow a certain tread design which makes some additional noise optimisation

necessary. Therefore we are working with the German road association, BASt

(Bundesanstalt für Straßenwesen) and some universities with the aim lowering

these emissions. Within this co-operation we want to achieve a noise reduction

of 3-4dB for certain tyre types in order to meet the new regulation.





Continental: We feel that consumers can be better informed about short

braking distances, rolling resistance and tyre noise. And we expect motorists

will find out that there is a general target conflict in short braking distances, low

rolling resistance and low noise. The EU tyre label gives a short overview

about the performance information regarding these criteria which is good – but

it is still reflecting only three of more than ten tyre performance criteria.


to the consumer?

Continental: Based on the diametric physical target conflicts of very low

rolling resistance and best braking results, consumers should be informed that

these criteria depend on each other systematically – both of which cannot be

maximised at the same time. Consumers should also be informed that the

label is consequently relying on a self-certification procedure of the tyre

industry. If one considers that we still find summer tyres without any winter

performance but marked with the M+S-symbol, we all should make sure that

the label information is declared according to the tyre performance. The other

thing consumers should be informed about is the idea of regulating tyre noise.





Continental: As the label has to be shown at the point-of-sale and not on the

tyre itself we do not have this problem. On the sidewall a mass of other

information is given – therefore the information in the label would not be easy

to find for an end-consumer. If you consider a low-aspect ratio tyre, such as [a

type with] 40% [ratio] the symbols would be that tiny that they could not be

readable. Therefore it is the best way to show the information at the point-of-

sale via any sort of technical promotional literature.


Continental: The idea sounds good but the data on the chip should be

readable for everyone, at each point-of-sale. A data reader would be

necessary at each European tyre dealer between Norway and Greece, as well

as Portugal and Romania. We think that this is not realistic. And another point



would be the question of who has to pay for this additional equipment? In the

end, probably the end-consumer would have to do that when purchasing the

tyres.

j-a: People talk of the ‘intelligent tyre’ as vehicles change. With newer forms of


Continental: Hybrid-driven cars need nearly the same tyres as cars with a

normal gasoline or diesel engine. Mostly, the normal engine is supported by an

electric engine. This saves fuel and minimises emissions. The speed and

handling of these cars is similar to conventional vehicles.

Tyres for electric driven cars need a very low rolling resistance to enlarge the

operating distance. We are working on this and – so we believe – are in a

leading position. But we do not want to sacrifice the longer operation time to

long braking results. We are working on this target conflict together with our

customers in the automobile industry, and hope for good results shortly.

j-a: Now that legislation is coming in to make TPMS mandatory, the motorist

no longer has to pay extra. What is the future for this technology? Do you think

that indirect TPMS will become a standard feature of on future ESC systems?

Continental: As a member of the Rubber Manufacturing Association and

ETRTO [European Tyre and Rim Technical Organisation], Continental has

already been advocating short warning times and tight warning thresholds for

several years. Derived from this, and with respect for our environmental

responsibility, Continental is confirming its statement and recommends the

direct measuring tyre pressure monitoring systems, Tire Guard.






this?

Continental: This scenario forms part of the focus on the so-called Intelligent

Tire. Continental’s know-how of tyres, TPMS, navigation systems and vehicle-

to-vehicle communication means that it is in the best position for realising this



kind of functionality in-house. To be concrete, with the legislation making

TPMS mandatory, the already available Intelligent Tire technology and

navigation systems penetrating the market more and more, nothing prevents

this feature coming to the market together in the legislation time frame.

j-a: In the early days of indirect TPMS development, it was said that the

system had within it all the information required to create a vehicle ‘black box’

similar to that found on aircraft. Yet as we see it, this idea never really took off

into mainstream vehicles. Would you agree? In what other ways are TPMS

being developed?

Continental: You are right. Black-box functionality never really took off. Next-

generation TPMS systems are focusing on integrating the up-to-now fully

mechanical tyres into the electronic control algorithms of modern vehicles. This

concept is known as the intelligent tyre system. It extends the scope of classic

TPMS systems to electronically identify tyre properties and even measure

physical data at the tyre-road interface. Early applications will enable CO2

assistant functionalities to improve gas mileage and reduce greenhouse gas

emissions. Load detection and filling assistant functions will help the driver in

selecting correct target pressures and filling the tyres to the desired pressure

levels. The ultimate target, however, is using tyre-related data to improve

chassis algorithms, e.g. roll-over protection or brake distance, thus enhancing

the fun of driving and vehicle safety at the same time.

Cooper Tire & Rubber

Cooper Tire & Rubber manufactures passenger, light truck, medium truck,

motorsport and motorcycle tyres which are sold nationally and internationally in

the replacement tyre market to independent tyre dealers, wholesale

distributors, regional and national retail tyre chains and large retail chains that

sell tyres as well as other automotive racing products. In terms of Cooper Tire

& Rubber’s overseas operations, the company has a manufacturing facility,

technical centre and distribution centre and its European headquarters office

located in the UK. In addition, the company operates five distribution centres

and fives sales offices in Europe. It also has two manufacturing facilities, 18

distribution centres, a technical centre, two sales offices and an administrative

office in China. The company also has a purchasing office in Singapore. In

Mexico, Cooper Tire & Rubber has a sales office and four distribution centres.

The company says it is expanding its operations in what are considered low-

cost countries. These initiatives include the Cooper Kenda Tire manufacturing



joint venture in China, the Cooper Chengshan joint venture in China and its

investment in a manufacturing facility in Mexico.

Q&A with Cooper Tire & Rubber

Matthew Beecham talked with Chuck Yurkovich, Cooper Tire’s vice president

of global technology.

just-auto: Now that legislation is coming in to make tyre pressure monitoring

systems (TPMS) mandatory, the motorist no longer has to pay extra. What is

the future for this technology? Do you think that indirect TPMS will become a

standard feature on future ESC systems?

Chuck Yurkovich: In Europe, COM 2008/316 – Vehicle Safety & Environment

Directive has been implemented. The objective of the directive is to lay down

harmonised rules on the construction of motor vehicles with a view to ensuring

the functioning of the internal market while at the same time providing for a

high level of safety and environmental protection. The proposal aims at

enhancing the safety of vehicles by requiring the mandatory fitting of some

advanced safety features. The proposal also aims at enhancing the

environmental performance of vehicles by reducing the amount of road noise

and vehicle CO2 emissions from tyres. Finally, the proposal contributes to the

competitiveness of the automotive industry by simplifying the existing vehicle

safety type-approval legislation, improving transparency and easing

administrative burden.

This legislation impacts both vehicle and tyre manufacturers. From 2012, all

new passenger vehicles will need to have the following systems fitted as

standard:

○ Electronic Stability Control;

○ Lane Departure Warning System;

○ Advanced Emergency Braking System;

○ Tyre Pressure Monitoring System.

Also, tyre manufacturers will need to comply with minimum values in the

following criteria:

○ noise;

○ rolling resistance;

○ wet grip.



Essentially this piece of new legislation will address both the environmental

impact of vehicles and tyres and the safety issues as well. So, in Europe,

TPMS will be on every new vehicle and it will be up to vehicle and tyre

manufacturers to exploit new technologies associated with this enforced

legislation.

Indirect systems have several advantages over direct sensor systems

including lower initial cost and much lower maintenance costs. They also

provide the motorists with much more flexibility and choice for replacement

tyres since indirect systems are very tyre neutral. Indirect systems are also

very compatible with electronically controlled suspension systems because

they utilise the same types of tyre information. On the other hand, indirect

systems can’t provide the wealth of tyre-specific data that direct sensors,

despite their high costs and maintenance issues, are capable of.

In the future, we see tyre sensor technology merging with RFID technology to

provide a low-cost, low-maintenance solution. Instantaneous tyre pressure is

only one dimension of the tyre’s operating condition that can be monitored and

reported. Tyre ID, running temperature, revolution count, tyre pressure history,

including severe under-inflation and overloading, etc, are examples of other

types of data that can be monitored, reported or archived by embedded chips

and then reported to on-board vehicle systems or external monitoring systems

– such as at tyre dealerships. The electronic technology is already here.

Cooper has patented technology which we continue to pursue in this field.

What is needed are better-defined data format standards so that vehicle

manufacturers and tyre manufacturers can continue to develop their

independent technologies, but so that all components can share the same

types of data through common formats.






this?

CY: The GPS technology is here today. Regardless of whether or not the tyre

service centre is informed of your vehicle’s condition, I’d certainly want my tyre

service centre advertised in the GPS software. If a GPS system can show the



driver where the nearest fast food restaurant is, it can certainly direct him to

the nearest tyre service centre. As a result, we could see this opportunity

occurring anytime with consumer awareness.

j-a: Run-flats have also done a lot to improve vehicle safety yet come with a

high price tag. Do you see technological evolution bringing run-flat and self-


CY: To the best of our knowledge, there is no new low cost material

technology in the short term that can provide the material property

performance requirements for stiffness, low hystersis, and fatigue that can

make run-flat technology affordable to the mainstream market. It should be

pointed out that the current self-supporting, run-flat technology typically carries

a 20-30% weight penalty for the additional materials used to make the run-flat,

self-supporting (inserts). These materials are expensive and must be passed

on to the consumer to maintain profitability for the tyre companies.

In the longer term, non-pneumatic tyre technology, which takes a completely

different approach, is continuing to advance due to new design concepts and

the utilisation of non-standard tyre industry polymers such as polyurethanes

and thermo-plastic elastomers. This technology, due to its lighter weight

construction and potentially lower material costs, could one day become

available at a price that is reachable to all consumers.







CY: In 2009, Cooper Tire introduced its GFE product line which stands for

Greater Fuel Efficiency. This low-rolling resistance tyre takes advantage of the

latest technology for design/materials and typically offers fuel efficiency

improvements over conventional replacement tyres of 4-6%. This tyre features

optimal tyre shape, traction compensating sipes, and ultra low rolling

resistance tread formulation utilising silica-silane with functionalised polymer

technology. It should be noted that as greater emphasis is placed on fuel



efficiency in the future, this technology will eventually become the mainstay for

all products in the industry.



their commercial vehicle ranges. Why is that?

CY: Utilisation of silica-silane technology in commercial vehicle tyres typically

will not provide as much of as advantage for rolling resistance as it does for

light duty vehicles due to the differences in polymer systems currently used for

the treads. Commercial vehicles typically use 100% natural rubber polymer in

the tread due to heat build-up and durability performance requirements. In

comparison light duty vehicle tyres typically use 100% synthetic polymers in

the treads to achieve its performance requirements of wear and traction.

Natural rubber is inherently highly resilient (low hystersis) so the rolling

resistance improvements observed with silica-silane technology are minimal in

comparison. As a result, you probably do not see the advertisement of silica-

silane technology for the commercial vehicle industry since the benefit at this

time is not great enough to warrant its use and compensate for the trade-offs

of higher costs and poorer tread wear.






CY: Like many tyre characteristics, successfully reducing tyre/road noise often

involves overcoming other performance trade-offs. Since a significant amount

of the tyre-related portion of tyre/road noise is generated by the tread pattern,

we spend considerable time and effort in determining proper tread groove

placement, depth and pitch sequencing in order to optimize the balance of

tyre/road noise and wet traction. To do this effectively, we’ve invested in

development of both predictive and testing tools. For example, we have

developed a tool that enables prediction of in-vehicle tyre sound quality

characteristics from the test data of a single tyre in an indoor noise

chamber. We are also developing methods to further extrapolate that indoor,

single tyre test data to predict performance on the pass-by noise test specified



by many regulations. This enables us to optimise tyre noise for both the

customer and the environment.


provide a better service for the end consumer?

CY: The labelling proposal will ensure the supply of ‘standardised information’

not only on fuel efficiency, but also on wet grip and rolling noise so that

consumers and end-users can make an informed choice between tyre

manufacturers.

Also, tyre labelling will provide a means for European consumers to make

better purchase decisions based on what’s most important to them: brand,

product performance, price, warranty, contributions to fuel efficiency, or

contribution to vehicle noise.

In the end, this new legislation may actually give consumers less choice if the

vehicle manufacturers stipulate that in order to maintain the CO2 emission of

the vehicle, they will have to fit a replacement tyre with the same rolling

resistance grading.


to the consumer?

CY: The E-mark in conjunction with the W and S marks signifies on the tyre’s

sidewall that the tyre has been type-approved to the ECE regulations. The

most appropriate means of communicating consumer information is at the

point-of-sale where consumers can understand the information prior to

purchasing tyres.





CY: Communicating labelling information is very important to the commercial

tyre sector and should be made readily available for fleets to make educated

purchase decisions based on several criteria that are most important to them:



product performance/brand, tread wear, retreadability, price, warranty,

contributions to fuel efficiency, contribution to vehicle noise, etc.





CY: The best method is to inform the consumer prior to purchasing their tyres.

I would agree that labels are not an effective way to communicate this

information to the consumer prior to sale, but having the information engraved

into the sidewall of the tyre won’t be any more effective. The consumer will

typically not see the label on the tread or the sidewall of the tyre prior to their

purchase. The information needs to be available to the consumer either prior

to the sale or at the point-of-sale so they can make a well-informed decision on

what tyre will best meet their needs.

Lastly, there is a proposal that the receipt given to the consumer after they

have purchased their tyres should contain the rolling resistance and wet grip

grades along with the noise value of the tyre they have purchased. If adopted,

this would be an additional communication method that could serve to

permanently document the tyre label regulatory information.


CY: RFID tags are used in some motorsport applications to understand the

forces that tyres see during usage. Other companies use them for processing

tyres through the manufacturing plant. There is also some usage in truck tyres

to monitor tyre performance. However, there does not seem to be a move to

more widespread use of RFID chips. Cost, practicality and the usefulness of

the information generated still has not been fully determined and we currently

do not see this as a better solution towards communicating consumer

information ratings on rolling resistance, noise and wet traction.



CY: I foresee two parallel paths on how tyres will change:

○ tyres for what I’ll call ‘evolution of conventional vehicle platforms’;



○ tyres for ‘new, revolutionary mobility platforms’.

In the first case, the modern pneumatic tyre and the internal-combustion

engine powered automobile have co-evolved over decades. They will continue

to evolve together under the evolutionary pressures of increased performance

demands (traction, rolling resistance, noise, etc) and their development will

explore the limits of materials and tyre construction technology within the

boundaries (tyre size constraints, drive trains, vehicle mass) of these types of

vehicle platforms.

Simultaneously, we are seeing a variety of new types of vehicles and

alternative drive trains that open up possibilities for revolutionary tyre

concepts. Not all of these new concepts will reach market viability. Some of

these new vehicle technologies will, however, find a niche and new

opportunities for tyre technology will emerge such as the non-pneumatic

Resilient-NPT concept being co-developed with Cooper.

An example of the types of engineered materials that I envision are just around

the corner are polymers and fillers that respond dynamically to the

instantaneous energy environment of the tyre, providing low hysteresis (i.e.,

energy absorption and heat generation) at steady state highway speeds, but a

high rate or energy dissipation during braking). A number of technologies are

under development to improve the durability – both in maximum speed and

mileage range – of conventional pneumatic run-flat tyres through advanced

tyre constructions and materials. Our Cooper run-flat products already exceed

European standards.

Our European technical centre in the UK is taking the lead in our technology

development focused on optimising the balance of tyre performance

characteristics required to meet the EU regulations that take effect in just a few

years. While ‘nano-technology’ and ‘smart materials’ are probably overused

buzzwords, I expect that we will continue to see the commercialisation of new

reactive polymers and filler systems that are engineered to work together in

composite structures to provide levels of tyre performance that far exceed the

performance based on the use of any of these materials alone.

Goodyear

Goodyear develops and manufactures tyres for cars, trucks, buses, aviation,

motorcycles, earthmoving and mining equipment, industrial equipment and



other applications. The company serves the OE and aftermarket. Its brands

include Goodyear, Dunlop, Kelly, Fulda, Debica and Sava as well as other

‘house’ brands and private-label brands of other companies. Goodyear also

manufactures rubber-related chemicals for various applications. The company

is one of the world’s largest operators of commercial truck service and tyre

retreading centres. The company operates 61 factories in 25 countries. All in

all, Goodyear currently employs 74,700 people.

Q&A with Goodyear Dunlop UK

In January 2010, Matthew Beecham talked with James Bailey, manager,

corporate communications at Goodyear Dunlop UK.

just-auto: Now that legislation is coming in to make TPMS mandatory, the

motorist no longer has to pay extra. What is the future for this technology? Do

you think that indirect TPMS will become a standard feature of future ESC

systems?

James Bailey: All ESC systems have the hardware required to implement

indirect TPMS; indirect TPMS is a software routine which is refined to work on

individual vehicle models through an extensive vehicle/tyre testing programme.

The cost of implementation will be only a few euros per vehicle and this will be

the most cost effective method of meeting the new EU TPMS regulation

requirements in the future – so yes, one day they will become standard on

future ESP systems.






this?

JB: This scenario only has the potential to work with RunOnFlat tyres, and is

potentially very dangerous with normal tyres. It is one of the long-term

possibilities for the RunOnFlat technology that we manufacture. We do not find

acceptable any TPMS implementation that allows any tyre to be driven below

the ETRTO minimum inflation for the application’s load and speed without

issuing an immediate warning to the driver.



j-a: In the early days of indirect TPMS development, it was said that the

system had within it all the information required to create a vehicle ‘black box’

similar to that found on aircraft. Yet as we see it, this idea never really took off

into mainstream vehicles. Would you agree? In what other ways are TPMS

being developed?

JB: Indirect TPMS takes all of its data from the ABS/ESP system. So it is the

ABS/ESP system that could have the information to create a black box.

Goodyear would, of course, welcome having a vehicle recording of tyre

pressure. We could use this to analyse any tyre-related incidents and show the

contribution of incorrect inflation in tyre problems.

But vehicle black boxes would also show what the driver was doing and

whether he was speeding etc. It is not the issue of TPMS that has prevented

black boxes [from] appearing in vehicles [as] there are many other issues,

such as civil liberties issues.

Linking TPMS with tyre load detection on the vehicle would allow it to give you

the best recommended tyre pressure for the current load of your vehicle before

going on holiday, or recommend different pressures for different conditions.

There are tremendous opportunities.

j-a: Run-flats have done a lot to improve vehicle safety yet come with a high

price tag. Do you see technological evolution bringing run-flat and self-inflating

tyres into the cheaper mainstream?

JB: Goodyear and Dunlop RunOnFlats are already a popular option on more

mainstream cars such as the Mini and BMW 1 Series. Ten years ago, it was a

technology that you only really saw in the limousine or supercar segment, for

example, on the 7 Series BMW or Corvette. As more customers therefore

experience the benefits of RunOnFlat tyres, we expect them to demand the

same levels of security and safety in their next vehicle purchase.

The difficulties of packaging a car to meet safety legislation, provide adequate

boot and passenger space and, increasingly, to accommodate alternative fuel

cells or hybrid technology means that the spare wheel is becoming a

dispensable part of car design.



Whilst there are other mobility solutions, such as inflation canisters available,

none of the solutions offers the convenience, safety and personal security

benefits of RunOnFlat technology.







JB: The latest Goodyear EfficientGrip features our ‘FuelSaving Technology’.

This comprises several technology advances which directly affect the tyre’s

rolling resistance: an improved construction with special lightweight materials;

an enhanced building and manufacturing process and an innovative compound

technology with a new material formulation that delivers excellent results in

mileage, wet braking and rolling resistance.

Using new materials and an efficient structure, the tyre’s weight has been

reduced by about 10%. Less material with less heat generation leads to

reduced rolling resistance levels. Compared to its predecessor, the

EfficientGrip features a lower polyester ply end and a sidewall using less

material, which contributes to the lower weight as well as to reduced rolling

resistance.

Part of this technology is a patented CoolCushion Layer. A new thermoplastic

ingredient used as a reinforcing agent partially replaces carbon black for less

weight and less heat generation, resulting in a further decrease in rolling

resistance.

Rolling resistance is mainly caused by the energy loss due to the deformation

of the tyre. Less deformation means less energy loss and hence, less rolling

resistance. Goodyear engineers used the latest computer simulation

technologies to analyse the tyre’s potential deformation behaviour during

driving. To reduce tyre deformation you need to look at all parts of the tyre and

not only at one element. For the EfficientGrip, we developed a new tyre shape

and structure, and used materials that are very strong and lightweight.



However, Goodyear has a focus on wet weather safety as a priority. Award-

winning tyres such as OptiGrip are evidence of our technology in this area. In

EfficientGrip, we haven’t compromised on this in the pursuit of fuel saving. For

the tyre’s wet performance, we mainly improved the tread design with its

grooves and blades and developed an innovative silica tread compound.



their commercial vehicle ranges.

JB: On the contrary. The performance of long haul truck tyres has an impact

on about 30% of the total operational costs. The focus on fleet running costs in

the commercial vehicle sector means that this has been a priority in truck tyre

design for many years. For example, in 2007 Goodyear launched the

Marathon range of truck tyres with FuelMax Technology – including a new

specifically developed tread compound. This resulted in low rolling resistance,

and consequently reduced fuel consumption and emissions.






JB: Our tyres have tread blocks of different varying lengths specially designed

to reduce noise and boost the ride comfort provided. The random block sizes

break up the noise frequency as the tyre rolls, reducing road noise both inside

and outside of the car.



JB: The proposal of the European Commission introduces mandatory tyre

labelling based on integrated performances and aims at influencing consumers

to buy especially more energy efficient and safer tyres through the provision of

harmonised and easy to understand information. The tyre is the only contact

area with the road surface, it therefore plays a key role for the braking

performance and its rolling resistance directly impacts vehicle fuel

consumption and emissions at large. The availability of reliable and



comparable information on tyre performance will make it easier for the end-

user to consider these elements before he takes a purchase decision.

Therefore, we welcome the initiative.


to the consumer?

JB: The label communicates wet grip, road noise and rolling resistance. We

welcome the regulation to communicate this – they are important factors for

customers to consider. A recent Auto Express tyre test [September 2009]

showed that our Goodyear OptiGrip had a 23% safer performance than one of

the budget brands tested, and scored an incredible 20% better than the

similarly priced Michelin Primacy HP in the curved aquaplaning test. In the wet

stopping distance test, the Goodyear stopped 7-m shorter from just 50mph

than another brand of tyre. That is equivalent to the length of two small family

cars. It is difficult to communicate this kind of information to motorists who

don’t read tyre tests, so the label will help on this.





JB: Truck tyres are included in the labelling. However, most truck tyres are

sourced and specified by qualified fleet managers and engineers, rather than

drivers, and they are arguably more qualified in the importance of tyre choice

than the average motorist. However, the label will still benefit them in making

their choice of tyres.





JB: We will comply with the EC rules on labelling. However, the information

must be available in promotional literature (leaflets, brochures, etc), including

our website. This is important, as many customers don’t see the tyre after until

they have chosen it.





JB: In the last decade we have seen the emergence of technologies such

RunOnFlat, TPMS, Fuel Saving Technology and Duraseal self-sealing

technology for truck tyres. The next decade promises to be even more

exciting! I can’t share the detail of our secrets, but a great example of

innovation is SmartWear Technology.

Previewed on Goodyear OptiGrip, launched last year, SmartWearTechnology

is designed to reveal a new tread design and compound as it wears, ensuring

it achieves ‘as new’ levels of performance over its whole lifetime – without

having to compromise on mileage. No one thought this was possible a few

years ago. It shows what is possible with a relentless focus on innovation.

Hankook Tire

Hankook Tire develops and manufactures radial tyres for passenger cars,

4x4s, SUVs, light trucks, campers, trucks, buses and motor sports vehicles.

The company currently employs 14,000 people. About 70% of its sales are

generated in countries outside Korea. The company invests 5% of its turnover

on research and development through its six R&D centres. For the fiscal year

2009, Hankook Tire generated sales of KRW4.8bn and an operating profit of

KRW549.3bn.

Kumho Tires

Kumho Tires is the second-largest tyre manufacturer in Korea. The company

was spun off from its parent, Kumho Industrial Co in mid-2003, and

incorporated as a separate company. Kumho Tires produces some 55m tyres

annually. Kumho Tires’ tyre division currently employs over 5,600 workers,

most of whom are based at its two manufacturing plants in Korea. Kumho

Tires exports tyres to 160 countries in the Americas, Europe, the Middle East,

Africa, Australia and Asia.

Michelin

The French group, Michelin, designs and manufactures tyres for passenger

cars, trucks, agricultural and construction equipment, bicycles, motorcycles

and aircraft. Michelin’s brands include Michelin, BFGoodrich, Kleber, Uniroyal,

Warrior, Riken, Taurus, Kormoran, and Siamtyre. Today, Michelin employs

117,500 people at 68 production sites worldwide.



Pirelli

Pirelli develops and manufactures tyres for motor vehicles, industrial vehicles

and motorcycles. The company is organised into two main operating

segments. Its Consumer segment, which accounts for 70% of sales revenues,

deals with tyres for motor vehicles, sport utility vehicles, light commercial

vehicles and motorbikes. Pirelli’s Industrial segment, which accounts for the

remaining 30% of revenues, deals with tyres for buses, heavy trucks,

agricultural machinery and steel cord. These businesses are, in turn, focused

on two distinct sales channels: original equipment and the replacement

market. Pirelli operates 23 production facilities, of which four are located in

Italy, five in Brazil, two in the UK, two each in Germany, Turkey and Romania

and one each in China, Argentina, Egypt, Spain, US and Venezuela. Pirelli

markets its tyres in 160 countries through a network of some 10,000

distributors and retailers.

Toyo Tire & Rubber

Toyo Tire & Rubber develops, manufactures and markets car tyres, industrial

rubber and synthetic resin products, soft and rigid polyurethane products,

waterproof sheets, anti-vibration rubber for automotive parts and seat

cushions. On a consolidated basis, the company currently employs 6,972

people. The company is headquartered in Osaka, Japan. In the financial year

ended 31 March 2009, the company generated sales of JPY328.3bn.

Sumitomo Rubber Industries

Sumitomo Rubber Industries produces tyres under the Dunlop, Falken,

Goodyear, Sumitomo and Ohtsu brands. In addition to its overseas

subsidiaries in China and Indonesia, the group carries out tyre production and

sales in Europe and the US in joint ventures with Goodyear. Through its

alliance with Goodyear, Sumitomo makes Goodyear-brand tyres in Japan,

while Goodyear makes Dunlop tyres in North America and Europe.

Headquartered in Tokyo, Sumitomo Rubber operates five factories in Japan

(Nagoya; Shirakawa; Izumiohtsu; Miyazaki; and Kakogawa) and three proving

grounds. In addition, the company has overseas offices located in the US,

Canada, Belgium, Germany, Australia, Russia, United Arab Emirates, Saudi

Arabia, Singapore, Chile, and China. In the year ended 31 December 2008,

Sumitomo Rubber posted sales of JPY604,974m, of which its tyres business

generated revenues of JPY501,345m. In October 2009, Sumitomo Rubber

industries revealed its fourth-generation run-flat tyres.



Yokohama Rubber

The Yokohama Rubber Co Ltd’s Tire Group manufactures tyres for passenger

cars, trucks, buses, light trucks, mining, construction equipment and industrial

equipment. Headquartered at Tokyo, Japan, the company employs over

16,000 people at facilities located across Japan, North America, Europe,

Middle East and Asia. In the fiscal year ended 31 March 2009, Yokohama

Rubber generated sales revenues of JPY517, 262m.

As the following three tables indicate, the major markets of the three largest

tyre producers are its home regions, i.e. Bridgestone’s business in Japan in

2008 accounted for just over one-third its total turnover, Goodyear’s North

American business accounted for less than half its turnover while half of

Michelin’s business was generated in Europe. As Tables 5-10 show, other tyre

producers also generate most of their turnover in their home markets.

Table 2: Bridgestone’s sales by geographical region, 2003-2008 (% of net sales)

2003 2004 2005 2006 2007 2008

Americas 42 42 43 39 38 37

Japan 35 34 32 36 35 34

Europe 12 13 13 12 13 12

Others 11 11 12 13 14 17

Total 100 100 100 100 100 100

Source: Bridgestone

Table 3: Goodyear’s tyre sales by operating segment, 2006-2008 (% of net sales)

2006 2007 2008

North American Tire 44 40 38

Europe, Middle East and Africa Tire

38 39 40

Latin American Tire 10 10 10

Asia-Pacific Tire 10 11 12

Total 100 100 100

Source: Goodyear



Table 4: Michelin’s sales by geographical region, 2003-2008 (% of net sales)

2003 2004 2005 2006 2007 2008

Europe 52 53 49 49 50 49

North America

39 33 35 34 33 31

Other 9 14 16 17 17 20

Total 100 100 100 100 100 100

Source: Michelin

Table 5: Cooper Tire & Rubber’s sales by geographical region, 2003-2008 (% of net sales)

2003 2004 2005 2006 2007 2008

North America

89 88 88 74 71 69

Rest of the World

11 12 12 26 29 31

Total 100 100 100 100 100 100

Source: Cooper Tire & Rubber

Table 6: Hankook Tire’s sales by geographical region, 2003-2008 (% of net sales)

2003 2004 2005 2006 2007 2008

Korea 37 30 30 32 32 28

Europe 22 24 24 24 25 18

North America

16 19 19 17 16 19

Asia, except Korea

13 13 13 13 11 17

South and Central America

4 3 3 5 5 7

Other 8 11 11 9 11 11

Total 100 100 100 100 100 100

Source: Hankook



Table 7: Kumho Tire’s sales by geographical region, 2003-2007 (% of net sales)

2003 2004 2005 2006 2007

Korea 40 37 32 42 40

North America 22 27 21 24 22

Europe 17 17 18 15 16

Asia 3 3 3 3 2

Other 18 16 26 16 20

Total 100 100 100 100 100

Source: Kumho

Table 8: Pirelli’s sales by geographical region, 2003-2008 (% of net sales)

2004 2005 2006 2007 2008

Europe (excluding Italy)

43 41 38 38 38

Central and South America

23 25 28 28 33

Italy 13 13 10 10 9

Oceania, Africa and Asia region

13 13 16 16 15

North America 8 8 8 8 5

Total 100 100 100 100 100

Source: Pirelli

Table 9: Toyo Tire & Rubber’s sales by geographical region, 2003-2009 (% of net sales)

2003 2004 2005 2006 2007 2008 2009

Japan 72 76 75 71 66 63 62

North America

21 18 20 22 24 25 25

Other 7 6 5 7 10 12 13

Total 100 100 100 100 100 100 100

Source: Toyo Tire & Rubber



Table 10: Yokohama’s sales by geographical region, 2003-2009 (% of net sales)

2003 2004 2005 2006 2007 2008 2009

Japan 79 79 79 78 74 69 68

North America

17 17 17 17 17 17 17

Other 4 4 4 5 9 14 14

Total 100 100 100 100 100 100 100

Source: Yokohama

Emerging markets

Brazil

Pirelli is in the process of investing some US$100m in expanding its new

technology centre developing tyres for special vehicles in Santo Andre, Brazil.

These special vehicles include construction, earthmoving, mining and

agricultural vehicles. Pirelli predicts that, at a global level, the specialised tyre

segment will grow over the next three years by around 7.5%. Pirelli states: “In

the segment of construction, digging and mining vehicles, the fastest growing

markets are expected to be Brazil, forecast for the period 2010-2013 to grow

37% overall compared with 2008, and Latin America in general, estimated to

grow 25% in the same period. These estimates are mainly linked to large

infrastructure works on the continent such as the new Panama Canal, works

related to the 2010 Rio de Janeiro Olympics, and the World Cup Football

games in Brazil in 2014.”

China

Bridgestone has said that, in response to the expected medium-to-long term

increase in demand for radial passenger tyres in the China market, it will

increase production capacity at its Wuxi plant in China. This plant produces

radial tyres for passenger cars. Bridgestone intends to start increased

production at the Wuxi plant beginning the second half of 2011. It plans a total

investment of US$98m, which will enable it to increase daily production by

4,200 units, giving the plant an estimated daily output of 12,000 units once

production capacity has been increased.



In October 2008, Continental began building a new tyre factory in Hefei, China.

The EUR185m plant is scheduled to open in 2010. The company is predicting

initial annual production of some 4m PLT tyres. In the long run, the company

expects to produce about 10m tyres annually.

In October 2008, Goodyear acquired the remaining 25% ownership interest in

Goodyear Dalian Tire Co Ltd, its tyre manufacturing and distribution subsidiary

in China.

Hankook Tire is aiming to strengthen its market position in China by reinforcing

its sales ability, marketing campaign and distribution channel. The company

used the 2009 Shanghai motor show to display four new tyre products, namely

its Optimo K415, Optimo K715, Dynapro ATm (RF10) and Dynapro MT

(RT03). In 1999, Hankook Tire set up production plants in Huai-an, in Jiangsu

Province, and Jiaxing (Zhejlang Province). The company currently has about

20% of China’s passenger car tyre market and has emerged as the largest

supplier of OE tyres in the country. In April 2007, Hankook Tire opened its first

overseas T-Station shop in Shanghai. T-Station is an aftermarket service shop

that is popular in Korea. The company plans to expand its T-Station network to

300 stores in China’s four major cities of Shanghai, Beijing, Guangzhou and

Tianjin by 2013.

Toyo Tire is in the process of setting-up a wholly-owned subsidiary in

Zhangjiangang City in Jiangsu Province, China, to manufacture passenger and

light truck tyres. The company also plans to build a new tyre plant in China in

Jiangsu Province. Operations at this new facility are expected to commence by

the end of 2011. Initial production capacity during the first phase will be 2m

units of passenger car and light truck tyres. When the new factory opens it will

create 500 new jobs.

Yokohama Rubber’s type manufacturing plant in Yokohama, Japan, Hangzhou

Yokohama Tire Co Ltd, is in the process of expanding from the current 3m

tyres to some 5.1m annually by 2011. Hangzhou Yokohama Tire is investing

some JPY7bn in the plant’s expansion. Established in January 2002,

Hangzhou Yokohama Tire Co Ltd manufactures and sells passenger car tyres

for the Chinese market. The plant began manufacturing tyres in May 2003.

This plant current manufactures tyres for passenger cars, recreational vehicles

and light trucks.



Hungary

Hankook Tire is in the process of investing some EUR230m in its Hungary

plant in order to reach production capacity of an additional 5m tyres annually

by the end of 2011. Following the completion of the plant extension, the

company says it will ramp up its efforts in the European market and double its

present production of 5m tyres to 10m tyres annually by 2011 in order to meet

increasing demand in the region. The additional investment in the Hungarian

plant will create 700 jobs, bringing the company’s total workforce in the country

to 1,900. With production at full capacity, says Hankook Tire, its European

customers will see a shortened delivery time from one month (when tyres were

delivered from Korea or China) to five days.

India

In January 2010, Bridgestone announced plans that it is to begin truck and bus

radial tyre production in India in response to increasing domestic demand.

Bridgestone says it will invest some JPY3.3bn in expanding its facility in

Madhya Pradesh, located about 400 miles northeast of Mumbai. This facility

already produces tyres for passenger cars and light trucks. Production of truck

and bus tyres is due to commence in the first half of 2011.

Mexico

In June 2008, Cooper Tire & Rubber announced an agreement to invest in a

tyre manufacturing facility in Guadalajara, Mexico. The facility is now owned by

Cooper, IBSA (a Mexican holding company) and Cooperativa TRADOC SRL.

Cooper’s ownership in this facility is 38% with an investment of US$31m. In

October 2007, Cooper announced a 50-50 joint venture to form a trading

company with Nemet International SA de CV, responsible for the marketing,

sales and distribution of the Cooper and Pneustone brands in Mexico. This

trading company continues to operate as a separate entity.

Romania

Continental is in the process of expanding the production process of its

passenger and light truck tyres plant in Timisoara, Romania by building a new

unit, creating 200 jobs. The investment will allow the company to have an

integrated production unit, which will consolidate its tyre business in Romania

and increase the cost competitiveness of the tyre plant. The plant in Timisoara

currently produces 40,000 passenger car tyres per day.



Russia

In November 2008, Toyo Tire & Rubber established Toyo Tire Rus LLC, its

Russian tyre sales subsidiary with Mitsubishi Corp. Toyo Tire & Rubber has a

60% stake in the new company, with Mitsubishi Corp owning the remaining

40%.

In August 2009, Yokohama Rubber entered into a joint venture with Itochu

Corporation to manufacture and sell tyres in Russia. The venture, known as

Yokohama rpz LLC, is 80%-owned by Yokohama Rubber, with the remaining

20% held by Itochu. The new company is planning to build a plant with an

annual production capacity of 1.4m passenger car tyres in the special

economic zone in the state of Lipetsk, located 300 miles south of Moscow. The

company will start building the new JPY14.8bn plant in March 2010, with the

start of operation scheduled for September 2011.

In December 2009, Pirelli entered into a 50-50 joint venture with Russian

Technologies State Corporation to produce tyres and steel cord in the country.

The partners are planning to build a factory in the Russian region of Samara

during the second half of 2010. The new factory will be built in two phases. In

the first phase, a factory for radial tyres for industrial vehicles will be built. The

second phase foresees a factory to manufacture steel cord. At full capacity,

the factory will employ 1,500 people. Russian Technologies State Corp is a

state-owned company set up by the Russian government. The stated mission

of Russian Technologies is to assist Russian design and manufacturing

organisations to develop, produce and export high-technology industrial

products in domestic and international markets, and attract corporate

investments in various industrial sectors.

Thailand

In July 2010, Bridgestone started building a new plant to produce tread used

for retread tyres. The company said this production base will help it increase

sales of its retread products as well as develop its solutions business in Japan,

Asia and China. Production at the new plant is scheduled to commence in

November 2010, creating 100 jobs. Bridgestone’s retread tyres are used on

trucks and buses, aircraft and construction and mining vehicles. Bridgestone

points out that the retread business is mature in both Europe and the US for

use on trucks and buses. In addition, says Bridgestone, the retread tyre

markets for trucks and buses are rapidly growing in Japan, Asia and China.

Bridgestone has positioned Japan, Asia, and China as growth markets. In



Japan, it has been developing its so-called Eco Value Pack business and

expanding its solutions business, which supports customers as they implement

their environmental management activities and work to reduce their total tyre-

related costs. In addition, in Asia and China, the company has been expanding

its network of Bandag1 franchises.

Turkey

In August 2008, Continental completed its acquisition of an 89.66% stake in

Oltas Spa headquartered in Istanbul, Turkey. Oltas is Continental’s exclusive

tyre distributor for the passenger car and commercial vehicle tyre brands

Continental, Uniroyal and Barum in Turkey. Turkey is considered to be one of

the European growth markets for the next few years and is also one of the

biggest markets for commercial vehicle tyres in Europe. Oltas Spa achieved

sales of some EUR39m in 2007 with a workforce of 65. Today, it has a

franchise dealer network with about 200 shops.

Investments in Europe

In September 2008, Continental completed its acquisition of the Finnish spike

manufacturer, TIKKA Spikes Oy. TIKKA Spikes Oy operated a plant in

Tikkakoski, Finland and a sales office in Espoo as well as a plant in St

Petersburg, Russia, through its Russian associated company OOO TIKKA. In

2007, TIKKA Spikes Oy employed 120 people and generated sales of some

EUR15m.

Investments in North America

In 2009, Cooper Tire and Rubber closed its manufacturing facility in Albany,

Georgia. The facility was acquired by Cooper in 1990 and employs 1,400

people. In a statement, chief executive officer Roy Armes said: “The current

state of the economy and demand for our products in the United States has

caused us to rethink how we could best leverage our fixed costs...This

capacity reduction, along with improvements at our other facilities, will allow

Cooper to optimise our global footprint and capitalise on current and future

market opportunities.”

Cooper Tire & Rubber is in the throes of adding capacity at its Findlay, Ohio,

tyre plant with an additional US$10m investment in automation, cost

improvements and retooling to support market trends. As a result of those

1 Bridgestone Americas Inc completed its acquisition of Bandag on 31 May 2007.



investments, capacity will increase and up to 100 people will be recruited. In

2009, Cooper increased its capacity and expanded its manufacturing facilities

in Texarkana, Texas, and Tupelo, Mississippi, as well as in its joint venture in

Guadalajara, Mexico, and the Cooper Kenda Tire joint-venture facility in

Kunshan, China.

In September 2009, Cooper Tire & Rubber began expanding its facility in

Tupelo, Mississippi. The company currently occupies 1.6m ft2 and employs

1,250 people at this facility. The US$7m extension will add 32,000 ft2. The

project is expected to be completed by April 2010 and calls for a new mixing

building that will be added to the southwest corner of the plant.

Investments in Asia

In August 2008, Cooper Tire & Rubber liquidated its investment in Kumho Tire

Co. The transaction includes payment of US$107m plus interest from the initial

due date of 31 May 2008. Cooper Tire acquired an 11% interest in the

common equity of Kumho in early 2005, when Kumho’s initial public offering

became available on the Korea and London stock exchanges.

In August 2009, Bridgestone opened its Kitakyushu plant in Japan. This plant

produces large and ultra-large off-road radial tyres for construction and mining

vehicles. The new facility will employ 329 people and have the production

capacity to handle 80 tons of new rubber each day by 2012. Previously,

Bridgestone manufactured large and ultra-large off-road tyres at its

Shimonoseki plant.

In September 2009, Yokohama Rubber established Yokohama Mold Co Ltd to

manufacture and sell tyre moulds, by acquiring the tyre mould manufacturing

business of Hashiba Tire Mold Inc in July 2009. The new company has its

head office and plant in Omitama City in Ibaraki Prefecture and employs 48

people.

Market shares

World

The three largest tyre suppliers – Bridgestone, Michelin and Goodyear –

collectively controlled 57% of the global tyre market in 2009. These producers

generate at least three-quarters of their turnover from tyres. The mid-size

manufacturers include Continental, Sumitomo, Pirelli, Yokohama, Cooper Tire



& Rubber, Toyo Tire, Hankook Tire and Kumho Tire. The remainder of the

market is served by local and niche market tyre producers. As a matter of

policy, most vehicle makers dual-source for every model and spread their total

purchase of tyres over three or four manufacturers. The type of tyre specified

by the vehicle makers differs markedly from one region to the next due to the

different vehicle mix sold in each market and the different driving habits.

Figure 1: Manufacturer shares of global OE and aftermarket tyre market, 2009 (% of market

value)

Source: just-auto

As the big three tyre makers have grown and extended their geographical

reach through acquisition, so their collective global market share has slightly

increased from 55% in 1999 to 57% in 2009.

Table 11: Manufacturer shares of global tyre market 1999-2009 (% of market value)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Bridgestone 19 19 18 19 18 19 20 21 22 21 20

Michelin 19 19 19 19 20 20 19 19 20 20 19

Goodyear 17 18 18 17 17 17 17 18 18 18 18

Others 45 44 45 45 45 44 44 42 40 41 43

Total 100 100 100 100 100 100 100 100 100 100 100

Source: just-auto

Bridgestone20%

Michelin19%

Goodyear18%Continental

8%

Pirelli5%

Others30%



European markets

The main competitors serving the European tyre industry are Goodyear,

Michelin, Bridgestone, Continental, Pirelli, several regional and local tyre

producers and imports from other regions, mainly Asia.

In January 2009, Sumitomo Rubber Industries established a new sales

company, known as Falken Tyre Europe GmbH in Offenbach, Germany. This

facility was set up in order to expand sales of Falken- and Ohtsu-branded

replacement tyres in Europe. The new business employs 25 people.

In 2009, Continental led the European OE and replacement tyre market for

passenger cars and light trucks with a 22% share, followed by Michelin,

Goodyear, Bridgestone and Pirelli.

Figure 2: European market shares for OE and replacement tyres for passenger cars and

light trucks, 2009 (% of volume)

Source: just-auto

In 2009, Michelin led the European OE and replacement tyres for commercial

vehicles with a 36% share, followed by Goodyear, Continental and

Bridgestone. Other competition includes regional and local tyre manufacturers

and imports from other regions, mainly Asia.

Continental22%

Michelin21%

Goodyear18%

Bridgestone12%

Pirelli8%

Other19%



Figure 3: European market shares for OE and replacement tyres for medium- and heavy-

duty trucks, 2009 (% of volume)

Source: just-auto

North American markets

The North American OE and replacement tyre industry is served by the major

tyre makers as well as the low-cost producers in Asia and South America.

The main competitors serving the North American tyre industry are Goodyear,

Bridgestone and Michelin. Other significant competitors include Continental,

Cooper and several Asian manufacturers.

Tyre makers point out that success in competing for the sale of replacement

tyres is dependent on a number of factors, the most important of which are

price, quality, line coverage, availability through appropriate distribution

channels and relationships with dealers. Other factors of importance are

warranty and credit terms.

In 2009, Goodyear led the North American market for OE and replacement

tyres for passenger car and light truck applications, closely followed by

Michelin and Bridgestone.

Michelin36%

Goodyear21%

Continental19%

Bridgestone16%

Pirelli5%

Others3%



Figure 4: North America market shares for OE and replacement tyres for passenger cars

and light trucks, 2009 (% of volume)

Source: just-auto

Goodyear also led the North American OE and replacement market for

commercial vehicle tyres in 2009, followed by Bridgestone and Michelin. These

top three collectively controlled 76% of the market in 2009.

Figure 5: North American market shares for OE and replacement tyres for medium and

heavy duty trucks, 2009 (% of volume)

Source: just-auto

Goodyear22%

Michelin20%

Bridgestone19%


9%

Continental8%

Other22%

Goodyear31%

Bridgestone25%

Michelin20%

Continental10%

Yokohama3% Others

11%



The main competitors serving the South American tyre industry are Goodyear,

Pirelli, Bridgestone, Michelin and Continental.

In October 2009, Sumitomo Rubber Industries established a sales company,

known as Sumitomo Rubber Latin America Limitada, to sell replacement tyres

in Central and South America. The new company is located in Santiago, Chile

and employs 17 people.

Asian markets

Asia incorporates a range of different political units and economies and is the

most complex of all the world’s major regions. Whereas North America is

relatively homogenous, dominated by one large country, and Europe is rapidly

moving towards economic and political unity, Asia still remains a collection of

independent states with different political and economic systems all at varying

stages of development. The region as a whole is generally regarded as having

enormous potential for growth, but much of the existing demand in Asia comes

from a market that is mature and slow-growing; Japan. In terms of the tyres

market, the main states are Japan, China, India, Korea, Thailand and

Australia. Emerging markets include Indonesia and Malaysia.

The main competitors serving the Asia-Pacific tyre industry are Goodyear,

Bridgestone and Michelin, along with a number of other global brands,

including Continental, Dunlop, Yokohama and Pirelli. In addition, there are a

large number of regional and local tyre producers serving the region.

On 15 January 2010, Michelin announced plans to end tyre production at its

facility in Ota, Japan, from July 2010. The tyre maker says it is continuing to

develop its operations and expand its presence in Japan and the Asia-Pacific

region, notably through its research and development programme in Ota, its

sales operations throughout the country and its activities in Nihon Michelin Tire

Co Ltd, headquartered in Tokyo.

In 2009, Hankook Tire led the South Korean OE and replacement tyres

market, just ahead of Kumho Tire. The main advantage that Korean

companies have over their European or US counterparts is the fact that their

labour costs are lower. Korean companies do not have any cost advantage on

basic raw materials such as rubber and carbon black. Nexen Tire has been

designing and producing tyres for the South Korean market since 1942. The



company changed its name from Woosung Tires to Nexen Tires in 2000. The

company recently opened a factory in China.

Figure 6: South Korean OE tyre market shares, 2009 (% of volume)

Source: just-auto

Figure 7: South Korean replacement tyre market shares, 2009 (% of volume)

Source: just-auto

Hankook Tires43%

Kumho41%

Nexen Tires11%

Others5%

Hankook Tires40%

Kumho39%

Nexen9%

Others12%



Market size

just-auto estimates that the global tyre market for passenger cars, light-,

medium- and heavy-duty truck applications accounted for nearly 1.37bn tyres

sold in 2009, of which 1.1bn (80%) were replacement tyres.

just-auto estimates that in 2009, the European Union, North America and Asia

accounted for 83.1% of demand for OE tyres for passenger cars and light truck

applications.

Figure 8: World market for OE tyres for passenger cars and light truck applications by

geographical region, 2009 (% of volume)

Source: just-auto

As Figure 9 indicates, Asia represents the largest market for OE medium- and

heavy-duty truck tyres.

North America, 31.8%

European Union, 24.8%

Asia, 26.5%

Eastern Europe and Russia, 5.7%

South America, 3.5%

Middle East and the Gulf, 2.3%

Africa, 2.1% Rest of the world, 3.3%



Figure 9: World market for OE tyres for medium- and heavy-duty truck applications by

geographical region, 2009 (% of volume)

Source: just-auto

Market forecasts

The following three tables set out just-auto’s estimates and forecasts of the

light vehicle (OE and replacement), medium- and heavy-duty truck tyre and

total tyre market across eight world regions, namely the European Union,

Central and Central Europe, North America, Asia, Africa, South America,

Middle East and the Gulf, and the rest of the world.

Despite a common heritage, Europe has been divided for much of the last

century into three distinct regions. Western Europe is the conventional

description of the European Union plus Norway and Switzerland. Eastern

Europe consists of the old Comecon organisation, although even here there

are marked differences between those on the border of Western Europe –

Poland, Czech Republic, and Hungary – and the other countries. Finally,

Russia is a single entity, although much of what is said about Russia is also

true of Belarus and Ukraine. The replacement tyre market is supplier driven,

thus guaranteeing stable earnings for manufacturers. More specifically, the

Russian car parc has been steadily increasing since the fall of the Soviet

Union. The rise in ownership of foreign cars in Russia over the last decade has

been relatively steeper and more relentless.

Asia34.1%

North America31.8%

European Union14.1%

Eastern Europe and Russia

11.2%

South America5.0%

Middle East and the Gulf

2.0%

Africa1.4%

Rest of the world0.3%



Overall, just-auto forecasts the global market volume for light vehicle tyre sales

will reach 1.61bn units by 2017, up 42% from 1.13bn in 2006. The replacement

tyre market is supplier driven, thus guaranteeing stable earnings for

manufacturers.

Table 12: World light vehicle tyre sales by region, split by OE and replacement units, 2006-

2017 (m units)

2006 2007 2008 2009 2010 2011

European Union 294.2 301.5 309.1 316.8 324.7 332.8

OE 82.4 84.4 84.0 85.0 87.0 90.0

Replacement 211.8 217.1 222.5 228.1 233.8 239.6


63.8 65.7 67.6 69.7 71.8 73.9

OE 17.9 18.4 18.9 19.5 20.1 20.7

Replacement 45.9 47.3 48.7 50.2 51.7 53.2

North America 367.4 377.7 388.2 399.1 410.3 421.8

OE 102.9 105.7 108.0 109.0 111.0 116.0

Replacement 264.5 271.9 279.5 287.4 295.4 303.7

Asia 280.8 294.8 309.6 325.0 341.3 358.4

OE 78.6 82.5 86.7 91.0 95.6 100.3

Replacement 202.2 212.3 222.9 234.0 245.7 258.0

Africa 23.3 24.0 24.8 25.5 26.3 27.1

OE 6.5 6.7 6.9 7.1 7.4 7.6

Replacement 16.8 17.3 17.8 18.4 19.0 19.5

South America 39.6 40.6 41.6 42.6 43.7 44.8

OE 11.1 11.4 11.6 11.9 12.2 12.5

Replacement 28.5 29.2 30.0 30.7 31.5 32.3


26.5 27.0 27.6 28.1 28.7 29.3

OE 7.4 7.6 7.7 7.9 8.0 8.2

Replacement 19.1 19.5 19.8 20.2 20.7 21.1

Rest of the world 39.7 40.5 41.4 42.2 43.0 43.9

OE 11.1 11.4 11.6 11.8 12.0 12.3

Replacement 28.6 29.2 29.8 30.4 31.0 31.6

Total 1,135.2 1,171.9 1,209.8 1,249.1 1,289.8 1,332.0

Total OE 317.9 328.1 335.5 343.3 353.3 367.7

Total replacement 817.4 843.7 871.1 899.3 928.6 959.0



Table 12 (continued): World light vehicle tyre sales by region, split by OE and replacement

units, 2006-2017 (m units)

2012 2013 2014 2015 2016 2017

European Union 341.1 349.7 358.4 363.9 373.0 382.4

OE 93.0 95.0 97.0 99.4 101.9 104.5

Replacement 245.6 251.8 258.1 264.5 271.1 277.9


76.1 78.4 80.8 83.2 85.7 88.3

OE 21.3 22.0 22.6 22.5 23.1 23.8

Replacement 54.8 56.5 58.2 60.7 62.6 64.4

North America 433.6 445.7 458.2 471.0 484.2 497.8

OE 118.0 120.0 123.0 122.5 125.9 129.4

Replacement 312.2 320.9 329.9 348.6 358.3 368.4

Asia 376.3 395.1 414.8 435.6 457.4 480.2

OE 105.4 110.6 116.2 122.0 128.1 134.5

Replacement 270.9 284.5 298.7 313.6 329.3 345.8

Africa 28.0 28.8 29.7 30.7 31.6 32.6

OE 7.8 8.1 8.3 8.6 8.9 9.1

Replacement 20.1 20.8 21.4 22.1 22.8 23.5

South America 45.9 47.1 48.2 49.5 50.7 52.0

OE 12.9 13.2 13.5 13.8 14.2 14.5

Replacement 33.1 33.9 34.7 35.6 36.5 37.4


29.8 30.4 31.0 31.7 32.3 32.9

OE 8.4 8.5 8.7 8.9 9.0 9.2

Replacement 21.5 21.9 22.4 22.8 23.3 23.7

Rest of the world 44.8 45.7 46.6 47.5 48.5 49.4

OE 12.5 12.8 13.0 13.3 13.6 13.8

Replacement 32.2 32.9 33.5 34.2 34.9 35.6

Total 1,375.6 1,420.9 1,467.8 1,513.0 1,563.4 1,615.6

Total OE 379.3 390.1 402.3 410.9 424.7 438.9

Total replacement 990.5 1,023.1 1,056.8 1,102.1 1,138.7 1,176.6

Source: just-auto

Before we estimate the market size for the medium- and heavy-duty truck

market, the following table further analyses just-auto’s estimates and forecast

volume of replacement tyres for passenger cars and light vehicles by

European Union country from 2006 through to 2017.



Table 13: European Union light vehicle tyre replacement units by market, 2006-2017 (m

units)

2006 2007 2008 2009 2010 2011

Austria 4.5 4.6 4.7 4.9 5.0 5.1

Belgium 5.4 5.5 5.6 5.8 5.9 6.1

Denmark 2.1 2.2 2.2 2.3 2.4 2.4

Finland 2.5 2.5 2.6 2.7 2.7 2.8

France 33.0 33.8 34.7 35.6 36.4 37.4

Germany 50.6 51.8 53.1 54.4 55.8 57.2

Greece 3.9 4.0 4.1 4.2 4.3 4.5

Ireland 1.6 1.7 1.7 1.8 1.8 1.8

Italy 38.2 39.1 40.1 41.1 42.1 43.2

Netherlands 7.6 7.8 8.0 8.2 8.4 8.6

Portugal 4.4 4.5 4.6 4.7 4.9 5.0

Spain 21.2 21.7 22.3 22.8 23.4 24.0

Sweden 4.6 4.7 4.8 4.9 5.0 5.2

UK 32.3 33.1 33.9 34.7 35.6 36.5

Total European Union 211.8 217.1 222.5 228.1 233.8 239.7

2012 2013 2014 2015 2016 2017

Austria 5.2 5.4 5.5 5.6 5.8 5.9

Belgium 6.2 6.4 6.5 6.7 6.9 7.0

Denmark 2.5 2.5 2.6 2.7 2.7 2.8

Finland 2.9 2.9 3.0 3.1 3.2 3.3

France 38.3 39.2 40.2 41.2 42.3 43.3

Germany 58.6 60.1 61.6 63.1 64.7 66.3

Greece 4.6 4.7 4.8 4.9 5.0 5.2

Ireland 1.9 1.9 2.0 2.0 2.1 2.1

Italy 44.3 45.4 46.5 47.7 48.9 50.1

Netherlands 8.8 9.0 9.3 9.5 9.7 10.0

Portugal 5.1 5.2 5.4 5.5 5.6 5.8

Spain 24.6 25.2 25.8 26.5 27.1 27.8

Sweden 5.3 5.4 5.6 5.7 5.9 6.0

UK 37.4 38.3 39.3 40.3 41.3 42.3

Total European Union 245.6 251.8 258.1 264.5 271.1 277.9

Source: just-auto



As far as the commercial vehicle tyre market is concerned, Table 14 sets out

just-auto’s estimates and forecasts (OE and replacement) across eight world

regions. Using our own databases supported by industry opinion of the rate of

growth in each region, we forecast the global market volume for medium- and

heavy-duty tyre sales will exceed 178m units by 2017, up 28% from 120m in

2006.

Table 14: World medium- and heavy-duty truck tyre sales by region, split by OE and

replacement units, 2006-2017 (m units)

2006 2007 2008 2009 2010 2011

European Union 14.7 15.1 15.5 15.8 16.2 16.6

OE 2.8 2.9 2.9 3.0 3.1 3.2

Replacement 11.9 12.2 12.5 12.8 13.2 13.5


11.6 11.9 12.3 12.7 13.0 13.4

OE 2.2 2.3 2.3 2.4 2.5 2.6

Replacement 9.4 9.7 10.0 10.3 10.6 10.9

North America 24.1 24.8 25.5 26.2 26.9 27.7

OE 6.3 6.4 6.6 6.8 7.0 7.2

Replacement 17.8 18.3 18.9 19.4 19.9 20.5

Asia 48.5 50.9 53.5 56.1 59.0 61.9

OE 6.3 6.6 7.0 7.3 7.7 8.0

Replacement 42.2 44.3 46.5 48.8 51.3 53.9

Africa 4.7 4.8 5.0 5.1 5.3 5.4

OE 0.3 0.3 0.3 0.3 0.3 0.3

Replacement 4.4 4.5 4.7 4.8 4.9 5.1

South America 9.1 9.3 9.5 9.7 10.0 10.2

OE 1.0 1.0 1.0 1.1 1.1 1.1

Replacement 8.1 8.3 8.5 8.7 8.9 9.1

Middle East and the Gulf 6.6 6.8 6.9 7.0 7.2 7.3

OE 0.4 0.4 0.4 0.4 0.4 0.4

Replacement 6.2 6.4 6.5 6.6 6.7 6.9

Rest of the world 1.1 1.1 1.1 1.2 1.2 1.2

OE 0.1 0.1 0.1 0.1 0.1 0.1

Replacement 1.0 1.1 1.1 1.1 1.1 1.1

Total 120.3 124.7 129.2 133.9 138.8 143.9

Total OE 19.3 20.0 20.7 21.4 22.1 22.9




Table 14 (continued): World medium- and heavy-duty truck tyre sales by region, split by OE

and replacement units, 2006-2017 (m units)

2012 2013 2014 2015 2016 2017

European Union 17.1 17.5 17.9 18.4 18.8 19.3

OE 3.2 3.3 3.4 3.5 3.6 3.7

Replacement 13.8 14.2 14.5 14.9 15.3 15.6


13.8 14.3 14.7 15.1 15.6 16.0

OE 2.6 2.7 2.8 2.9 3.0 3.0

Replacement 11.2 11.5 11.9 12.3 12.6 13.0

North America 28.5 29.3 30.1 30.9 31.8 32.7

OE 7.4 7.6 7.8 8.0 8.3 8.5

Replacement 21.1 21.6 22.3 22.9 23.5 24.2

Asia 65.0 68.2 71.7 75.2 79.0 82.9

OE 8.4 8.9 9.3 9.8 10.3 10.8

Replacement 56.5 59.4 62.3 65.5 68.7 72.2

Africa 5.6 5.8 5.9 6.0 6.1 6.1

OE 0.3 0.3 0.4 0.4 0.4 0.4

Replacement 5.3 5.4 5.6 5.6 5.7 5.7

South America 10.5 10.8 11.0 11.3 11.6 11.9

OE 1.2 1.2 1.2 1.1 1.2 1.2

Replacement 9.3 9.6 9.8 10.2 10.4 10.7


OE 0.4 0.5 0.5 0.6 0.6 0.6

Replacement 7.0 7.2 7.3 7.4 7.5 7.7

Rest of the world 1.2 1.3 1.3 1.3 1.3 1.4

OE 0.1 0.1 0.1 0.1 0.1 0.1

Replacement 1.2 1.2 1.2 1.2 1.3 1.3

Total 149.1 154.6 160.4 166.2 172.3 178.6

Total OE 23.7 24.6 25.4 26.4 27.3 28.3


Source: just-auto

Overall, looking at the combined light vehicle and truck, OE and replacement

tyre markets, we estimate that there were 1.24bn tyres sold in 2006. That

figure could reach 1.78bn by 2017, largely thanks to the Chinese market.



Table 15: World tyre sales (all applications) by region, split by OE and replacement units,

2006-2017 (m units)

2006 2007 2008 2009 2010 2011

European Union 308.9 316.6 324.5 332.6 340.9 349.5

OE 85.2 87.3 86.9 88.0 90.1 93.2

Replacement 223.7 229.3 235.0 240.9 246.9 253.1


75.4 77.6 79.9 82.3 84.8 87.4

OE 20.1 20.7 21.3 21.9 22.6 23.2

Replacement 55.3 57.0 58.7 60.4 62.2 64.1

North America 391.5 402.5 413.7 425.3 437.2 449.5

OE 109.1 112.2 114.6 115.8 118.0 123.2

Replacement 282.4 290.3 298.4 306.7 315.3 324.2

Asia 329.3 345.7 363.0 381.2 400.2 420.3

OE 84.9 89.2 93.6 98.3 103.2 108.4

Replacement 244.4 256.6 269.4 282.9 297.0 311.9

Africa 28.0 28.8 29.7 30.6 31.6 32.6

OE 6.8 7.0 7.2 7.5 7.7 7.9

Replacement 21.2 21.8 22.5 23.2 23.9 24.6

South America 48.7 49.9 51.1 52.4 53.7 55.0

OE 12.1 12.4 12.7 13.0 13.3 13.7

Replacement 36.6 37.5 38.4 39.4 40.4 41.4


OE 7.8 8.0 8.1 8.3 8.5 8.6

Replacement 25.3 25.8 26.3 26.9 27.4 27.9

Rest of the world 33.1 33.8 34.5 35.1 35.9 36.6

OE 11.2 11.4 11.6 11.9 12.1 12.4

Replacement 29.7 30.2 30.9 31.5 32.1 32.7

Total 1248.0 1,288.7 1330.9 1374.6 1,420.2 1,467.3

Total OE 337.2 348.1 356.2 364.7 375.5 390.6

Total replacement 918.4 948.4 979.6 1,011.8 1,045.3 1,079.9



Table 15 (continued): World tyre sales (all applications) by region, split by OE and

replacement units, 2006-2017 (m units)

2012 2013 2014 2015 2016 2017

European Union 358.2 367.2 376.3 382.3 391.9 401.7

OE 96.2 98.3 100.4 102.9 105.5 108.1

Replacement 259.4 265.9 272.6 279.4 286.4 293.5


90.0 92.7 95.5 98.3 101.3 104.3

OE 23.9 24.7 25.4 25.3 26.1 26.9

Replacement 66.0 68.0 70.0 73.0 75.2 77.4

North America 462.0 475.0 488.3 501.9 516.0 530.4

OE 125.4 127.6 130.8 130.5 134.2 137.9

Replacement 333.2 342.6 352.2 371.4 381.8 392.5

Asia 441.3 463.3 486.5 510.8 536.4 563.2

OE 113.8 119.5 125.5 131.7 138.3 145.2

Replacement 327.5 343.8 361.0 379.1 398.0 417.9

Africa 33.6 34.6 35.7 36.7 37.7 38.7

OE 8.2 8.4 8.7 9.0 9.3 9.6

Replacement 25.4 26.2 27.0 27.7 28.4 29.2

South America 56.4 57.8 59.3 60.8 62.3 63.8

OE 14.0 14.4 14.7 15.0 15.4 15.7

Replacement 42.4 43.5 44.6 45.8 46.9 48.1


OE 8.8 9.0 9.2 9.4 9.6 9.8

Replacement 28.5 29.1 29.6 30.2 30.8 31.4

Rest of the world 37.3 38.0 38.8 39.6 40.4 41.2

OE 12.6 12.9 13.1 13.4 13.7 13.9

Replacement 33.4 34.1 34.7 35.4 36.1 36.9

Total 1,516.1 1,566.7 1619.2 1,670.0 1,726.2 1,784.5

Total OE 403.0 414.7 427.8 437.3 452.0 467.2

Total replacement 1,115.9 1,153.1 1,191.8 1,241.9 1,283.7 1,326.9

Source: just-auto

Chapter 3 Technical review



Defining the elements

Tyres remain a key technology within chassis engineering. Quite apart from

the fact that vehicle grip and handling behaviour ultimately depends entirely on

the physics and mechanics of what happens within the four tyre contact

patches, the tyres also make significant contributions towards determining ride

comfort (since the tyre contributes up to 10% of the total spring rate), internal

and external vehicle noise, and economy.

An important distinction in car and truck tyres is made between bias tyre

construction and radial tyre construction. Radial-ply tyres have long since

become the norm for light-duty vehicle use. Bias-ply tyres are now only fitted to

motorcycles, bicycles, excavating machines and industrial and agricultural

machines. Michelin first introduced steel-belted radial tyres in Europe in 1948.

Radial tyres are so named because the ply cords radiate at a 90° angle from

the wheel rim, and the casing is strengthened by a belt of steel fabric that runs

around the circumference of the tyre. In radial tyres, the ply cords are made of

nylon, rayon or polyester. The belt over-wrap of a radial tyre uses less tread

distortion under load and more sidewall distortion. The advantages of radial

tyres include longer tread life, better steering characteristics and less rolling

resistance, which increases fuel consumption. On the other hand, radials have

a harder riding quality, and since they are technologically more complex than

bias-ply tyres, they are about 45% more expensive to make when volumes are

comparable. Because of their construction, radial tyres require a different

suspension system from that used by cars designed for bias-ply tyres.

Tyres are classified according to the respective requirements of various

vehicle types and sizes, and operating conditions. The essential data – tyre

dimensions, load ratings, specified inflation pressures and authorised speeds –

are standardised in the interests of interchangeability in the following seven

tyre categories:

○ engine-driven, two-wheeled vehicles – motorcycles and motor

scooters;

○ passenger cars;

○ light-duty trucks – including delivery trucks;

○ commercial vehicles – including multi-purpose vehicles;



○ excavating machines – transport vehicles, loaders and graders;

○ industrial trucks – including solid rubber tyres;

○ agricultural vehicles and machinery – tractors, machines, trailers and

equipment.

Market demand for tyres is being partly driven by the shift towards high-

performance tyres (V-grade or above). Most light trucks, which now account

for 60% of total vehicle sales in North America, also need high-performance

tyres.

According to Bridgestone, tyres are retreaded by removing the worn tread,

adding new tread rubber and vulcanising it so that the tyre can be reused.

Compared to new tyres, retread tyres can make an environmental contribution

in three ways:

○ contribute to resource conservation, as compared to new tyres; retread

tyres can reduce, by two-thirds, consumption of raw materials such as

natural rubber;

○ reduce CO2 emissions generated in tyre production;

○ contribute to reducing the number of tyres scrapped by maximising

their total life.

Run-flat tyres

Extended mobility tyres (or run-flat tyres) provide reliable assistance in the

event of a loss of pressure. They allow a vehicle to safely continue on its way

at a specified maximum speed for a certain distance.

There are basically two types of run-flat systems: the self-supporting and the

support ring-type. The self-supporting run-flat tyre has reinforced sidewalls to

support the load of the vehicle even after a loss of tyre pressure. With the

support ring-type system, a core ring supports the vehicle in case of air loss by

fixing the tyre bead on the rim.

Bridgestone’s run-flat tyre initiatives trace their origins to the early 1980s, when

the company began manufacturing tyres that enabled vehicles for the

physically disabled to be driven even after a loss of air pressure. In 1987, the

selection of Bridgestone run-flat tyres as a standard equipment for the Porsche

959 launched the company’s start-up of manufacturing for mass-produced

vehicles. As the following table shows, Bridgestone’s first-generation run-flat



tyres cover the period from 1987 until 2004. Second-generation run-flat tyres

cover the period from 2005, when improved sidewall-reinforced rubber

enhanced riding comfort, until the present day.

Table 16: Bridgestone’s three generations of run-flat tyres, 1987-2010

First generation Second generation Third generation

1987-2004 2005-present 2009-

Beginning of delivery for mass-produced vehicles

Improvement of sidewall-reinforced rubber

Based on tyre size, vehicle conditions and available technologies

Source: Bridgestone

In 2009, Bridgestone developed new technologies to improve the riding

comfort of run-flat tyres, marking the company’s third generation of run-flats for

installation in new passenger cars.

According to Bridgestone, while there are various ways to eliminate spare

tyres, the company believes that run-flat tyres are the best way of eliminating

spare tyres because of significant advantages offered by them, including:

○ improved driving stability when the tyre punctures;

○ greater peace of mind as it avoids the need to change tyres in

dangerous places, such as on highways;

○ continued mobility, not only when punctures damage the tyre tread in

contact with the road surface but even when punctures damage the

tyre sidewalls.

Continental’s SSR (Self-Supporting Run-flat Tyre) has reinforced sidewalls that

support the weight of the car after a loss of tyre pressure. The company says

the system can be used on conventional rims. SSR tyres are available both for

summer and winter use, says the company.

With the ContiComfortKit sealant system, Continental is offering another

solution for extended mobility in the event of punctures. The company says

that this system will be offered as original equipment and on the replacement

market. The ContiMobilityKit and lighter ContiMobilityKit SC are supplied

specifically as original equipment.

The new R-Line version of the Volkswagen Passat CC is fitted with

Continental’s so-called ContiSportContact 3 tyres, incorporating the



tyremaker’s ContiSeal technology. This self-sealing tyre is able to immediately

close off punctures up to 5mm in diameter, resolving around 85% of all tyre

failures as a result, says Continental. All other characteristics of the

ContiSportCompact 3, sizes 235/45 R17 and 235/40 R18, are identical to

those found on the regular tyre.

Tyre labelling

In late 2008, the European Commission presented the directive for the

combined tyre label planned from 2012 specifying the criteria for braking

performance, rolling resistance and rolling noise. The label comprises a

concrete specification on the basis of seven classes (A-G) for rolling resistance

(in kilograms per 1,000kg wheel load) and for braking performance as well as

precise details of the noise level generated by the tyre when rolling (in dB (A)).

Implementation of the tyre label regulation will be via self-certification by the

tyre manufacturers, whilst the sanctions for misuse and infringements will be

laid down by national law in each of the 27 EU states. Validation will occur in

spring 2016, some 40 months after the obligatory introduction of the EU tyre

label, and will take a critical look at whether the label is achieving its

objectives, in particular the effectiveness of the requirements relating to point-

of-sale communication.

The EU label focuses on three of the relevant tyre characteristics. It will be

interesting to see whether individual tyre manufacturers will already use the

EU tyre label in their advertising before national laws determine the sanctions

to be imposed for misuse and infringements.

Tyre pressure monitoring systems (TPMS)

There are basically two main types of TPMS available on the market: indirect

and direct. Indirect systems are those which use algorithms to interpret signals

in ABS brake system. It uses wheel speed sensors and can detect a deflated

tyre because it rotates more slowly. Direct systems are those which use

separate radio sensors mounted in each wheel which detect deflation and then

transmit that information to the driver via a radio frequency signal. As the

transmitter is located inside the tyre, it requires its own battery power source,

which is built to last up to ten years, or far beyond the tyre’s useful life. With



either system, warning lights, messages on the dashboard or audible warnings

alert drivers to drops in tyre pressure.

By installing tyre monitoring systems, additional benefits include increased fuel

economy, longer tyre wear, fewer crashes due to tyre blowouts, immobilised

vehicles or poor vehicle handling from pressure loss and hydroplaning. It also

means that motorists can instantly check their tyre pressure without touching

the greasy tyre valve. Tyre pressure monitoring is also essential for run-flat

systems, enabling the driver to drive a short distance after the tyre has

deflated.

“With a tyre pressure monitoring system, you don’t only drive more safely, you

also save fuel,” said Helmut Matschi, head of body and security unit of

Continental’s interior division. “Based on our calculations, carbon dioxide

emissions could be reduced by more than 10m tonnes each year in Europe if

tyre pressure monitoring systems are used in all cars and trucks.”

Continental started supplying electronic systems for automatic monitoring of

tyre pressure on cars in 2000. The company currently provides TPMS to 20

vehicle makers worldwide. The company says that the systems that are best

accepted by drivers are those that, should there be an underinflated tyre,

indicate which tyre is low and how much air it needs in order to be properly

inflated. The TPMS which measures directly can then be supplemented with

an additional pressure calculation based on the ABS sensors. This, says

Continental, can further improve the quality of the sensor data thanks to the

additional plausibility check, thus providing an even greater margin of safety.

Other innovations

In late 2009, Yokohama Rubber announced that it had developed a new

material inner liner to improve the performance of its so-called Eco tyres. It is

called the Airtex Advanced Liner. The company has developed it by adding a

special resin to the conventional inner-liner rubber. Yokohama Rubber claims

the new material is airtight, flexible and one-fifth as thick as conventional

products.

Chapter 4 Manufacturers



Bridgestone

Bridgestone is the world’s largest manufacturer of tyres and other rubber

products. More specifically, the company produces tyres and tubes for

passenger cars, trucks, buses, construction and mining vehicles, industrial and

agricultural machinery, aircraft, motorcycles and scooters. Tyres account for

80% of Bridgestone’s sales.

Bridgestone also produces antivibration and noise insulating materials,

polyurethane foam products, office equipment, industrial rubber products,

building materials, belts, hoses, marine products and other rubber parts. Tyres

account for 80% of Bridgestone Group sales worldwide.

The company also manufactures industrial rubber and chemical products, and

sporting goods.

Bridgestone employs 138,000 people (as of December 2008) worldwide. The

location of its tyre operations are set out in the following table.



Table 17: Bridgestone’s production and R&D operations worldwide, 2009

North

America Latin

America Europe

Middle East/

Africa

Asia/ Oceania

Japan Total

Tyres

New tyre plants

8 7 8 3 12 10 48

Other tyre related plants

7 3 3 0 4 11 28

Raw material plants 6 1 2 1 9 3 22

Diversified products plants 29 2 2 0 20 38 91

Total 50 13 15 4 45 62 189

Under construction

New tyre plants

0 0 0 0 0 0 0

Other tyre related plants

0 0 0 0 1 0 1

Raw material plants

0 0 0 0 0 0 0

Diversified products plants

0 0 0 0 0 0 0

Total 0 0 0 0 1 0 1

Technical centres 1 0 1 0 1 2 5

Proving grounds 2 2 2 0 3 2 11

Source: Bridgestone

In May 2008, Bridgestone entered into a business and capital alliance with

Toyo Rubber. In setting out the industry background and objective of these

alliances, Bridgestone stated: “In recent years, the tyre and rubber industry is

confronting with unprecedented changes in demand due to the bipolarisation

of the market into high-performance products and general purpose products,

structural changes in competition due to emerging power with low-priced

products, and structural change in earnings due to the steep rise of raw

material costs. Under such an environment…these alliances are expected to

create a synergy effect which will bring additional corporate values for both

Bridgestone and Toyo.” The partners are in the process of forming project

teams to determine the areas of joint focus. These include the co-development

of new production methodology, procurement of raw materials, cross-

production between the partners and cooperation in logistics.

Continental

Continental Corp is a major supplier of brake systems, chassis parts, vehicle

electronics, tyres and technical elastomers. In what Continental Corp said was



its biggest purchase ever, the supplier bought Siemens VDO Automotive for

EUR11.4bn in July 2007. The company claimed the merged operations – now

amongst the top five suppliers in its specialist sectors – would have

“unsurpassed competence in chassis, safety, powertrain systems and

infotainment”. In 2006, Continental and Siemens VDO Automotive had

combined annual sales of around EUR25bn with a global workforce of about

140,000. In explaining the magnitude of the task of merging the two

businesses, Continental executive board chairman Manfred Wennemer said

the merged Continental/Siemens VDO operations would pool know-how in

systems technologies like driver assistance, environment sensors, telematics

and electronic brakes and advance the integration of passive and active

vehicular safety and also set new standards in the areas of traffic management

and accident prevention.

Today, Continental’s product portfolio is divided into six groups, namely:

○ Chassis and Safety;

○ Powertrain;

○ Interior;

○ Passenger and Light Truck Tires;

○ Commercial Vehicle Tires;

○ ContiTech.

Continental’s passenger and light truck tyres business generated sales of

EUR5.1bn in 2008. The company generated 75% of its sales revenues from

Europe in 2008, of which 21% was earned in Germany.



Figure 10: Continental AG’s passenger and light trucks tyres sales by region, 2007 and

2008 (% of net sales)

2007

2008

Source: Continental

Continental’s passenger and light truck tyres business produces passenger car

and light truck tyres at its factories in Spain, Germany, France, Mexico, China

and the US. This business is organised into five distinct groups:

○ Original Equipment – tyres for compact medium- and full-size cars,

4x4s and SUVs, vans, light trucks and recreational vehicles. It also

Europe (excluding Germany)

51%

Germany22%

NAFTA20%

Asia4%

Rest of the world3%


54%Germany21%

NAFTA18%

Asia4%

Rest of the world3%



offers extended mobility systems and NVH engineering services. Its

brands include Continental and General Tire.

○ Replacement Europe – tyres for compact medium- and full-size cars,

four-wheel drive and SUVs, vans, light trucks and recreational

vehicles. Brands include Continental, Barum, Uniroyal (except NAFTA

region, Columbia and Peru), Semperit, General Tire, Gislaved, Viking,

Mabor, and Matador.

○ Replacement The Americas – tyres for compact medium- and full-size

cars, four-wheel drive and SUVs, vans, light trucks and recreational

vehicles. This business also supplies high-performance and ultra-high-

performance tyres. Brands include Continental, Barum, General Tire,

Euzkadi, Semperit, Viking and Gislaved.

○ Replacement Asia – tyres for compact, medium- and full-size cars,

four-wheel drive and SUVs, vans light trucks and recreational vehicles.

This business also supplies high-performance and ultra high-

performance tyres. Brands include Continental, Barum, Dunlop

(trademark rights for Malaysia, Singapore and Brunei) and Sime Tyres.

○ Two-Wheel Tires – bicycle tyres for OE and replacement business,

cart tyres, motorcycle and scooter tyres. This business also supplies

high-performance racing tyres. Its brand is Continental.

Continental’s commercial vehicle tyres business generated sales of EUR1.4bn

in 2008. Over half (62%) of sales were generated in Europe in 2008, the

remainder from North America and other regions. It produces tyres for

commercial vehicles at its facilities located in Germany, Austria and the US.



Figure 11: Continental AG’s commercial vehicle tyres sales by region, 2007 and 2008 (% of

net sales)

2007

2008

Source: Continental

Continental’s commercial vehicle tyres business is organised into five groups,

as follows:

○ Truck Tires Europe – applications include long-distance haulage,

regional traffic, winter, urban traffic, construction and off-road. Global

brands are Continental, ContiTread and ContiRE. Its regional brands

include Uniroyal, Semperit, Barum and Metador.


41%

NAFTA28%

Germany20%

Asia6%

Rest of the world5%


41%

NAFTA26%

Germany21%

Asia6%

Rest of the world6%



○ Truck Tires The Americas – applications include long-distance

haulage, regional traffic, winter, urban traffic, construction and off-

road. Global brands are Continental and ContiTread. Its regional

brands are General Tire, Ameri-Steel and Euzkadi.

○ Truck Tires Replacement Asia – applications include long-distance

haulage, regional traffic, urban traffic, construction and off-road. Global

brand is Continental. Its regional brands are Sime Tyres and Terco.

○ Industrial Tires – applications include transportation, multi-purpose

and stack/lift. Global brand is Continental. Its regional brands are

Simex and Barum.

○ OTR Tires – applications include construction industry, mining, forestry

and container handling. Global brand is Simex. Regional brands are

Simex and General Tire.

Continental’s passenger and light truck tyre business is involved in a number

of joint ventures, including:

○ Compania Ecuatoriana del Caucho SA, Cuenca, Ecuador – minority

shareholding and technology transfer; production, sales and marketing

of passenger and commercial vehicle tyres.

○ HighwayTwo, Illinois, US – joint venture with Selle Royal SpA, Italy;

distribution of bicycle products.

○ General Tyre & Rubber Co of Pakistan Ltd, Karachi, Pakistan –

minority shareholding and technology transfer.

○ JK Industries Ltd, New Delhi, India – technology transfer.

○ Barez Industrial Group, Teheran, Iran – technology transfer.

○ The Yokohama Rubber Co Ltd, Tokyo, Japan – technical cooperation

on CSR (together with Bridgestone); distribution of Continental

passenger car tyres in Japanese replacement market.

○ Yokohama Continental Tire Co Ltd, Tokyo, Japan – acquisition of

OEM tyre business for Japanese carmakers and their transplants and

Korean carmakers on behalf of Yokohama and Continental.

○ Matador Omskshina aszt Omsk, Russia – joint venture with Sibur;

production, sales and marketing of light truck tyres.

Continental’s commercial vehicle truck tyre business is also involved in a

number of joint ventures, including:

○ Mitas as, Prague, Czech Republic – off-take production of industrial

tyres.



○ Nizhnekamsk All Steel Tire Plant (NASTP) Russia – technology

transfer.

○ Compania Ecuatoriana de Caucho SA, Cuenca, Ecuador – minority

shareholding and technology transfer; production, sales and marketing

of passenger and commercial vehicle tyres.

○ GTY Tire Co (partnership), Mount Vernon, Illinois, US – joint venture

with Toyo and Yokohama for the production of commercial vehicle

tyres.

○ General Tyre & Rubber Co of Pakistan Ltd, Karachi, Pakistan –

minority shareholding and technology transfer.

○ JK Industries Ltd, New Delhi, India – technology transfer.

○ Barez Industrial Group, Teheran, Iran – technology transfer.

○ Euretec, Sri Lanka – off-take production of industrial tyres.

Over-capacity is a major concern among tyre makers as the economic

recession continues.

In March 2009, Continental confirmed that a steep drop in original equipment

sales and a marked deterioration on replacement markets have resulted in

production overcapacities for its passenger and commercial vehicle tyres. In a

statement, Dr Hans-Joachim Nikolin, Continental executive board member in

charge of the company’s tyre divisions, said: “Since the downturn set in last fall

[Autumn 2008], we have managed to avoid taking trenchant measures by

resorting to other instruments at our disposal – production flexibility and the

reduction of surpluses on working time accounts, longer plant vacations, the

capping of contracts for temporary workers and shorter working hours for core

staff. Unfortunately, in the face of a stubborn slump in demand of this great

magnitude, the short-term measures at our disposal are no longer sufficient.”

Consequently, Continental set about closing its commercial vehicle tyre

production at its plant in Hanover, Germany, with a capacity of some 1.4m

units, resulting in the loss of 780 jobs. Production at its plant in Puchov,

Slovakia, has been reduced by 20%. Together this has reduced the company’s

commercial vehicle tyre production throughout Europe by a total of 27%. In

Clairoix, France, the company is in the process of closing this plant. In October

2009, Continental AG and MAG ended their talks on the sale of tyre

technology in combination with the passenger and light-truck tyre

manufacturing facility in Clairoix, France. No agreement was reached, said

Continental. The plant in Clairoix will therefore close as planned.




Cooper Tire & Rubber Co is a major producer of replacement tyres for

passenger car and light truck applications. It also manufactures radial medium

truck tyres and materials and equipment for the truck tyre retread industry. It

also produces motorcycle and racing tyres.

Cooper Tire & Rubber is organised into two operating segments: North

American Tire Operations and International Tire Operations. Each is managed

separately.

○ North American Tire Operations – produces tyres for passenger car

and light truck applications. These are mainly sold in the US

replacement market. Its major distribution channels and customers

include independent tyre dealers, wholesale distributors, regional and

national retail tyre chains and large retail chains that sell tyres as well

as other auto parts. This business currently has a manufacturing

supply agreement with an Asian and Mexican manufacturer to provide

tyres for distribution in the US.

○ International Tire Operations – produces tyres for passenger car, light

truck, racing and motorcycle applications. Its main markets are the UK,

continental Europe and Scandinavia. This business produces tyres in

the UK and is aiming to expand in Asia through joint ventures as well

as through existing contract manufacturing arrangements. In the UK,

this business currently produces passenger car, light truck, racing and

motorcycle tyres. It has subsidiaries in France, Germany, Italy, Spain

and Switzerland for selling its products in Continental Europe. This

business does not sell its products directly to end-users and does not

manufacture tyres for sale to OEMs in Europe, other than several

small contracts with specialty vehicle makers in the UK. In China, this

business currently produces passenger car, bias, radial light and

medium truck tyres, and off-the-road tyres. These products are

manufactured for export to Europe and North America and also sold to

dealers in the replacement tyre market within China. Only a small

percentage of the tyres manufactured in China are sold to OEMs.

Headquartered in Findlay, Ohio, Cooper Tire & Rubber currently employs

13,000 people at seven manufacturing facilities (five in the US, one in the UK

and the other in China) and 40 distribution centres dotted across the US (12

sites), Mexico (four), Europe (six) and Asia (18). In addition, Cooper operates

19 technical centres and offices across the US (six sites), Mexico (one),



Europe (seven), and Asia (five). In 2004, the company sold its Cooper-

Standard Automotive and inner tube businesses for some US$1.2bn.

In May 2009, Cooper Tire & Rubber and American Kenda Rubber Industrial Co

Ltd dissolved their marketing and distribution arrangement with the Kenda

brand in the US and Canada. Since November 2004, Cooper has been the

exclusive marketer of Kenda radial passenger and light truck tyres. In a

announcing the split, Phil Caris, vice president of sales and marketing at

Cooper, said: “While the results of the joint venture were positive, it was

agreed that a new approach would be beneficial in pursuing each company’s

brand strategy.” Both companies continue as partners in the radial passenger

and light truck tyre plant in China.

Goodyear

Goodyear is one of the world’s major manufacturers of tyres and rubber

products, currently employing 80,000 people at 100 facilities in 29 countries.

The company designs and produces tyres for most applications, including

cars, trucks, buses, aircraft, motorcycles, farm machinery, earth moving

equipment, industrial equipment and other applications.

Its tyre brands include Goodyear, Dunlop, Kelly, Fulda, Debica, Sava and

various house brands. Goodyear also manufactures a range of power

transmission belts, hoses and other rubber products for the transportation

industry as well as service and tyre retreading centres.

During the second quarter of 2008, Goodyear formed a new business unit,

known as Europe, Middle East and Africa Tire, by combining its former

European Union Tire and Eastern Europe, Middle East and Africa Tire

business units. Consequently, Table 18 below shows the past three year’s tyre

sales, not five as shown for its other tyre business units.

Today, Goodyear’s tyre business is organised into four main operating

segments:

○ North American Tire;

○ Europe, Middle East and Africa Tire;

○ Latin American Tire;

○ Asia-Pacific Tire.



Goodyear sold a total of 215m tyres worldwide in 2008, of which its

replacement tyre units were 152m and OE sales making up the remainder.

Table 18: Goodyear’s tyre sales by operating segment, 2006-2008, (m tyres)

2006 2007 2008

North American Tire 90.9 81.3 71.1


83.5 79.6 73.6

Latin American Tire 21.2 21.8 20.0

Asia-Pacific Tire 19.4 19.0 19.8

Worldwide tyre sales 215.0 201.7 184.5

Source: Goodyear

The following table sets out Goodyear’s tyres sales worldwide, divided into OE

and replacement sales.

Table 19: Goodyear’s worldwide tyre sales, OE and replacement, 2003-2008 (m tyres)

2003 2004 2005 2006 2007 2008

Replacement tyre units

150.6 159.6 162.0 152.0 141.9 134.1

OE tyre units 62.9 63.7 64.4 63.0 59.8 50.4

Total 213.5 223.3 226.4 215.0 201.7 184.5

Source: Goodyear

North American Tire sold 61.6m replacement tyres in 2008. This business

represents Goodyear’s largest operation, serving the US and Canadian

markets. It manufactures tyres for cars, trucks, motorcycles, buses,

earthmoving equipment, commercial, military aviation and industrial

equipment. It manufactures these tyres at nine plants in the US and three

plants in Canada. Goodyear, Dunlop and Kelly branded tyres are sold in the

US and Canada through several channels of distribution.



Table 20: Goodyear’s North American Tire sales, OE and replacement, 2003-2008 (m tyres)

2003 2004 2005 2006 2007 2008


68.6 70.8 71.2 61.6 55.7 51.4

OE tyre units 32.6 31.7 30.7 29.3 25.7 19.7

Total 101.2 102.5 101.9 90.9 81.3 71.1

Source: Goodyear

Europe, Middle East and Africa Tire ranks as Goodyear’s second-largest

business in terms of sales revenue. This business manufactures tyres for cars,

motorcycles, trucks, agricultural and construction equipment in Western

Europe. It operates 16 manufacturing facilities located across the UK, France,

Germany, Luxembourg, Poland, Slovenia, South Africa and Turkey. Europe,

Middle East and Africa Tire sales decreased by 4.4m units in 2008.

Table 21: Goodyear’s European Union Tire sales, OE and replacement, 2006-2008 (m tyres)

2006 2007 2008

Replacement tyre units 62.4 58.8 55.9

OE tyre units 21.1 20.8 17.7

Total 83.5 79.6 73.6

Source: Goodyear

The company’s Latin American Tire business produces tyres for cars, trucks,

and agricultural equipment throughout Central and South America and in

Mexico. It operates six tyre factories in Brazil, Chile, Columbia, Peru and

Venezuela. While its replacement tyre sales business has remained flat over

the past five years, this business has managed to improve its OE tyre sales to

local OEMs.

Table 22: Goodyear’s Latin American Tire sales, OE and replacement, 2003-2008 (m tyres)

2003 2004 2005 2006 2007 2008


14.2 15.0 15.0 14.9 14.7 13.9

OE tyre units 4.5 4.6 5.4 6.3 7.1 6.1

Total 18.7 19.6 20.4 21.2 21.8 20.0

Source: Goodyear



Goodyear’s Asia Pacific Tire business manufactures tyres for cars, light and

medium trucks, farm and construction equipment and aviation throughout the

Asia-Pacific region. It operates 11 plants in Australia, China, India, Indonesia,

Japan, Malaysia, New Zealand, the Philippines, Taiwan and Thailand. Asia

Pacific Tire sells mainly Goodyear branded tyres throughout the region. It also

sells the Dunlop brand in Australia and New Zealand. Its other brands of tyres

are sold in smaller quantities such as Kelly, Fulda and Sava.

Table 23: Goodyear’s Asia Pacific Tire sales, OE and replacement, 2003-2008 (m tyres)

2003 2004 2005 2006 2007 2008


9.1 14.5 13.9 13.1 12.7 12.9

OE tyre units 4.3 5.0 6.2 6.3 6.3 6.9

Total 13.4 19.5 20.1 19.4 19.0 19.8

Source: Goodyear

The following table summarises Goodyear’s business units.

Table 24: Goodyear’s strategic business units, 2010

Strategic business unit

Products and markets Geographic markets served

Operations

North American Tire Original equipment and replacement tyres for cars, trucks, and aircraft.

United States, Canada, export

10 tyre plants, (eight in the US and two in Canada) 1 steel tyre wire cord plant 4 chemical plants 1 tyre mould plant 3 tyre retread plants 2 aviation retread plants 1 mix plant in Canada


Original equipment and replacement tyres for cars, trucks, and tractors.

Europe, export 16 tyre plants 1 steel tyre wire cord plant 1 tyre mould and tyre manufacturing machines facility 1 aviation retread plant 1 mix plant

Latin America Tire Original equipment and replacement tyres for cars, trucks, tractors

Central America, South America, export

6 tyre plants 1 tyre retread plant 1 aviation retread plant

Asia Pacific Tire Original equipment and replacement tyres for cars, trucks, agricultural vehicles, and aircraft

Asia, Australia, New Zealand, export

9 tyre plants 2 aviation retread plants

Source: Goodyear

In 1999, Goodyear entered into a global alliance with Sumitomo Rubber

Industries Ltd. Under the terms of the deal, Goodyear acquired 75% and



Sumitomo owned 25% of Goodyear Dunlop Tires Europe BV, a holding

company based in the Netherlands. Concurrently, the holding company

acquired substantially all of Sumitomo’s tyre businesses in Europe and most of

Goodyear’s tyre businesses in Europe. Goodyear also acquired 75% and

Sumitomo acquired 25% of Goodyear Dunlop Tires North America Ltd, a

holding company that purchased Sumitomo’s tyre manufacturing operations in

North America and some of its tyre sales and distribution operations. The

global alliance included Goodyear’s acquisition of 100% of the balance of

Sumitomo’s Dunlop Tire replacement distribution and sales operations in the

US and Canada. The cost of the acquired businesses amounted to

US$1.24bn.

Goodyear’s tyre-related facilities are located in US; Canada; Belgium; France;

Germany; Luxembourg; the Netherlands; Slovenia; Turkey; the UK; Morocco;

South Africa; United Arab Emirates; Brazil; Chile; Colombia; Peru; Venezuela;

China; India; Indonesia; Japan; Malaysia; New Zealand; the Philippines;

Taiwan; Thailand; and Australia.

Table 25: Goodyear’s tyre-related facilities worldwide, 2010

Country Location Facilities

US Akron, Ohio World Headquarters, North American Tire headquarters, technical centre, racing tyres, tyre proving grounds, global purchasing, airship operations, research and development facilities

Asheboro, North Carolina

Steel tyre cord

Bayport, Texas Chemicals

Beaumont, Texas Synthetic rubber

Carson, California Airship operations

Danville, Virginia Tyres

Fayetteville, North Carolina

Tyres

Gadsden, Alabama Tyres

Houston, Texas Synthetic rubber

Huntsville, Alabama Tyre proving grounds

Kingman, Arizona Aero retread facility

Lawton, Oklahoma Tyres

Niagara Falls, New York

Chemicals

Pompano Beach, Florida

Airship operations



Table 25 (continued): Goodyear’s tyre-related facilities worldwide, 2010


US (continued) San Angelo,Texas Tyre proving grounds

Social Circle, Georgia Tread rubber

Spartanburg, South Carolina

Tread rubber

Statesville, North Carolina

Tyre moulds

Stockbridge, Georgia Aero retread facility

Tonawanda, New York

Tyres

Topeka, Kansas Tyres

Union City, Tennessee

Tyres

West Amherst, New York

Goodyear Dunlop Tires North America headquarters

Canada Medicine Hat, Alberta Tyres

Nappanee, Ontario Tyres

Valleyfield, Quebec Mixing Centre

Belgium Brussels Goodyear Dunlop Tires Europe headquarters; Europe, Middle East & Africa Tire headquarters

France Amiens, France Tyres

Mireval, France Tyre proving grounds

Montlucon, France Tyres

Germany Fuerstenwalde Tyres

Fulda Tyres

Hanau Tyres

Philippsburg Tyres

Riesa Tyres

Wittlich Tyres

Luxembourg Colmar-Berg Tyres, steel tyre cord, tyre moulds, technical centre, tyre proving grounds

Netherlands Tilburg Aero retread facility

Poland Poland Tyres

Slovenia Kranj Tyres

Turkey Adapazari, Turkey Tyres

UK Birmingham Tyres

Wolverhampton Mixing Centre

South Africa Izmit Tyres

United Arab Emirates

Dubai Regional tyre sales and distribution

Brazil Americana Tyres, tyre proving grounds, films

Santa Barbara Retread materials

Sao Paulo Latin American Tire headquarters, tyres, aero retread facility



Table 25 (continued): Goodyear’s tyre-related facilities worldwide, 2010


Chile Santiago Tyres

Colombia Cali Tyres

Peru Lima Tyres

Venezuela Valencia Tyres

China Dalian Tyres

Shanghai Asia Pacific Tire headquarters

India Aurangabad Tyres

Ballabgarh Tyres

Indonesia Bogor Tyres

Japan Tatsuno Tyres

Malaysia Kuala Lumpur Tyres

Philippines Las Pinas Tyres

Singapore Singapore Natural rubber purchasing

Taiwan Taipei Tyres

Thailand Bangkok Tyres, Aero retread facility

Source: Goodyear

Goodyear is in the process of closing its plant in Amiens, France, as part of its

strategy to reduce high-cost manufacturing worldwide. The action, which is

expected to be complete by the third quarter of 2010, would result in the loss

of 820 jobs. This plant produces tyres for passenger cars and farm machinery.

Hankook Tire

Hankook Tire is a major producer of tyres for the Korean and Chinese

passenger car markets. The company has operations worldwide.

Located near Frankfurt, Germany, Hankook Tire’s European headquarters

comprises seven subsidiary offices (located in Germany, UK, France, the

Netherlands, Italy and Spain), three sales offices (Hungary, Turkey and

Russia), its Europe Technology Center in Hanover, Germany, and a plant in

Dunaujvaros, Hungary. Europe represents Hankook Tire’s largest market,

accounting for 35% of total company exports. Representing the first European

production base of a Korean tyre maker, the Hungary plant started production

in 2007 and is expected to produce 10m tyres annually by 2010.



The company’s American headquarters is based in New Jersey and oversees

sales and distribution in the US, Canada, Puerto Rico and Mexico. This

business offers a range of products, including radial tyres for passenger cars,

UHP tyres, tyres for light trucks, 4x4 trucks, large trucks and buses. These are

supplied to about 500 wholesalers and 3,000 retailers through the company’s

regional offices and distribution centres. The company also supplies tyres to

Ford, GM and Hyundai Motor and International Truck & Engine Corporation.

Created following a reorganisation of its global operations in 2006, Hankook

Tire’s Latin America, Asia-Pacific, Africa and the Middle East headquarters

comprises four support teams at the Seoul head office (Latin America Team,

Asia-Pacific Team, Middle East and Africa Team, and the Marketing Planning

Team), seven branch offices (in Mexico City, Sao Paulo, Panama, Jeddah,

Dubai, Bangkok and Santiago), and two overseas subsidiaries (in Japan and

Australia).

Hankook Tire commands the largest market share for passenger-car tyres in

China. Its foray into China began with the construction of factories in Jiaxing

and Jiangsu in 1996. Then in 1998, the tyre maker established a technical

centre in the country. Extensions to the centre followed in 2006 in the vicinity

of the Jiaxing plant. Tyres produced at the Chinese factories are shipped to

Ford and GM in Europe and the US.

The company’s Korean headquarters is also home to its main production base,

responsible for more than 60% of total output. The company currently operates

five production facilities in Korea, China and Hungary.

The company invests 5% of its turnover on research and development through

its six R&D centres.

For the fiscal year 2009, Hankook Tire generated sales of KRW4.8bn and an

operating profit of KRW549.3bn.



Table 26: Hankook Tire’s consolidated sales and operating profit, fiscal years 2008, 2009

and forecast for 2010, (KRW bn)

Fiscal year 2008 Fiscal year 2009 Year-over-year % Fiscal year 2010

target

Sales 4,076.5 4,809.9 18% 5,095.4

Operating profit 114.2 549.3 381% 550.2

Source: Hankook Tire

Kumho Tires

Kumho Tires is the second-largest tyre manufacturer in Korea. The company

was spun off from its parent, Kumho Industrial Co in mid-2003, and

incorporated as a separate company. Kumho Tires produces some 55m tyres

annually. Kumho Tires exports tyres to 160 countries in the Americas, Europe,

the Middle East, Africa, Australia and Asia. The company’s main OE

customers, by geographic region, include:

○ North America – Chrysler, Hyundai Motors;

○ Europe – Daimler, Smart, Mitsubishi and Volkswagen;

○ China – Ford, Nissan, Volkswagen, Suzuki, General Motors,

Mitsubishi, Peugeot, Isuzu, Citroen and FAW;

○ Korea – Hyundai Motors, Kia Motors, Renault Samsung Motors, GM

Daewoo and Ssangyoung Motors.

Kumho Tires is using motor sport as a way to establish its brand in the high-

and ultra-high-performance sectors. Its board believes there is “substantial”

demand for its tyres abroad, particularly for UHP tyres but the volume of

overseas sales is constrained by its current production capacity. In the

passenger car tyre market, Kumho Tires’ products are generally viewed to be

in the second tier category. The company has, therefore, targeted its tyres at

the middle-income market and has historically priced its tyres below the top-

tier tyre makers. In an effort to capture a bigger slice of the market, the

company has been increasing its marketing efforts to improve brand

awareness through television advertising, motorsports and motor show

sponsorship. In the truck, bus and light truck tyre market, Kumho Tires

observes how consumers are less brand-conscious and focus more on the

cost-efficiency and quality of the tyres. The company believes that it is

therefore able to target its tyres at the upper-to-middle market segment, pricing

its tyres only slightly below top-tier manufacturers. The board also believes



that there is room for expansion of market share in these segments as Kumho

has not been able to meet increasing demand due to capacity constraints.

Kumho Tires’ tyre division currently employs over 5,600 workers, most of who

are based at its two manufacturing plants in Korea. The company also

operates four R&D centres as follows:

○ Kumho Tires Research and Development Centre (KRDC) –

established in 1981, this facility develops tyres for the local and global

market. It is located in Gwangsan-gu Gwangju, in the Republic of

Korea.

○ Kumho Tires China Technical Centre (KCTC) – established in 2006,

this facility develops high-performance tyres for the Chinese and

European markets. It is located in Tianjin, China.

○ Kumho Tires America Technical Centre (KATC) – established in 1990,

this facility develops tyres for the North American market. It is located

in Akron, Ohio.

○ Kumho Tires Europe Technology Centre (KETC) – established in

1997, this facility develops high-performance tyres for the European

market. It is located in Birmingham, UK.

It also operates offices in Italy, Spain, Austria, the US, Canada, Brazil, Mexico,

China, Kuala Lumpar, Egypt, South Africa, United Arab Emirates, and

Australia. The company’s manufacturing facilities are located in Gokseong,

Gwangju and Pyungtaek, Korea operating at three eight-hour shifts per day for

350 days per year. The company’s overseas plants are located in China

(Nanjing, Tianjin and Changchun) and Vietnam (Ben Cat, Binh Duong

Province).

Kumho Tires’ products include radial and bias tyres for passenger cars, light

trucks, trucks and buses, recreational vehicles, racing cars, off-road

equipment, industrial and agricultural equipment and aircraft. The company

also produces carbon black master batch and markets other tyre-related

rubber products such as small agricultural tyres, tubes and flaps.

In June 2009, Kumho Tire opened its first retail outlet in North America. The

outlet, located in Buena Park, California, is known as Tires 4U, and follows the

company’s global retail format. The company is aiming to build its distribution

channel in the US and promote its brand awareness through this retail route.



Michelin

Michelin is organised into eight product lines (each with its own marketing,

development, production and sales resources), nine group services

(responsible for purchasing, audit, finance, information systems, corporate and

communications, legal, personnel, quality and organisation, and supply chain

management), four geographic zones (Europe; North America; South America,

Africa and Middle East; and Asia-Pacific and China), two distribution networks

and a technology centre (with facilities in Europe, the US and Asia). Its eight

product lines are as follows:

○ passenger car/light truck;

○ truck;

○ agricultural;

○ aircraft;

○ two-wheel;

○ earthmover;

○ components;

○ maps and guides.

As the following table shows, Michelin operates 68 production sites worldwide.

Table 27: Michelin’s production sites worldwide, 2009

Country Location

Passenger car and light truck product line: 38 sites in 18 countries

France Cholet, Clermont-Ferrand (2 sites), Lille, Montceaules-Mines, Roanne, Toul

Germany Bad-Kreuznach, Bamberg

Spain Lasarte, Valladolid, Vitoria

Hungary Nyiregyhaza

Italy Cuneo, Turin

Poland Olsztyn

UK Dundee

Russia Davydovo

Romania Victoria

Serbia Pirot

United States Ardmore, Columbia, Dothan, Fort-Wayne, Greenville (2 sites), Opelika

1,

Tuscaloosa

Canada Bridgewater, Pictou

Mexico Queretaro



Table 27 (continued): Michelin’s production sites worldwide, 2009

Country Location

Passenger car and light truck product line (continued)

Brazil Resende

Colombia Cali

China Shenyang, Shanghai

Japan Ota2

Thailand Laem Chabang, Phrapadaeng

Truck product line (including retread workshops): 28 sites in 16 countries

France Avallon, Clermont-Ferrand, La Roche-sur-Yon, Tours

Germany Homburg, Karlsruhe, Orianenburg

Spain Aranda, Valladolid

Hungary Budapest

Italy Alessandria

Poland Olsztyn

UK Ballymena, Stoke on Trent

Romania Zalau

Algeria Hussein-Dey

United States Spartanburg, Covington, Duncan, Asheboro

Canada Waterville

Mexico Queretaro

Brazil Campo Grande, Resende

Colombia Bogota

China Shenyang

Thailand Nongkae, Phrapadaeng

Specialty tyres: 18 sites in 9 countries

France Bourges, Clermont-Ferrand, Le Puy-en-Velay, Montceau-les-Mines, Troyes

Spain Lasarte, Valladolid, Vitoria

Hungary Nyiregyhaza

Italy Cuneo

Poland Olsztyn

Serbia Pirot

United States Lexington, Norwood, Kansas City

Brazil Campo Grande

Thailand Nongkae, Phrapadaeng



Table 27 (continued): Michelin’s production sites worldwide, 2009

Notes 1. In 2009, Michelin closed its BFGoodrich Tire Manufacturing plant in Opelika, Alabama, US. Production shifted to BFGoodrich Tire facilities in Alabama, Indiana. In a statement, Michelin said: “The dramatic drop in market demand has created significant over-capacity in the North American tyre markets that Michelin does not expect to rebound in the near term.” The BFGoodrich Tire Manufacturing plant in Opelika produced BFGoodrich and Uniroyal brand passenger car tyres. It employed 1,000 people. Michelin has consolidated production at the BFGoodrich Tire Manufacturing facilities in Tuscaloosa, Alabama and Ft Wayne, Indiana. 2. On 15 January 2010, Michelin announced plans to end tyre production at its facility in Ota, Japan, from July 2010. The manufacture of tyres currently made at the Ota plant will be transferred to other Michelin plants producing passenger cars and light truck tyres in Asia, Europe and North America.

Source: Michelin

Pirelli

Pirelli & C SpA is the parent company, listed on the Italian Stock Exchange, of

an international group active in 169 countries. The company operates in the

tyre sector with its Pirelli Tyre business. Pirelli Tyre itself is organised into two

business units: consumer and industrial. The consumer business offers tyres

for passenger cars, SUVs, vans and motorcycles. Its industrial business offers

tyres for buses, trucks, construction and agricultural vehicles. It also operates

a steel cord production operation. Thanks to its widespread distribution of

tyres, Pirelli is one of the world’s best-known Italian brand names. The Pirelli

range comprises tyres for cars, motorcycles and commercial vehicles.

Pirelli’s tyre operation employs 21,500 workers at factories dotted across

Argentina, Brazil, China, Egypt, Germany, Italy, Romania, Turkey, the UK, the

US and Venezuela, as follows:

Table 28: Pirelli tyre plants worldwide, 2010

Country Location Year opened Area (square

metres) Number of employees

Products

Germany Breuberg Odenwald

1963 687,000 2,082 Radial car tyres SUV tyres Motorcycle tyres

Merzig-Saar 1972 160,000 255 Steel cord

Italy Milan 1987 59,000 414 Car tyres SUV tyres

Turin 1961 245,000 596 All-steel truck tyres

Florence 1960 119,000 506 Steel cord

Turkey Izmir 1962 218,000 1,317

Car tyres SUV tyres Van tyres Industrial vehicle tyres



Table 28 (continued): Pirelli tyre plants worldwide, 2010

Country Location Year opened Area (square

metres) Number of employees

Products

UK Carlisle 1969 261,000 988 Car tyres

Burton 1969 n/a 63 Car tyres SUV tyres

US Rome, GA 1969 261,000 110 Car tyres SUV tyres

Argentina Merlo 1969 118,000 555 Car tyres Van tyres Industrial vehicle tyres

Brazil Campinas 1970 457,000 1,444 Car tyres SUV tyres

Santo Andre 1940 241,000 1,647 Industrial vehicle tyres

Feira de Santana

1986 402,000 647 Car tyres SUV tyres Industrial vehicle tyres

Gravata 1976 61,400 1,526 Industrial vehicle tyres Motorcycle tyres

Venezuela Guacara 1990 n/a 579 Car tyres SUV tyres

Egypt Alexandria 1999 n/a 636 n/a

Romania Slatina 2005 n/a 136 Steel cord

China Yanzhou 2005 n/a 593 Truck tyres

n/a: information not available

Source: Pirelli

Sumitomo Rubber Industries

Sumitomo Rubber was established in 1909 as the Far East company of

Dunlop UK. In 1963, the company changed its name to Sumitomo Rubber

Industries Ltd. In 2003, the company span off its sports and industrial goods

businesses. Today, Sumitomo Rubber Industries produces tyres under the

Dunlop, Falken, Goodyear, Sumitomo and Ohtsu brands. In addition to its

overseas subsidiaries in China and Indonesia, the group carries out tyre

production and sales in Europe and the US in joint ventures with Goodyear.

Through its alliance with Goodyear, Sumitomo makes Goodyear-brand tyres in

Japan, while Goodyear makes Dunlop tyres in North America and Europe.

Headquartered in Tokyo, Sumitomo Rubber operates five factories in Japan

(Nagoya; Shirakawa; Izumiohtsu; Miyazaki; and Kakogawa) and three proving

grounds. In addition, the company has overseas offices located in the US,

Canada, Belgium, Germany, Australia, Russia, United Arab Emirates, Saudi

Arabia, Singapore, Chile and China. Sumitomo Rubber has also built up an

international network of subsidiaries and affiliates. Today, the company has

subsidiaries located in Japan, Indonesia, France, Malaysia, Thailand, Vietnam,



and China. The company’s affiliates are located in the Netherlands and the

US. As noted above, Sumitomo Rubber Industries has a global alliance with

Goodyear. In January 2009, Sumitomo Rubber Industries established a tyre

selling company, known as Sumitomo Rubber Middle East FZE, to expand its

sales of replacement tyres in the Middle East region. The company is located

in Dubai, United Arab Emirates and employs 15 people. In September 2009,

Sumitomo Rubber Industries opened a mew technical centre in Kobe, Japan.

The new JPY5bn facility covers some 10,520-m².

Sumitomo Rubber continues to strengthen its production and sales structure

on a global basis. Overseas, the company has joint ventures in tyres with

Goodyear in Europe and the US and a tyre and golf ball factory in Indonesia.

In addition, the company opened a tyre factory in China in 2004. Recognising

China as its largest growth market, Sumitomo Rubber established Sumitomo

Rubber (Changshu) Co Ltd and Sumitomo Rubber (Suzhou) Co Ltd as

production and marketing companies for radial passenger car tyres. The

companies produce some 5,000 tyres daily.

In the year ended 31 December 2008, Sumitomo Rubber posted sales of

JPY604,974m, of which its tyres business generated revenues of

JPY501,345m.

Table 29: Sumitomo Rubber Industries’ net sales and operating income, 2006, 2007, 2008

and nine months ended 30 September 2008 and 2009 (JPY m)

2006 2007 2008 Nine months

ended 30 September 2008

Nine months ended 30

September 2009

Net sales

Tyres 430,886 478,763 501,345 358,119 292,347

Sports 58,043 59,893 74,689 57,066 46,378

Industrial products 48,675 31,928 31,181 23,898 18,677

Adjustments and eliminations

(3,519) (3,279) (2,242) (2,373) (740)

Total net sales 534,086 567,306 604,974 436,710 356,662



Table 29 (continued): Sumitomo Rubber Industries’ net sales and operating income, 2006,

2007, 2008 and nine months ended 30 September 2008 and 2009 (JPY m)

2006 2007 2008 Nine months

ended 30 September 2008

Nine months ended 30

September 2009

Operating income

Tyres 26,381 35,892 15,849 9,780 6,902

Sports 7,468 6,779 7,718 6,915 1,899

Industrial products 2,906 2,441 1,813 1,544 1,000

Adjustments and eliminations

32 12 277 (24) 73

Total operating income 36,789 45,126 25,658 18,215 9,875

Source: Sumitomo Rubber Industries

Toyo Tire & Rubber Co Ltd

Established in 1945, Toyo Tire & Rubber Co is a major supplier of rubber and

polyurethane products. Its businesses include tyres, rubber and plastics,

including manufacturing of automotive parts, chemical and industrial products,

sports- and housing-related products. On a consolidated basis, the company

currently employs 6,972 people. The company is headquartered in Osaka,

Japan. In the financial year ended 31 March 2009, the company generated

sales of JPY328.3bn.

The company’s business activities are divided into three segments: Tires;

Chemical and Industrial Products; and Automotive Parts. Forming the core of

Toyo’s operations, the tyres division supplies a range of tyres for passenger

cars, commercial vehicles, trucks and buses. In addition, the company offers a

range of tyres for winter use, such as studless and lamellae tyres. The tyre

business is itself divided into three departments: original equipment,

replacement tyres and overseas operations.

Toyo Tire & Rubber has tyre operations in Australia, China, Germany, the UK,

Netherlands, Japan, Canada, the US and Mexico.

Yokohama Rubber

The Yokohama Rubber Co Ltd is a major manufacturer of rubber products,

including vehicle tyres, other rubber products and adhesive products. Its Tire



Group manufactures tyres for passenger cars, trucks, buses, light trucks,

mining, construction equipment and industrial equipment.

Headquartered at Tokyo, Japan, the company employs over 16,000 people at

facilities located across Japan, North America, Europe, Middle East and Asia.

Its Japanese factories are located as follows:

Table 30: The Yokohama Rubber Co Ltd’s tyre-related facilities in Japan, 2010

Location Total site area (m²) Main products

Hiratsuka City (Hiratsuku factory) 990,000 Aircraft tyres, industrial products, aerospace products, sporting goods

Ise City (Mie plant) 264,000 Tyres for trucks, buses, light trucks, passenger cars

Mishima City (Mishima plant) 112,000 Tyres for passenger cars and light trucks, racing tyres

Shinshiro City (Shinshiro plant) 221,000 Tyres for passenger cars and light trucks

Shinshiro City (Shinshiro-Minami plant)

88,300 Tyres for passenger cars

Onomichi City (Onomichi plant) 193,000 Off-road tyres

Source: The Yokohama Rubber Co Ltd

In the fiscal year ended 31 March 2009, Yokohama Rubber generated sales

revenues of JPY517,262m.

Appendix: Glossary of terms



Aramid: A synthetic fibre that is, per weight, stronger than steel. Used in tyre

construction, it provides good high tensile strength to weight.

Aspect ratio: An expression representing the height of the sidewall of a tyre in

terms of a percentage of tyre’s width.

Carcass: That portion of a tyre that is the foundation for the tread, belts, bead

and sidewall.

Casing: The structure of tyre cords locked around wire beads.

Chafer: A finishing strip of calendered fabric used to protect the tyre’s bead

area from the rim.

Compound: General term referring to the chemical formula for the tread

material.

Filler: The material used to fill the area above the bead between the outer and

inner portion of the sidewall. It is also used in enlarged form to stiffen the lower

sidewall of a tyre.

Grooves: Circumferential channels between the tread ribs of a tyre.

H-speed or H-performance rated: A speed category for tyres with a

maximum speed capability of 130mph.

High-performance tyre: Those tyres with speed ratings of S or greater and

aspect ratios of 70 or less.

Light truck tyres: Tyres designed for off-the-road and on/off-the-road use on

sport/utility, small commercial and recreational vehicles.

Load rating: A method of rating a tyre’s load-carrying capacity (denoted by

letters such as B, C, D, etc) with respect to its ply rating.



Low-profile: A term describing a tyre with a low relative aspect ratio or series

classification.

Passenger car tyre: Vehicle tyres featuring aspect ratios of 70 or greater,

using a taller profile for increased ride comfort.

Ply: A layer of rubber-coated fabric or wire making up the tyre casing.

S-speed or S-performance rated: A speed category for tyres with a maximum

speed capability of 112mph.

Series: A numerical representation of a tyre’s aspect ratio; for example, 50

series.

Sipes: Slits in the tyre tread. Small cuts in the surface of the tread to improve

traction.

Steel belt: A belt material used in radial tyres. Its high stiffness provides good

handling and low treadwear.

Stud holes: Small cavities along a tyre’s tread designed to hold tyre studs for

increased traction on snow-covered surfaces.

Touring performance tyre: A tyre providing the ride comfort of a passenger

car tyre, yet possessing high-performance tyre characteristics.

Tread blocks: Raised rubber-compound segments on the outside visible part

of a tyre.

V-speed or V-performance rated: A speed category for tyres with a maximum

speed capability of 14mph.

Varied-pitch ratio: Variations in angles and sizes of a tyre’s tread elements

that reduce ride noise levels.

Z-speed or Z-performance rated: A speed category for tyres with a maximum

speed capability of 149+mph.

Source: Yokohama Rubber Co Ltd

Global market review of automotive tyres forecasts to 2017 2010

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