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Global market review of automotive tyres – forecasts to 2014 Updated forecast June 2009 Now with scenario forecasts and updated market volume and value data! Forecasts take into account recent industry activity!

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Global market review of automotive tyres – forecasts to 2014

Updated forecastJune 2009

Now with

scenario

foreca

sts and updated market v

olume and value data!

Forecasts ta

ke into acco

unt rece

nt industry

activity

!

Page i

© 2009 All content copyright Aroq Ltd. All rights reserved.

Global market review of automotive

tyres – forecasts to 2014

2008 edition

Originally published July 2008. Addendum added June 2009

by Matthew Beecham

Published by

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Page iv Contents

© 2009 All content copyright Aroq Ltd. All rights reserved.

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 ................................................................................................................... 4

Q&A with Bridgestone ............................................................................................. 4 Continental .................................................................................................................... 6

Cooper Tire & Rubber .................................................................................................... 6 Goodyear....................................................................................................................... 7 Hankook Tire ................................................................................................................. 7 Kumho Tires .................................................................................................................. 8

Michelin ......................................................................................................................... 8 Pirelli ............................................................................................................................. 9 Sumitomo Rubber Industries ......................................................................................... 9 Toyo Tire & Rubber Co Ltd ............................................................................................ 9 Yokohama Rubber ......................................................................................................... 9

Emerging markets ................................................................................................................ 13 China ........................................................................................................................... 14

Hungary ....................................................................................................................... 16 India ............................................................................................................................ 16 Indonesia ..................................................................................................................... 16 Kazakhstan .................................................................................................................. 17 Mexico ......................................................................................................................... 17

Nigeria ......................................................................................................................... 17 Poland ......................................................................................................................... 18 Romania ...................................................................................................................... 18 South Africa ................................................................................................................. 18

Page v Contents

© 2009 All content copyright Aroq Ltd. All rights reserved.

Thailand ...................................................................................................................... 19 Vietnam ....................................................................................................................... 20

Investments in Western Europe ........................................................................................... 20

Investments in North America .............................................................................................. 21 Investments in Asia .............................................................................................................. 22 Market shares ...................................................................................................................... 23

World ........................................................................................................................... 23 European markets ....................................................................................................... 24

North American markets .............................................................................................. 26 Asian markets .............................................................................................................. 27

Market size .......................................................................................................................... 29 Market forecasts .................................................................................................................. 31

Chapter 3 Technical review ....................................................................................................... 38

Defining the elements .......................................................................................................... 38 Latest innovations ................................................................................................................ 39

Q&A with Goodyear .............................................................................................. 40 Q&A with Continental ............................................................................................ 47

Tomorrow’s tyres ................................................................................................................. 51

Chapter 4 Manufacturers ........................................................................................................... 53

Amerityre ............................................................................................................................. 53 Bridgestone ......................................................................................................................... 55 Continental Corp .................................................................................................................. 57

Cooper Tire & Rubber .......................................................................................................... 61

Goodyear ............................................................................................................................. 62 Hankook Tire ....................................................................................................................... 71 Kumho Tires ........................................................................................................................ 73 Michelin ............................................................................................................................... 74 Pirelli .................................................................................................................................... 77 Sumitomo Rubber Industries ................................................................................................ 79

Toyo Tire & Rubber Co Ltd .................................................................................................. 80 Yokohama Rubber ............................................................................................................... 82

Appendix 1 Glossary of terms .................................................................................................. 83

Appendix 2 Tyre speed rating symbols .................................................................................... 85

Updated forecast: June 2009 .................................................................................................... 86

Page vi List of figures

© 2009 All content copyright Aroq Ltd. All rights reserved.

List of figures

Figure 1: Manufacturer shares of global tyre market, 2007 (% of market value) ........................... 23

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

trucks, 2007 (% of volume) .................................................................................... 25

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

trucks, 2007 (% of volume) .................................................................................... 25

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

light trucks, 2007 (% of volume) ............................................................................. 26

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

trucks, 2007 (% of volume) .................................................................................... 27

Figure 6: Chinese market shares for OE and replacement tyres for passenger cars and light trucks,

2007, % of volume ................................................................................................. 28

Figure 7: Korean OE tyre market shares, 2007 (% of volume)...................................................... 29

Figure 8: Korean replacement tyre market shares, 2007 (% of volume) ....................................... 29

Figure 9: World market shares for OE tyres for passenger cars and light truck applications by

geographical region, 2007 (% of volume) ............................................................... 30

Figure 10: World market shares for OE tyres for medium- and heavy-duty truck applications by

geographical region, 2007 (% of volume) ............................................................... 30

Figure 11: Continental AG’s passenger and light trucks tyres sales by region, 2007 (% of net

sales) ..................................................................................................................... 58

Figure 12: Continental AG’s commercial vehicle tyres sales by region, 2007 (% of net sales) ...... 59

Page vii List of tables

© 2009 All content copyright Aroq Ltd. All rights reserved.

List of tables

Table 1: Bridgestone’s sales by geographical region, 2003-2007 (% of net sales) ....................... 10

Table 2: Goodyear’s sales by geographical region, 2003-2007 (% of net sales) ........................... 10

Table 3: Michelin’s sales by geographical region, 2003-2007 (% of net sales) ............................. 11

Table 4: Cooper Tire & Rubber’s sales by geographical region, 2003-2007 (% of net sales) ........ 11

Table 5: Hankook’s sales by geographical region, 2003-2006 (% of net sales) ............................ 11

Table 6: Kumho’s sales by geographical region, 2003-2007 (% of net sales) ............................... 12

Table 7: Pirelli’s sales by geographical region, 2004-2007 (% of net sales) .................................. 12

Table 8: Toyo Tire & Rubber’s sales by geographical region, 2003-2007 (% of net sales) ............ 12

Table 9: Yokohama’s sales by geographical region, 2003-2007 (% of net sales) ......................... 13

Table 10: Manufacturer shares of global tyre market 1997-2007 (% of market value) .................. 24

Table 11: World light vehicle tyre sales, split by OE and replacement units, by region, 2004-2014

(m units)................................................................................................................. 32

Table 12: European Union light vehicle tyre replacement units (by country), 2004-2014 (m units) 34

Table 13: World medium- and heavy-duty truck tyre sales, split by OE and replacement units, by

region, 2004-2014 (m units) ................................................................................... 35

Table 14: World tyre sales (all applications) split by OE and replacement units, by region, 2004-

2014 (m units) ........................................................................................................ 36

Table 15: Amerityre’s Arcus tyre compared with run-flat tyres ...................................................... 54

Table 16: Bridgestone’s tyre operations worldwide, 2008 ............................................................. 55

Table 17: Goodyear’s tyre sales by operating segment, 2002-2007 (m units) .............................. 63

Table 18: Goodyear’s worldwide tyre sales, OE and replacement, 2003-2007 (m units) .............. 64

Table 19: Goodyear’s North American Tire sales, OE and replacement, 2003-2007 (m units)...... 64

Table 20: Goodyear’s European Union Tire sales, OE and replacement, 2003-2007 (m units) ..... 65

Table 21: Goodyear’s Eastern Europe Tire sales, OE and replacement, 2003-2007 (m units)...... 65

Table 22: Goodyear’s Latin American Tire sales, OE and replacement, 2003-2007 m units) ........ 66

Page viii List of tables

© 2009 All content copyright Aroq Ltd. All rights reserved.

Table 23: Goodyear’s Asia Pacific Tire sales, OE and replacement, 2003-2007 (m tyres) ............ 66

Table 24: Goodyear’s strategic business units, 2008 ................................................................... 67

Table 25: Goodyear’s tyre-related facilities by country, 2008 ....................................................... 68

Table 26: Hankook Tire production facilities worldwide, 2008 ...................................................... 72

Table 27: Michelin’s production sites worldwide, 2008 ................................................................. 75

Table 28: Pirelli tyre plants worldwide, 2008 ................................................................................ 77

Table 29: Sumitomo Rubber Industries’ net sales and operating income, 2006 and 2007 (JPYm) 80

Table 30: Toyo Tire & Rubber Co Ltd’s sales by business segment, 1998-2007 (JPYm) ............. 81

Table 31: The Yokohama Tire Company Ltd’s tyre-related facilities in Japan, 2008 ..................... 82

Table 32: Tyre speed rating symbols (mph/km/h) ......................................................................... 85

Page ix Preface

© 2009 All content copyright Aroq Ltd. All rights reserved.

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 2014.

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; and

○ 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. the 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 fifth 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

© 2009 All content copyright Aroq Ltd. All rights reserved.

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

Middle East and the Gulf; and the rest of the world from 2004 through to 2014.

This chapter includes exclusive Q&A interviews with senior executives of

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

developments is presented in Chapter 3, while Chapter 4 provides brief

profiles of the major manufacturers, namely Bridgestone, Continental, Cooper

Tire & Rubber, Goodyear, Hankook Tyres, Kumho, Michelin, Pirelli, Sumitomo,

Toyo Tyres, and Yokohama.

The author

Matthew Beecham has more than 15 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, 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.

Page 1 Chapter 1 Introduction

© 2009 All content copyright Aroq Ltd. All rights reserved.

Chapter 1 Introduction

Although only one-quarter of road tyres are specified and bought by the

vehiclemakers, this segment of the market is significant as it drives technical

development and has a major influence over the aftermarket. Indeed, the

popularity of sports utility vehicles (SUVs), minivans and cross-over vehicles

has prompted manufacturers to redesign their tyres. In terms of innovation, the

accent remains on improving tyre dimensions, weight, rolling resistance, noise,

and fuel efficiency. Interest in run-flat tyres is another major focus of research

and development. In an exclusive interview with just-auto, Franco Annunziatto,

managing director of Bridgestone’s technical centre in Rome, told us: “Car

manufacturers continually improve their technologies, and we as tyre

manufacturers have to move with them. Current demands are for lower rolling

resistance tyres, with lower pass by noise, with no reduction in wet grip

properties, and with adequate riding comfort level.”

Page 2 Chapter 2 The market

© 2009 All content copyright Aroq Ltd. All rights reserved.

Chapter 2 The market

Market trends

The tyre market is divided into two sectors: OE and replacement. OE tyres are

defined as those supplied to vehicle makers to be fitted to new vehicles while

replacement tyres are those which are fitted subsequently. Car and truck tyres

are clearly the most widely used types of tyre, based on total value of sales.

There is a wide range of both car and truck tyres designed to serve different

purposes.

Although brands have always played a part in tyre marketing, they have

assumed much more importance in the last decade with the emergence of

global players, and the acquisition of a portfolio of existing brands as a result

of the takeover of other firms. The increasing segmentation of the car market

has led directly to a much more complex segmentation of the tyre market.

There has always been a price differentiation, with the luxury vehicles having

more expensive tyres fitted and, conversely, the smaller utility vehicles fitting

economy tyres. With the advent of specialist vehicles such as super sports

cars, sports utility vehicles and minivans, this has led to specialist tyres being

developed for them, usually at above-average prices. This is particularly the

case for the OEM market, where the increasing sophistication of vehicle

design has led to specific tyres being designed for specific vehicles, but it is

also true of the replacement market. There is a tendency for the OEM brand to

be specified for replacement tyres for any vehicle, but for some specialist

vehicles this becomes almost obligatory, as there are very few makes of tyre

designed for some low-volume vehicles.

Tomorrow’s tyre market is expected to be led by the ultra high-performance

(UHP) tyres which offer enhanced driving control, run-flat tyres which ensure

safe driving even in the event of a flat tyre, and ultra fuel efficiency tyres which

improve fuel efficiency. In particular, with the rapid growth of the hybrid vehicle

market, the tyre industry has recently been concentrating on developing fuel

efficient products.

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

Page 38 Chapter 3 Technical review

© 2009 All content copyright Aroq Ltd. All rights reserved.

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

com fort (since the tyre contributes up to xx% 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 t yres are so nam ed because the pl y cords radiate at a xx degree 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

com plex than bias-ply tyres, they are about xx% more expensive to m ak e

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;

Page 53 Chapter 4 Manufacturers

© 2009 All content copyright Aroq Ltd. All rights reserved.

Chapter 4 Manufacturers

Amerityre

Amerityre Corp was founded in 1995 as American Tire Corporation. The first

products developed and sold by the new company were polyurethane foam

tyres based on the company’s proprietary chemical formulation technology.

Since the tyres were fabricated using a closed-cell polyurethane material, they

could never go flat. Thus, the company has registered the Flatfree trade mark

for this product. These tyres are currently fitted to a variety of applications,

including bicycles, wheelchairs, lawn and garden products, and golf carts. In

1999, the company changed its name to Amerityre Corp and continued

development of its Flatfree technology.

In 2001, Amerityre developed polyurethane elastomer pneumatic passenger

car tyres that were able to be driven for xxx m iles without air pressure and with

several holes in the sidewalls. These tyres did not incorporate conventional

tyre reinforcement materials, such as beads, belts and plies. Buoyed by this

innovation, the company’s engineers then developed a system for integrating

these reinforcement materials in its Elastothane tyres. This system, dubbed

the Arcus Run-Flat Tire, is designed to operate at normal air pressure, yet

continue to perform norm ally f or up to xxx m iles without air. These Elastothane

products include tyre fill, solid tyres, composite tyres and pneumatic passenger

vehicle tyres. In April 2004, Amerityre completed testing to Federal Motor

Vehicle Safet y Standard (FMVSS) xxx of its so-called Arcus design passenger

car tyre and in Novem ber 2007 com pleted testing to the new F MVSS xxx

specification.

Since completing this testing, the company says it has begun discussions with

companies that are interested in licensing its technology, providing them with

sample tyres. The company states: “While companies evaluate sample tyres,

we will focus on finishing the design and development of the manufacturing

equipment required to produce the polyurethane road tyre in commercial

volumes. We are discussing the construction and installation of a pilot

manufacturing facility capable of demonstrating this production capability with

potential strategic partners.”

Page 86 Updated forecast: June 2009

© 2009 All content copyright Aroq Ltd. All rights reserved.

Updated forecast: June 2009

Since our last review of tyres was published in July 2008, the outlook for the

automotive industry has significantly changed. In early 2008, we were looking

at a ‘managed slowdown’ for the global economy and the automotive industry

was very much part of that. By the end of 2008, however, major companies

were struggling to keep their heads above water in the face of collapsed

automotive markets.

Given the current state of the industry, just-auto has completely revised its

estimates and forecasts of the automotive tyres market volumes. This briefing

sets out our revised forecasts for both OE and replacement tyres for

passenger cars based on JD Power & Associates’ forecasts for passenger car

vehicle assembly in North America, Western Europe, Japan, China, Argentina,

Brazil, Korea, India and Australia from 2005 through to 2013. Given that our in-

house component forecasts set out the next seven years, we have extended

JD Power & Associates’ predictions by a further three years to 2016. In

addition, and given the sheer volatility of the global economy at present, we

have set out an ‘expected’, ‘best case’ and ‘worst case’ scenario applied to

automotive tyres. On balance, we believe this will provide readers with a more

realistic framework for our component forecasts.

The following two tables therefore set out our estimates and forecasts for the

market volume of OE and replacement tyres for passenger car applications.

Overall, we estim ate that the OE t yres m ark et volume totalled xxxm units in

2008, with potential to reach xxxm by 2016. Meanwhile, we estim ate that th e

world replacem ent m ark et for passenger car t yres was about xxxm units in

2008 with potential to reach xxxm by 2016.

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