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November 28, 2014 12:00 AM

Michelin to double budget-tire sales to counter Chinese

Nick Gibbs
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    CHENGDU, China -- Michelin says it will nearly double the proportion of budget tires in its global sales mix to counter the huge rise in Chinese imports sold in Europe and the U.S.

    “Today [our mix] is 15 percent to 20 percent, it should move up to 25 percent to 30 percent in the next five to 10 years,” Michelin CEO Jean-Dominique Senard told Automotive News Europe on the sidelines of the company’s recent Challenge Bibendum conference here.

    Michelin produces entry-level tires under the brand Tigar, Kormoran and Riken at its factory in Serbia for export across Europe, Russia and the Middle East.

    Chinese tires now account for nearly half of all tires imported into Europe, according to data from analysts LMC Auto. Growth in North America is “quite tremendous,” Senard said. “These exports tend to have an impact on the price structure on the tire business,” he added.

    Chinese tires 'getting better'

    The main reason for the growth is that Chinese tires are getting better, said Rob Simmons, head of rubber and tire research at analysts LMC Auto. Chinese brands have been helped by the new European labeling system, which lists scores for wet braking performance, rolling resistance and noise. “Chinese tires are scoring higher, particularly for rolling resistance, which helps fuel economy,” he told Automotive News Europe. “Historically, tires in Europe have been good on wet grip, but less good on rolling resistance.”

    Michelin recently started manufacturing budget tires in China in a joint venture with local maker Double Coin under the Warrior brand. However the company has no plans to export China-made tires outside Asia.

    “Our goal is not to make China an export hub,” Michelin’s director of car and van tires, Florent Menegaux, told Automotive News Europe.

    Michelin also isn't interested in being a leader in very low-cost tires, Senard said, adding: “All our tires have the basic characteristic of being safe."

    LMC’s Simmons said European tire makers also face competition from Korean brands manufacturing in eastern Europe. In March, the European Commission announced it would give 58 million euros of regional investment aid to help Korean tire maker Hankook build a second tire plant next to its current factory in Hungary.

    Innovation will help premium tire makers stay ahead, Simmons predicted. Late next year Michelin will launch its so-called "Self-Seal" tire that repairs punctures up to 6mm wide. The new technology will be available on all Michelin-branded passenger car and light van tires for a premium, the company said. No price was given.

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