SupplierBusiness

Trends in the Global Tire Industry

2013 Edition Trends in the Global Tire Industry

CONTENTS Chapter 1: What Is A Tire? ...... 10
Who makes tires? ...... 11
What is a tire? ...... 13
Steelcord ...... 15
Textile Reinforcement ...... 16
Rubber Compound ...... 16
Processes ...... 19
Key Raw Materials ...... 21
Reinforcing Fillers ...... 23
Reinforcing Fibres ...... 25
Types of tire ...... 25
Off-road / earthmover tires (OTR) ...... 25
Agricultural tires ...... 27
Racing tires ...... 28
Truck tires ...... 28
Aircraft tires ...... 30
Motorcycle tires ...... 31
Buggy tires ...... 32
Chapter 2: Big picture ...... 34
Global production ...... 37
Raw materials ...... 39
Globalisation ...... 41
Segments, sectors, and branding ...... 42
Technology ...... 45
Low-cost manufacture ...... 46
China ...... 47
Legislation ...... 48
Chapter 3: Internal Drivers and Change ...... 51
Winter tires ...... 52
Consumer Vehicles ...... 55
Commercial Vehicles ...... 57
Chapter 4: External Drivers ...... 59
Raw Materials ...... 59
Making natural rubber ...... 61
Butadiene is also short ...... 63
Legislation ...... 64
Environmental Issues ...... 66
Diversification ...... 67
Electronic chips in tires are now commercialised...... 68

© 2013 IHS Global Limited 3 Trends in the Global Tire Industry

OE Relationships ...... 68
Chapter 5: Tire labelling ...... 70
Why labels ...... 70
Communications ...... 71
EU labels ...... 73
Winter tires and the label ...... 75
Labels and selling price ...... 76
Enforcement ...... 78
Impact since introduction ...... 79
Japanese scheme ...... 80
The United States ...... 81
Other countries ...... 83
Marketing communications ...... 84
On-line sales ...... 85
Chapter 6: Retail and Service ...... 86
On-line retailing ...... 89
Chapter 7: Key Profit Opportunities ...... 92
Car/Light Truck ...... 92
Winter Tires ...... 93
UHP segment ...... 97
Runflat Tires ...... 98
Truck Tires ...... 100
Moto Tires ...... 101
Aircraft Tires ...... 102
Agricultural ...... 104
Off-Road ...... 105
Chapter 8: Technologies ...... 107
Bio technology ...... 110
Extended Mobility ...... 111
Air Maintenance Technology ...... 115
Sensors in the Tire ...... 116
Compounding Ingredients ...... 118
Solution-SBR ...... 119
Polybutadiene ...... 120
Reinforcement ...... 120
Steelcord ...... 121
Manufacturing Technology ...... 122
Recycled rubber ...... 122
Chapter 9: Industry response ...... 126
Michelin ...... 126
Bridgestone ...... 130

© 2013 IHS Global Limited 4 Trends in the Global Tire Industry

Goodyear ...... 132
Continental ...... 134
Pirelli ...... 136
Yokohama ...... 137
Hankook ...... 138
Apollo ...... 139
Chapter 10: Europe ...... 141
Expansion & Contraction projects in Europe ...... 145
Bridgestone ...... 145
Continental AG ...... 145
Cooper Tire & Rubber Co...... 145
Goodyear ...... 146
Michelin ...... 146
Nokian Tires ...... 146
Pirelli Tire S.p.A...... 146
Sumitomo Rubber Industries ...... 146
Market shares ...... 146
Chapter 11: North America ...... 149
Overview ...... 149
Imports increase – especially from China ...... 152
Expansions ...... 153
Bridgestone Corp...... 153
Continental A.G...... 153
Hoosier Racing Tire Corp...... 153
Group Michelin ...... 153
Specialty Tires of America Inc...... 153
Yokohama Rubber Company ...... 154
Chapter 12: China ...... 155
Volumes continue to increase ...... 158
Expansion projects ...... 159
Continental A.G...... 159
Kenda Rubber Co. Ltd...... 160
Chapter 13: Russia ...... 161
A, B, C classification ...... 164
Russian State steps in as Sibur moves out of tire building ...... 165
Big changes in B segment ...... 166
Russian Consumers and the winter tire segment ...... 168
Distribution ...... 169
Bridgestone Corp...... 171
JSC Cordiant ...... 171
Pirelli Tire S.p.A...... 171

© 2013 IHS Global Limited 5 Trends in the Global Tire Industry

Chapter 14: other Asia ...... 172
Korea and the Global Tire Market ...... 173
Japanese tire production ...... 173
Expansions ...... 176
Apollo Tires ...... 176
Bridgestone Corp...... 176
P.T. Gajah Tunggal Tbk...... 177
Pirelli Tire S.p.A...... 177
J.S.C. Southern Rubber Industry (Casumina) ...... 177
Shandong Linglong ...... 177
Toyo Tire & Rubber Co. Ltd...... 177
Yokohama Rubber Co. Ltd...... 177
Chapter 15: South America ...... 179
Pirelli Tire S.p.A...... 181
Chapter 16: India ...... 182
Alliance Tire Group ...... 185
Apollo Tires Ltd...... 185
Continental A.G...... 185
Chapter 17: Supplier Profiles ...... 186
Aeolus Tire ...... 186
Apollo Tyres ...... 188
Bekaert ...... 191
Bridgestone ...... 194
Ceat Ltd ...... 200
Continental ...... 202
Cooper Tire & Rubber ...... 217
DuPont ...... 220
Giti ...... 224
Hankook Tire ...... 226
Hyosung Corporation ...... 229
JK Tyre ...... 231
KIS Wire ...... 234
Kolon Industries ...... 235
Kordsa Global ...... 236
Kumho Tire ...... 238
Michelin ...... 241
MRF ...... 246
Pirelli ...... 248
South China Tire & Rubber ...... 253
Sumitomo Rubber ...... 255
Teijin Aramid ...... 258

© 2013 IHS Global Limited 6 Trends in the Global Tire Industry

Toyo Tire ...... 260
Xingda ...... 264
Yokohama Rubber ...... 266

TABLES AND FIGURES Figure 1: Chart of top 50 tire makers by location of HQ [Source: Tire Industry Research] ...... 12
Figure 2: Total tire sales by origin [Source: Tire Industry Research] ...... 12
Figure 3: Diagram of structure of tire [Source: Hankook] ...... 14
Figure 4: Tires are complex composite assemblies [Source: www.tirelitigation.com] .... 15
Figure 5: Tire Industry Consumption of Compounding Ingredients, 2012 [Source: Notch Consulting] ...... 18
Figure 6: Tire Industry Consumption of Other Compounding Ingredients, 2012 [Source: Notch Consulting] ...... 18
Figure 7: Reinforcing Filler Demand in Passenger Tires, 2012 & 2015 [Source: Notch Consulting] ...... 24
Figure 8: Titan 63 inch tires [Source: Titan International] ...... 26
Figure 9: Deutz Agro XXL [Source: Trelleborg] ...... 27
Figure 10: Pirelli’s F1 2013 Range [Source: Pirelli] ...... 28
Figure 11: Continental demonstrates its winter truck tires [Source: Continental] ...... 29
Figure 12: Michelin Air X Tires [Source: Michelin] ...... 30
Figure 13: Hyundai Fork Lift Truck [Source: Hyundai] ...... 32
Figure 14: Bridgestone Airless Buggy Tires [Source: Bridgestone] ...... 32
Figure 15: Speed / Load symbols [Source: Pirelli] ...... 33
Figure 16: Tire Industry Global Sales Split [Source: Tire Industry Research] ...... 34
Figure 17: Global Car Tire Sales by Region [Source: Morgan Stanley] ...... 35
Figure 18: Global Truck Tire Sales by Region [Source: Morgan Stanley] ...... 35
Figure 19: European Car Tires Sales, replacements (left) and OE (right) 2010-2012 [Source: Morgan Stanley] ...... 36
Figure 20: European Truck Tires Sales, replacements and OE 2010-2012 [Source: Morgan Stanley] ...... 36
Figure 21: Tire Production Worldwide (million units) [Source: JATMA] ...... 37
Figure 22: Global Light Vehicle Tire Production by Region [Source: LMC] ...... 37
Figure 23: 2011 Light vehicles and Truck Sales by Region and Channel [Source: Morgan Stanley] ...... 38
Figure 24: Increasing Price of Rubber [Source: Pirelli] ...... 38
Figure 25: Price Trend in Sicom prices for last (10 years) Price in US cents / kg [Source: Indexmundi] ...... 39
Figure 26: Butadiene Demand 2014, (KT) [Source: IRSG] ...... 40
Figure 27: Tire Brand Pricing Strategy [Source: Tire Industry Research] ...... 44
Figure 28: ETRMA Tire Data 2011 [Source: ETRMA] ...... 46
Figure 29: Car Tire Market Growth by Region 2010-2035 [Source: LMC] ...... 49
Figure 30: Truck Tire Market Growth by Region 2010-2035 [Source: LMC] ...... 49
Figure 31: Raw materials prices eased during 2012 after significant increases in 2011 [Source: Morgan Stanley] ...... 60
Figure 32: Global Natural Rubber Scenarios (KT) [Source: IRSG] ...... 61

© 2013 IHS Global Limited 7 Trends in the Global Tire Industry

Figure 33: Cambium Cross Section and Havea Tapping [Sources: FAO and Cirad] ..... 62
Figure 34: Butadiene monomer prices [Source: ICIS Pricing] ...... 63
Figure 35: Olefin Cracker Yields, (MT for MT of Feedstock) [Source:IRSG] ...... 63
Figure 36: Rolling Resistance, Abrasion Resistance and Wet Traction Triangle [Source: Evonik] ...... 65
Figure 37: ETRMA RR limits [Source: ETRMA] ...... 74
Figure 38: ETRMA WG limits [Source: ETRMA] ...... 75
Figure 39: ETRMA dB limits [Source: ETRMA] ...... 75
Figure 40: Winter Tire ‘Three Peaks’ Logo [Source: Michelin] ...... 76
Figure 41: Tire Price Ranked by Wet Grip [Source: Tire Industry Research] ...... 77
Figure 42: Tire Price Ranked by Rolling Resistance [Source: Tire Industry Research] .. 77
Figure 43: Tire Price Ranked by Noise [Source: Tire Industry Research] ...... 78
Figure 44: Japanese Tire Label [Source: JATMA] ...... 80
Figure 45: United States Tire Label [Source: NHTSA] ...... 81
Figure 46: High Demand for Mobility Related Services [Source: Continental] ...... 86
Figure 47: Importance of Reliable Tires [Source: Continental] ...... 87
Figure 48: Tire Price Comparison by Size [Source: Tire Industry Research] ...... 93
Figure 49: Winter Tire and Standard Tire Braking Time Comparison [Source: Continental] ...... 94
Figure 50: EU Winter Tire Rules: Country-by Country [Source: Continental] ...... 95
Figure 51: Winter Tire Market Penetration [Source: Continental] ...... 96
Figure 52: Regional Demand for Carbon Black versus Highly Dispersible Silica in Passenger Tires, 2009 [Source: Notch Consulting] ...... 109
Figure 53: ETRMA Tire Data 2011 [Source: ETRMA] ...... 141
Figure 54: European Car Tires Sales, replacements and OE 2010-2012 [Source: Morgan Stanley] ...... 142
Figure 55: European light vehicle tire sales development: OE channel (left) Replacement channel (right) [Source: Pirelli] ...... 142
Figure 56: European Truck Tires Sales, replacements and OE 2010-2012 [Source: Morgan Stanley] ...... 143
Figure 57: European light vehicle tire sales development: OE channel (left) and Replacement channel (right) [Source: Pirelli] ...... 143
Figure 58: European Passenger Tire Market Share, 2001-2010 [Source: Morgan Stanley] ...... 147
Figure 59: European Truck Tire Market Share, 2001-2010 [Source: Morgan Stanley] . 147
Figure 60: ETRMA tire plants [Source: ETRMA] ...... 148
Figure 61: North American Car Tire Sales – OE (left) and Replacement (right) [Source: Pirelli] ...... 150
Figure 62: North American Truck Tire Sales – OE (left) and Replacement (right) [Source: Pirelli] ...... 150
Figure 63: North American Car Tire Sales by Volume – OE (left) and Replacement (right) [Source: Morgan Stanley] ...... 151
Figure 64: North American Truck Tire Sales by Volume – OE (left) and Replacement (right) [Source: Morgan Stanley] ...... 151
Figure 65: Tire Review’s Tire Brand study 2012 - Consumer Tires [Source: Tire Review] ...... 152

© 2013 IHS Global Limited 8 Trends in the Global Tire Industry

Figure 66: Tire Review’s Tire Brand study 2012 - Medium truck tires [Source: Tire Review] ...... 152
Figure 67: Car Tire Market Growth by Region 2010-2035 [Source: LMC] ...... 155
Figure 68: Truck Tire Market Growth by Region 2010-2035 [Source: LMC] ...... 156
Figure 69: China OE Car Tires, Month by Month [Source: Pirelli] ...... 156
Figure 70: China OE Truck Tires, Month by Month [Source: Pirelli] ...... 157
Figure 71: China Replacement Truck Tires, Month by Month [Source: Pirelli] ...... 157
Figure 72: Russian Market Share by Manufacturer [Source: Cordiant] ...... 161
Figure 73: A-, B- and C-Segment Tire Market Share in Russia 2010-2012 [Source: Cordiant] ...... 164
Figure 74: A-, B- and C-segment Growth 2007-2018 by Volume (left) and Value (right) Source: Nokian] ...... 165
Figure 75: Russian B-Segment market share by manufacturer 2011-2012 [Source: Cordiant] ...... 167
Figure 76: South America OE (left) and Replacement (right) Car Tires, Month by Month [Source: Pirelli] ...... 179
Figure 77: South America OE (left) and Replacement (right) Car Tires, Month by Month [Source: Pirelli] ...... 179

Table 1: Tire manufacturer profitability in 2011 [Source: Tire Business] ...... 40
Table 2: Global Tyre Markets 2009-2015 [Source: Morgan Stanley] ...... 49
Table 3: The number of major international auto car tires Commodity Trends (2010) [Source: Korean Trade Association statistics (KOTIS)] ...... 88
Table 4: Tire Rating compared with Maximum Speed Allowance [Source: ERMC] .... 97
Table 5: Share of World Tire Production by Geographic Region (units x 103 tons (produced rubber)) [Source: IRSG] ...... 155
Table 6: Top domestic tire makers (2010) ...... 158
Table 7: Korean tire production (Unit: one thousand, %) [Source: KOTMA] ...... 173
Table 8: Japanese Sales of Replacement Tires [Source: JATMA] ...... 174
Table 9: Japanese Sales of OE Tires [Source: JATMA] ...... 174
Table 10: Japanese Production of Automotive Tires and Tubes [Source: JATMA] ..... 175
Table 11: Sales of summer tyres and winter tyres for replacement (for four-wheeled vehicles) [Source: JATMA] ...... 175
Table 12: Indonesian vehicle market - Domestic Auto Market & Eximby Category Jan- Dec 2012 [Source: GAIKINDO] ...... 176
Table 13: Indonesian vehicle market - Domestic Auto Production by Category Jan-Nov 2012 [Source: GAIKINDO] ...... 176
Table 14: Category-wise Tire Production in India Financial Year 2010-11 - 2011-12 (April-December) [Source: ATMA] ...... 182
Table 15: Total Tire Production in India F.Y. 2004-05 T0 2010-11 [Source: ATMA] .. 182
Table 16: Category-wise Export of Tires Financial Year 2010-11 - 2011-12 (April- September) [Source: ATMA] ...... 183

© 2013 IHS Global Limited 9