cri-report.com - According to China's Ministry of Industry and Information Technology, in 2010Q1, Chinese auto production and sales volume reached 4.55 million and 4.61 million, growing by 77% YOY and 72% YOY respectively. In March 2010, Chinese auto production and sales volume amounted to 1.73 million and 1.74 million, rising by 44% and 43% separately compared with that in the last month; the YOY growth rates were 58% and 56% separately. The auto production and sales volume in both March and Q1 of 2010 hit the record high. Almost all vehicle models assumed the vigorous growth trend.
With the rapid development of Chinese auto market, the tire industry also enjoyed high-speed growth. In 2010Q1, Chinese tire production was 167.44 million, 35% increase over 2009Q1.
In 2008-2009, owing to the global financial crisis, Chinese tire export was bogged down. Fortunately, depending on the domestic high demand, Chinese tire enterprises managed to counteract some adverse effects from the export recession. Chinese domestic tire market is highly valued by international tire enterprises. Despite the financial crisis and the tire special safeguard case, those transnational tire enterprises such as Michelin and Bridgestone keep increasing their investment in China.
Since its entry into China in 1999, Bridgestone has set up factories in Shenyang, Tianjin, Wuxi and Huizhou. In 2009, Bridgestone added another USD 98 million into its factory in Wuxi to expand its daily production capacity from 8,000 to 12,000 by July 2011. Bridgestone has declared that it will continue its expansion in China.
The project of Continental Tire with the aggregate investment of EUR 600 million was started at the end of September 2009. The annual production capacity is scheduled to be 16 million passenger car tires and 2 million commercial vehicle tires.
At the beginning of January 2010, Michelin declared to invest USD 1 billion to set up a factory in Shenyang for the production of passenger car and truck tires. The factory is expected to go into operation in 2012. On February 2nd, 2010, Michelin acquired the shares of Shanghai Michelin Warrior Tire Co., Ltd held by other shareholders at the price of CNY 170 million to completely control the company.
Yokohama Tires has carried out the fourth round expansion for its Hangzhou Yokohama Tire Co., Ltd, planning to raise its annual production capacity from 3 million to 5.10 million.
On January 28th, 2010, TOYO Tires announced to invest USD 9.80 million to establish a wholly-owned subsidiary in Zhangjiagang, Jiangsu. This subsidiary will produce car and light truck tires with the annual production capacity of 2 million radial tires. In 2002, Toyo Tire & Rubber Co., Ltd became the shareholder of Cheng Shin-Petrel Tire (Xiamen) Co., Ltd. In 2003, Toyo Tire & Rubber Co., Ltd set up Toyo Tire (Shanghai) Co., Ltd in Shanghai. In 2004, it established Toyo Automotive Parts (Guangzhou) Co., Ltd in Guangzhou. Attracted by Chinese high-potential tire market, Toyo Tire & Rubber Co., Ltd has decided to set up the sole proprietorship tire production company in China.
In 2009, the private vehicle reserving volume per thousand people in China was less than 50, much lower than the 600-800 in developed countries and less than half of the average reserving volume in the world. With the development of Chinese economy, the new vehicle sales volume and vehicle reserving volume will maintain the annual growth rates of over 15% in the following 3-5 years. This will encourage the high-speed development of Chinese replacement tire market. It is forecast that the growth rate of Chinese tire market will exceed that in Chinese auto market in the coming years. Those participants in this tire market including transnational tire enterprises, local tire manufacturers and upstream & downstream enterprises will all accelerate their expansion in Chinese market in recent years to make huge profits. In Chinese tire market, both first movers and new entrants will receive great opportunities.
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