Published on April 29, 2014

China's impact on N.A. tire industry: huge and growing

AKRON (April 29, 2014)— China’s impact on the North American tire industry is huge — the numbers bear that out — and getting bigger.

As of 2013, nearly one of every four passenger tires, one of every five light truck tires, and one of every three medium truck tires sold in the U.S. aftermarket was built in China. Quite of few these, it must be noted, are familiar private and/or associate brands, but a substantial and growing percentage are brands owned or controlled by Chinese tire makers or offshore distributors.

The trend is continuing thus far in 2014, with passenger, light truck and medium truck tire imports from China up 15, 47 and 10 percent in the first couple of months over 2013. Overall, the consumer tire aftermarket is expected to be up only slightly this year, according to the Rubber Manufacturers Association’s most recent forecast, with the commercial sector possibly declining a percentage point or two.

The distribution of tires from China falls into several categories, ranging from those Chinese tire manufacturers with their own import/distribution companies in the U.S. to those with designated independent importers/distributors—either with or without their own North American distribution assets (see lists on pages 21 and 24) —to those that ship containers to those customers with adequate lines of credit willing to take the risk of being labeled the “importer of record.”

Roughly half of the 350+ brands on sale in the U.S. are sourced from China, with roughly 50 to 60 of those owned or controlled by the Chinese manufacturer or a foreign trading company.

Establishing a brand name has become more important for the leading Chinese manufacturers, a strategy reflected in some companies’ decisions to establish subsidiaries in North America and develop sales and service networks to back up their brands.

One example of building brand identity: TBC Corp. and Dynamic Tire Corp.—the U.S. and Canadian distributors of the Sailun brand—staged ride-and-drive events the past couple of years in an effort to show potential dealer customers that the Sailun brand performs equal or nearly equal to more well-known American, European or Japanese brands.

At these events, and in conversations with other distributors of Chinese brands, executives often repeat what’s becoming a mantra for the Chinese industry: It’s not that the tire is built in China, it’s just that the factory — often among the most modern worldwide — happens to be located in China.

Without supplies from China, the private brand business in North America would be a shell of what it is today.

Delving a bit deeper into the import data, however, shows that nearly two-thirds of Chinese-sourced passenger tires are in 13- to 15-inch rim diameters — perhaps not surprisingly — but also that more than one-half of high-performance tires imported into the U.S. — tires with rim diameters of 18 inches and larger — are from China.

The average declared value of those larger diameter tires, however, was just $58.95, according to U.S. Commerce Department data.

Collectively, the value of consumer and commercial tire imports last year hit $11.7 billion, up 4.5 percent over 2012. Of that total, $3 billion was for Chinese-sourced products.

The tire industry trade deficit — value of imports minus value of exports — was $7.72 billion, with nearly half that attributed to China.

Among individual companies with ties to China:

China Manufacturers Alliance L.L.C. (CMA) put into service recently a West Coast distribution center in Rancho Cucamonga, Calif., designed to support customers with shipments of Double Coin and other CMA brands, including the Warrior car tire line being launched this year.

“We’ve invested in the latest building innovations to construct an energy-efficient and technologically advanced distribution center,” said CMA Vice President Aaron Murphy at the opening of the 129,000-sq.-ft. facility.

The new warehouse was designed for optimized tire distribution, CMA said, with customized and portable racking systems that provide multiple storage combinations at full capacity, a wireless mobile security monitoring system as well as dock-high and grade level bay doors.

The center opens as CMA prepares to launch the Warrior brand of passenger tires that CMA parent Double Coin Holdings is building at a plant in Wuwei, Shandong Province, China, it co-owns with Group Michelin.

Shipments of the Warrior brand will start with the R29, a touring all-season tire featuring a symmetrical tread design, and the Warrior R30, a high-performance all-season tire with an asymmetrical tread pattern.

The company plans eventually to add light truck sizes to the line.

Monrovia, Calif.-based CMA operates a second warehouse in Memphis. CMA’s other brands are Bluestar, Dynacargo, Dynatrail and Superhawk.

Giti Tire USA Ltd. is stepping up marketing activities on several fronts to improve the image of its primary brand, GT Radial.

Foremost among these are recent decisions to establish a research and development presence in the U.S. and get active in motorsports, beginning with Formula Drift Holdings L.L.C.

On the R&D front, Giti hired Hamid Aboutorabi — a 23-year veteran of the tire industry, including time in research and engineering with Kumho America Technical Center and Goodyear — last fall to head up its efforts to set up a technical base in or near Akron. To date the company has hired four technicians to work in the new center.

Mr. Aboutorabi reports to Phang Wai Yeen, executive director, R&D, at the parent company, and Herve Richert, executive director, sales and marketing (international) and president of Giti Tire (USA).

Julianto Djajadi, executive vice president, business operations for Giti Tire (USA), said at the time: “This is not just a marker for our commitment to North America, but to improving our products and credentials worldwide.”

On the motorsports front, Giti sees Formula Drift as an “ideal platform for demonstrating the technology and performance of the GT Radial brand to North American drivers,” said Armand Allaire, vice president of marketing for Giti Tire USA.

Giti Tire USA will be one of eight tire brands active this year in Formula Drift, which is running seven events in 2014. The others are: Achilles, Falken, Hankook, Kenda, Maxxis, Nitto and Yokohama.

The R&D and motorsports engagements are in addition to the launch of Tread Academy, an online training program introduced last year to inform North American tire dealers about GT Radial tires and tire trends. The program is now available in both English and French and is supported by the Giti Tire (Canada) Ltd. as well.

China’s Qingdao Sentury Tire Co. Ltd. has renamed its Miami-based Americas sales and marketing subsidiary Sentury Tire Americas to reflect the company’s “transformation to a global tire company.”

The unit, in business since 2007, previously operated as Sentaida International Inc., marketing the parent company’s Delinte and Landsail brands.

Max Wee, director of sales for Sentury Tire Americas, said the Sentury Tire name is part of the parent firm’s worldwide brand strategy and is used already in other countries.

“The primary reason for the name change is to better communicate our company and brand to our distributors and dealers,” Mr. Wee told Tire Business at last year’s Specialty Equipment Market Association Show in Las Vegas.

“Going forward we’ll market our Delinte and Landsail product brands under the Sentury Tire Americas corporate brand umbrella,” he added, noting the Landsail brand is targeted at the more mainstream touring car/SUV categories while Delinte is geared to a “younger, hipper performance-oriented” consumer.

Landsail, for example, is Sentury’s OE brand in China, Mr. Wee said.

Under development and scheduled for launch this year are run-flat versions of both Landsail and Delinte models, Mr. Wee said.

Sentury Tire maintains warehousing at its headquarters in Miami and in California.

Qingdao Sentury — originally Sentaida Group Co. Ltd. — inaugurated production at its sole plant in Qinngdao in 2009, with capacities for passenger car and aircraft tires. The plant opened with an annual capacity of 9 million tires, which is being expanded to 15 million car/SUV and 80,000 aircraft tires.

A third phase expansion, slated for 2015-18, will more than double capacity, the company said.

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To reach this reporter: bdavis@crain.com; 330-865-6145.

 

 

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