HYOGO, Japan — Toyo Tire Corp.'s board of directors has agreed to sell an 86% share interest in its Toyo Tire Zhangjiagang Co. Ltd. (TTZ) subsidiary in Zhangjiangagan City, China, to Liaoning Hengdasheng Investment Co. Ltd.
Toyo said the board's decision was based on its belief that transferring controlling interest in TTZ to LIH — its marketing alliance partner in China since 2023 — will ensure that TTZ has access to the "necessary operational support" to survive and thrive in the competitive Chinese market.
Established in 2010 to make and sell passenger and light truck tires for the Chinese market, TTZ "has struggled to fully leverage its competitive advantage as a local manufacturer/supplier," Toyo said, "due to slower-than-expected brand and product recognition."
Given those challenges, Toyo said it decided to reassess the strategic role of its China business within its global strategy.
Toyo has one other factory in China, in Zucheng, that produces radial truck/bus tires.
The transfer is expected to be concluded by mid-year. Effective from the date of the transfer, TTZ will be excluded from Toyo's scope of consolidation.
TTZ reported sales of $28.2 million in fiscal 2024, down 33% from 2023 and nearly 42% from 2022. It was marginally in the red on both an operating and net basis.
Toyo did not disclose at this time the expected value of the transaction. It lists TTZ's net assets as $45.6 million
The tires produced and sold by TTZ for export to certain Asian countries will in future be supplied from bases in Japan and Malaysia, Toyo said.
Separately, it said it will continue to pursue "flexible and agile business operations" in North America and other high-growth markets by promoting the "optimal allocation of its management resources" and establishing an optimal global supply system.
