CLERMONT-FERRAND, France (June 7, 2000)—Group Michelin intends to become the No. 2 tire maker in Asia by 2005, Michelin Chairman Edouard Michelin told shareholders at the company´s annual general meeting.
To do so, the company must more than double its sales base there, according to estimates of its Asian presence.
Michelin´s ambitions in Asia will play a key role in its overall goals for the next five years—increasing annual sales at least 2 percentage points above overall market growth, while raising profitability to 10 percent of sales.
Based on first-quarter results—14.8-percent sales growth—Mr. Michelin said he expects the company will reach its 2000 fiscal targets of 4-percent sales growth worldwide and 9.5-percent pre-tax earnings/sales ratio.
The chairman did not divulge details about his firm´s plans for Asian expansion, other than to say its strategy for the next five years includes provisions for partnerships and acquisitions, along with internal growth.
Michelin claims to be No. 4 in Asia, with a 5.5-percent market share, trailing market leaders Bridgestone Corp., Goodyear and Yokohama Rubber Co. Ltd.
The firm manufactures tires in China, Japan and Thailand, has a joint venture plant in the Philippines and is finalizing plans for a factory in India. In the past year, Asian news reports have linked Michelin and Yokohama in a series of alleged cooperation talks, but both companies deny the stories.
Michelin recently purchased 100-percent ownership of Michelin Okamoto Tire Corp. in Japan, allowing it to exercise more freedom in expanding its aftermarket presence there, Mr. Michelin said. The company will try to leverage its original equipment connections with Japanese car makers to open up replacement distribution opportunities.
In general, Michelin hopes to achieve a better balance among its geographic sales zones—Europe, the Americas and Asia/Middle East. North America already has achieved equilibrium with Europe in terms of unit sales.
In South America, the company has made significant strides toward competing more effectively with Goodyear, Pirelli and Bridgestone/Firestone Inc., the region´s Big 3, Mr. Michelin said.
In addition to taking over Colombia´s Icollantes, Michelin has expanded its medium and heavy truck tire capacities in Brazil and opened a C3M-based car tire plant there.
Michelin is counting on its expanded distribution network, its multiple brand strategy and strong global OE presence to build its business in South America, Mr. Michelin said.
In Europe, Michelin is in the midst of a three-year restructuring improvement program that calls for 7,500 job cuts to raise productivity 20 percent and help the company compete more effectively with its major rivals, Goodyear and Bridgestone/Firestone, he said.
Michelin also said the company´s recent moves to set up joint ventures in the automotive suspension field—Woco Michelin AVS, for example, with Germany´s Woco Industrietechnik GmbH—are designed to cement the French firm´s relations with vehicle makers by adding its knowledge of tire behavior to the entire process of suspension design and tuning.
Michelin´s role as a leading wheel maker in Europe also plays a role in this strategy, the chairman said.