CLERMONT-FERRAND, France (June 4, 2002)—Group Michelin's decision to stop supplying tires to General Motors Corp. in Europe will affect Fiat S.p.A. as well, as GM handles tire purchases for the Italian group according to an agreement the two car makers signed two years ago.
The revelation effectively doubles the impact on Michelin's sales, since Fiat makes about 1.4 million cars a year to go with GM's annual output of 1.6 million light vehicles in Europe.
Neither Michelin nor GM divulged the size of Michelin's business with the car maker, but a conservative estimate would be about 3.5 million to 4.5 million units, based on European car makers' tendency to maintain at least four tire suppliers, Michelin's OE market share claims and five tires per vehicle (temporary spares are still relatively rare in Europe).
Michelin claimed a 35-percent share in 2000 of the 92 million-unit OE market for passenger and light truck tires in Europe, and said at the time that both GM and Fiat were among its 10 largest customers.
Regardless of the size of the contract, the decision mans Michelin will not have an OE presence on prestigious marques such as Ferrari and Alfa Romeo.
Michelin's decision earned it praised from at least one analyst.
“GM is known for being the most difficult partner in the industry,” said Philip Wylie, automotive director at PricewatershouseCoopers Corporate Finance in London. “It's not surprising that someone like Michelin is not caving in.”