Aeolus revamping global strategy

By Jane Ho, Crain News Service

JIAOZUO, China (Sept. 23, 2015) — China's Aeolus Tyre Co. Ltd. is refocusing its global and domestic tire strategy in response to pressures created by the imposition of elevated U.S. import duties as well as to the takeover of Pirelli & C. S.p.A. by its parent China National Chemical Co. (ChemChina).

Jiaozuo-based Aeolus suspended its consumer tire business in the U.S. earlier this year because of the anti-dumping and countervailing duties — which amount to 120.6 percent for Aeoulus — and has put on hold a project to triple annual capacity for passenger tires to 15 million units.

Aeolus had been selling passenger tires in the U.S. only since early 2013, but according to Jason Rothstein, general manager of Aeolus North America, it was enjoying a “halo effect” as a result of the brand image already built up by the company in the truck and bus tire sector, where it claims a 2.5-percent market share.

Nevertheless, Aeolus still looks to a comeback in the U.S. market, Mr. Rothstein told Tire Business during Aeolus' 50th anniversary ceremony Sept. 19-20 in Jiaozuo.

“There is too much growth attraction,” he said, adding, “We offer a bit of value in terms of dollars per mile compared to tier-1 manufacturers.”

Aeolus' decision to suspend work on a capacity expansion is, in part, to allow dust to settle over ChemChina's acquisition of Pirelli, while the company is also actively seeking expansion for TBR and OTR tires in southeast Asia, South Asia, the Middle East and Africa.

According to Mr. Rothstein, Europe has been Aeolus's largest overseas market, followed by the U.S. – its largest export market as a single country. The company is expecting a lower double-digit growth rate in the country this year.

In 2014, the company saw a 17-percent rise in export sales to $935 million while its total revenue dropped 4 percent to $1.7 billion due to a sluggish China market. The company is the seventh largest Chinese tire maker and 26th largest worldwide, according to Tire Business' annual ranking of the world's tire makers.

In addition to its exports ambitions, Aeolus has appointed new senior executives to develop the domestic market further.

“Our domestic [replacement tire] sales rose by 50 percent in first half 2015, and we will have doubled or tripled OE customers by the end of this year,” said Guo Shuangxing, the company's general manager of international sales and marketing.

“Our total revenue should be recovered in 2016,” he added.

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Jane Ho is a correspondent for European Rubber Journal, a London-based sister publication of Tire Business, for which she reported on Aeolus' recent event.