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October 12, 2015 02:00 AM

Aeolus shifts strategy

Jane Ho
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    JIAOZUO, China—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 Aeolus—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 pending acquisition of Pirelli, while the company is also actively seeking expansion for truck/bus 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 $670 million while its total revenue dropped 4 percent to $1.3 billion due to a sluggish China market.

    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 the 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.

    During the anniversary celebrations in Jiaozuo—attended by more than 2,000 guests from the company, distributors, clients and trade associations—Aeolus showcased nine recently developed tire models.

    “Our products featuring up-to-date technology will create new values for the global automotive industry,” Aeolus Chairman Wang Feng said at the opening ceremony.

    Among the new products is a 27.00R49 heavy-duty dump truck tire customizable for different road conditions and equipped with built-in RFID chips capable of real-time monitoring, shortening the time to identify problems such as slow bleeding and allowing precautions to avoid serious damage.

    “Currently we are using RFID systems only in certain giant OTR tires on account of high cost—$400 per tire just for equipment. We'll expand the coverage to a broader range of products when we can reduce such costs,” said the company.

    Passenger models displayed at the event consisted of one for SUVs, one for sports cars and a run-flat model able to run at normal speed for 50 miles when flat. The sports model SteeringAce 2 has passed Germany's TUV SUD verification, and another of Aeolus' PCR model obtained such certificate earlier this year—the first time it's been granted to a Chinese tire maker.

    Aeolus showed five TBR models, including three tubeless ones, a tube type model tailored for the China market and another one targeting the Europe market with more balanced performance.

    Jane Ho is a freelance reporter based in Shanghai, China.

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