Yokohama sets ambitious goals through 2023

TOKYO — Yokohama Rubber Co. Ltd. has approved a three-year business plan covering 2021-23 that company management said will "deepen" the firm's core strengths while seeking to create new value "that responds to the needs being generated by this new era of great change."

Through this two-pronged approach, dubbed Yokohama Transformation 2023 (YX2023), the Tokyo-based tire maker said it will "transform" into a corporate group that contributes to the growth during the next generation.

By implementing the new plan's initiatives, Yokohama expects to achieve an operating ratio of at least 10% annually while growing sales 8% by 2023 and 18% by 2025 over the 2019 benchmark.

YRC points to fundamental shifts in the global economy and their impact on the transportation sector — such as the decline in individual car ownership in favor of "infrastructure-type" shared vehicles — as reasons for its need to adopt different approaches to growth.

As such, Yokohama will shift its tire business strategy through a two-pronged approach, with the consumer tire sector focusing more intently on high-value-added tires while the commercial tire segment will seize business opportunities presented by the market changes in four thematic areas.

YRC sees the tire market divided roughly equally into consumer tires for passenger cars (including light trucks, SUVs, etc.) and commercial tires used on trucks and buses, agricultural machinery and other industrial vehicles.

To effect the company's growth objectives, Yokohama has laid out a number of initiatives, including:

• Increase sales of its Advan performance, Geolandar SUV/light truck and winter tire lines by 50%, 15% and 20%, respectively, by 2023 over 2019, taking advantage of both OE and replacement market demand. Achieving this would raise the combined sales ratio of these three core tire brands to 50% of Yokohama's consumer tires from 40% currently;
• Strengthen commercial tire activities by tackling "dynamic market changes" brought about by the transportation sector's focus on Connectivity, Autonomous, Sharing/Subscription and Electrification (CASE) and Mobility as a Service (MaaS). The company sees revenue from the commercial sector growing to nearly $1 billion by 2025 by increasing truck/bus tire capacities, including at the firm's U.S. plant in Mississippi.
• Accelerate off-highway tire (OHT) business through the ongoing integration of YRC's OHT assets with those of its ATG and Aichi Tire businesses and leveraging its multi-brand approach. These initiatives complement the firm's capacity expansions under way, which should nearly double revenue in this area by 2025 over that currently.

YRC has identified four thematic areas to tackle:

• Cost — YRC will create a "low-cost production model," starting with positioning its passenger tire plant in India and truck/bus tires plant in Thailand as low-cost production poles;
• Service — YRC will package tire-related after-sales services with the tires it sells to take advantage of rising corporate ownership of vehicles along with leveraging its nationwide sales and logistics network and increasing the size of its service truck fleets.
• Vehicle integration — YRC will accelerate its development of tire sensors and create value-added services by expanding services and adding customers.
• Product lineup — YRC plans to keep expanding its product portfolio to meet the evolving needs of the transportation and logistics industries as electric and driverless vehicles become more common.

The launch of the YX 2023 closes the books on Yokohama's previous fiscal strategy, GD2020. YRC said it fell short of its GD2020 targets for revenue and profits due to the 2020 global economic slowdown, but it did succeed in improving its financial condition, cutting its interest-bearing debt by 38% and lowering the debt/equity ratio is to 0.5.