Goodyear aims to dominate EU labelling race

ERJ staff report (DS)

Chicago, Illinois -- At a Deutsche Bank analyst conference yesterday in Chicago, Goodyear's CFO Darren Wells said that Goodyear aims, "to absolutely win the labelling race in Europe." He said there is a trend toward standardised tyre labelling around the world, which is being led by Europe.

He also said, "customer demand has been higher than what we have been able to supply for much of the last 12 months." He said this under-supply has meant Goodyear has run its inventory levels down further than it likes. In particular he said the fuel efficiency is in strong demand from customers at both OE and replacement.

He said global tyre growth is around 50 million units per year, which represents 5 - 10 large tyre factories that need to be built each year.Goodyear, however, expects to limit volume growth to 3 - 5 percent annually, but to steadily move existing capacity upmarket, into higher margin products.

In particular he said there is strong demand for fuel-efficient tyres around the world and that the technologies which were used exclusively in high-end tyres are now moving toward the mid-range tyres.

Wells noted that the internet will affect how consumers research and buy tyres. He said it is already changing, but Goodyear expects it to change further and faster, as consumers research their tyre purchases on the internet and then buy from another outlet -- possibly over the internet or possibly more traditional.

In China Wells said Goodyear has a market share in the low single digit figure, but its brand reputation is disproportionaly strong, and it is currently building its distribution network there. It currently has 700 distribution points focussed on five cities, selling around 78 000 tyres/month. In those cities, Goodyear claims a market share above 10 percent. Goodyear expects this number to increase to 1100 outlets in 2012 selling 100 000 unit/month and 1555 in 2015 selling 140k unit/month.

However, the company said it is supply constrained in China, and is unable to meet consumer demand. In order to rectify that position, Goodyear said it is on target with the re-building of its facility in Dalian China to make car tyres and truck tyres. The production should increase its capacity for consumer tyres in the near future and produce the first commercial truck tyres in 2013.

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Audio broadcast from Goodyear